California has been at the forefront of diversifying corporate boards through policy mandates in the United States. First, in 2018, the state passed a law requiring that at least one woman sit on the board of any publicly traded company with headquarters in the state. Then, in 2020, California adopted a new bill requiring publicly traded companies based in the state to include board members from underrepresented communities, including racial and ethnic minorities and those who identify as LGBTQ+. In a blow to the state’s efforts, a California state judge recently ruled the latter law unconstitutional.

In recent years, corporate diversity has been an important discussion point in the larger conversation around social justice and equity. Corporate leaders and policymakers alike are taking aim at the status quo and seeking ways to not only diversify the workplace but also ensure access to top leadership positions for historically underrepresented groups. As seen with the California law, however, progress toward greater corporate leadership diversity has encountered roadblocks.

We asked two of our experts to share their thoughts regarding long-standing systemic issues that continually challenge the progression of corporate diversity efforts and effective strategies for increased corporate leadership diversity.

Tell us how you and your research approach the study of corporate diversity?

Also, my research is motivated by policy-relevant questions; my interest in topics related to corporate diversity is no exception. I hope my results can inform the debate and steer policy to achieve its objectives for all stakeholders involved.

Based on that research, what are one or two factors that you think are holding back corporate America from pushing the needle forward on more diverse representation in corporate leadership positions?

How do we accelerate change? I think it is key to get qualified women on corporate networks. There is a large supply of highly qualified women in the labor market who are not necessarily part of the pool of candidates known by firms. Since searching for the right candidate outside of the known pool of candidates can be costly, some firms refrain from doing so. Institutional investors, universities, and of course existing corporate leadership should work in tandem to broaden the pool of diverse candidates available to firms to hire. Second, we need to realize that a top-down approach may not be enough. Change needs to be broader. It should start from the pre-K level. According to BLS data, in 2019 only 27% of STEM workers were women and only 15% of engineers were women. The role of education from the early formative years plays a major role and can bring deep and necessary change.

For the former group, I think many well-intentioned executives would like to push for greater representation but struggle using existing systems to produce different outcomes. This is where you hear complaints about pipelines and lack of diverse talent. These complaints make sense in a world in which we use the systems that caused the disparities but expect different outcomes with only small adjustments (i.e., look for candidates in same places, rely on existing criteria to evaluate candidates, and offer similar working conditions and demands). Instead, enhancing diversity requires reinventing recruitment into leadership positions and challenging assumptions. For example, recent experiments suggest that moving from an opt-in process to be considered for a position (i.e., needing to apply) to an opt-out option (i.e., everybody who meets certain criteria is automatically considered) decreases gender differences in promotions. My point is not that this is the solution. There are no silver bullets. Instead, it suggests the need to creatively challenge assumptions and systems to reduce the unique barriers underrepresented groups face. For the latter group, the question is tougher. Resistance often boils down to endorsement of a merit ideology. Merit as an idea is valid and useful. But it doesn’t always represent the reality people experience. Belief in meritocracy leads to an assumption that any attempt to increase representation would sacrifice “quality” and thus amounts to unequal treatment of otherwise equal people (e.g., hiring women just because of their gender). This is a pervasive but false assumption. Addressing such ideological resistance requires a long-term, respectful active dialogue. Organizations can start by better using data to challenge assumptions about increased representation and lower quality and making such data transparent. Moreover, organizations can devote efforts to uncovering invisible and subtle barriers faced by those from underrepresented groups, as well as hidden and subtle advantages benefiting majority members. This can help change the narrative from one where gender, ethnicity, and sexual orientation are seen as irrelevant for decisions related to work (which, in a “vacuum,” they are) to one in which people not belonging to the majority group often must put in “twice the work” to achieve the same level of performance and thus their capabilities are often misrepresented using existing criteria.

Do you think there is a role for policy mandates that encourage greater diversity within corporate leadership roles? Why or why not?

Two broad recommendations come to mind. First, consider mandating the process rather than the outcome. For example, rather than mandating board representation, legislation could focus on greater process goals and transparency. Imagine if companies had to set clear criteria for a position in advance and then show evidence that the list of candidates they considered who met these criteria was long and diverse. Such a process has at least three advantages:

• Setting criteria in advance tends to reduce bias as it makes it harder to re-weight criteria post hoc to favor certain candidates.
• This process reduces the association between outcome and representation (i.e., this person was chosen because of their demographic characteristics), the reason why those resisting such policies react negatively to them.
• Companies could no longer rely on informal and narrow networks and thus must invest, in advance, in developing diverse talent, connections, and networks (in line with Elena’s suggestion). Put differently, a process mandate may be better in addressing the core causes of lack of diversity boards.

Second, I agree with the University of Chicago’s John List that policies represent field experiments, and huge ones at that. Hence, I would like to see policies treated as experiments, with clear criteria and mandates to collect data, explore it, and adapt implementation quickly based on results. For example, could legislation include an expiration date (i.e., sunshine legislation) such that it is automatically becomes more or less strict (or even expires) if certain standards or pre-agreed thresholds of efficacy are met? Could policies involve a host negative and positive “strong” and “soft” incentives (not all have to be monetary) for different tiers of representation that come into effect at different times and tiers of companies, allowing for natural experiments that enable exploring cause and effect?

What can corporate stakeholders do to more effectively diversify their leadership and then retain that talent?

When I teach team leadership, I tell my students that we can’t expect diverse teams to work well if we don’t manage how they interact. There is a reason why people tend to cluster with similar others. It is easier to communicate and to feel understood.

When new members join a team, it provides a great opportunity to shake things up, change how work is done, and create new norms with which everybody feels comfortable. If everybody must learn from scratch, newcomers are less likely to feel like outsiders and can have a voice in establishing the new norms. If people are involved in creating norms, they are more likely to build norms they feel comfortable with and be committed to them. So, my advice would be to question every explicit and implicit interaction within your team. This starts from the smallest decisions (What snacks are in the meeting? Is everybody sitting in same chair in the room? Do we have to meet in this room?) to explicit consideration of who gets to speak and how people react to them (Does everybody get opportunities to participate? Are reactions to everybody’s ideas similar? Can people share concerns in private and public?), all the way to how resources (nonmonetary such as managerial time or challenging assignments to monetary such as bonuses and stock options) are allocated. The answers likely differ in each organization, but aiming to ensure involvement and inclusion in every interaction is a good place to start.

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• Keyword(s):
• bias 23
• gender 31
• inclusion 30
• inequality 95