Companies are paying more attention to their governance infrastructure. Not only do local laws and regulations ensure company board members have appropriate resources and insight for decision making, it's also been demonstrated that companies adhering to high levels of corporate governance perform better in the long-term. But how do we define good corporate governance by today's standards?
We're headed to the 2019 Society for Corporate Governance National Conference in San Diego in just a couple of days, and this is what we want to find out. The conference line-up, including topics such as "A California Tale of Gender Diversity" and "Winning Strategies for Improving Diversity at your Company," already gives us a good indication of what we won't see in this broadening and modern world of corporate governance: a lack of diversity, narrow skill-sets, and limited pools of candidates.
The cornerstone of good corporate governance is collective analytical thinking and innovation. Diverse teams are more likely to regularly re-examine facts and remain objective. In the past, we've seen boards comprised of almost entirely middle-aged, white collared men, with similar networks, educational backgrounds and skill-sets. This pattern has historically limited the pool of candidates deemed appropriate to serve on boards and consequently narrowed perspectives for problem-solving.
This trend is shifting; this year's conference is making a pointed effort to highlight how diversity in gender, age, background, and thought brings fresh ideas to companies. According to a study published in conjunction with the Society for Corporate Governance, 94% of respondents said they are looking to increase board diversity, and 61% say gender is their top recruitment priority, followed by race/ethnicity at 48%, then specific professional skills or experience at 43%. And these research findings are already coming to life. For example PepsiCo, General Motors, and Facebook all have female CEOs or COOs.
Breaking away from groupthink and what has traditionally been thought to make up good boards opens companies up to a slew of new candidates with new ideas. More diverse groups may also encourage greater scrutiny of each member's actions, keeping their joint cognitive resources sharp and vigilant. Diverse boards are effective boards.
We look forward to learning more about the expanding world of corporate governance this week. Reach out to say hello, come see us at booth #11, and stay tuned for our takeaway round-up article after the conference.
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