View from TIAA-CREF: diversity works.

• Author: Biggs, John H.
• Position: Teachers Insurance and Annuity Association

Board diversity may be decent public policy, our critics said, but is it good business? We say it is.

In a 1902 report to the New York City Tenement House Department, it was pointed out that for an inspector's job women may be hired for less pay than men and will likely make more intelligent workers. The committee recommended that, nevertheless, male applicants be hired for the positions.

As justification for the recommendation, the report indicated that women are handicapped by wearing skirts and will lose valuable time in getting from place to place. Thus, it suggested that the volume of work done by women will not be as great as that done by men. And furthermore, women, who are naturally more inclined to be sympathetic, will let their feelings for the tenants run away with them.

One hopes things are different 90 years later. Simple and rational self-interest would lead to hiring less expensive and more intelligent workers. And common decency would challenge the appropriateness of a lower pay scale.

Several important social, economic, and demographic changes have fostered greater access and opportunities for the advancement of women and minorities in business and public service. Certainly there is heightened awareness among company stockholders and participants in pension funds, many of whom are becoming active and filing resolutions and petitions on corporate issues. And because of today's emerging global markets, company managers and investors have a wider knowledge of the customs and values of those from diverse ethnic backgrounds.

Even with these sweeping changes, however, American business is reluctant to take advantage of the views of women and minorities. This is particularly evident in the current composition of corporate boards of directors. Despite some progress, today's boardroom remains one of the last bastions of the white male in America.

A study published last year by Korn/Ferry shows that 67% of the companies responding to its survey had at least one woman director. This figure is up from 59% in 1989 and 45% ten years ago. A 1994 survey by the Catalyst organization shows that only 721 - or 6.2% - of the 11,715 director seats at Fortune 500 companies are held by women. Two-thirds of the companies with women directors have only one female on their board, while 30% have two. Only 26, or 4.5% of the companies, have three or more women directors.

The number of minorities on corporate boards has increased over the years but...