What makes a board of directors "diverse?" For many years, discussions about board diversity have focused primarily on issues of gender, race, and ethnicity. Studies show that there has been some improvement in gender and racial diversity on boards, especially for the largest Fortune 100 boards (for examples, see the "2016 Board Diversity Census of Women and Minorities on Fortune 500 Boards," a multi-year study published by the Alliance for Board Diversity in collaboration with Deloitte). (https://www2.deloitte.com/us/en/pages/center-for-board-effectiveness/articles/ board-diversity-census-missing-pieces.html)
However, progress has been slow, and there is much more work to be done. Shifting demographics in the United States have brought diversity to the forefront of issues on the minds of executives and corporate boards. Conversations around board diversity are expanding to include the mix of skills, experiences, perspectives and other qualities needed to facilitate strong performance and to defend against new and emerging challenges. This expanding focus reflects that companies should address ever-increasing challenges in areas such as emerging technologies, global competition, regulatory changes, and business model disruption, among others.
Know Your Board's Skill Sets and Skill Gaps
A key initial step to realizing the benefits of a "skills-diverse" board is evaluating the skillsets of current directors against where the board believes those skillsets should be, In other words, skills gaps. Among the public companies surveyed as part of Deloitte's 2016 Board Practices Report, 91% conduct full board evaluations. (https://www2.deloitte.com/us/en/pages/center-for-board-effectiveness/articles/ us-board-practices-report-transparent-look. html). The key components of a successful evaluation of the potential skills gaps commonly include the following:
* First and foremost, the evaluation should to be objective, an evaluation that reflects perceptions or even biases often provides little or no value. This is one factor that may lead a board to engage an independent third-party facilitator to conduct the evaluation, either on an ongoing basis or periodically, to refresh the evaluation process.
* The evaluation should be comprehensive. It should consider "out of the box" capabilities, experiences and other attributes that might benefit the company, even if those attributes have not previously been factored into an evaluation process. For example...