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Boardroom diversity — the key to better governance?

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Written By: Brenda Lee Tang  27/8/15

The urgency to increase boardroom diversity has gained momentum since the 2008/09 global financial crisis which highlighted the need for better governance, effectiveness and competence at the board level.

Shareholders have been demanding more from businesses, boards and nominating committees, and have been looking for a wider pool of candidates from beyond ‘‘the male and stale’’ category.

ACCA believes that everyone — corporations, recruiters and women — has a role to play in increasing board diversity. Increased diversity is not a numbers game. It’s about developing and finding board-ready candidates and having those candidates speak up and promote themselves to their networks, recruiters and board members they may know. All of the corporate directors invited to speak at diversity roundtables organised by ACCA stressed the importance of training and making their board aspirations known.

They also noted the importance of seeking sponsors and having someone to act as an advocate on a candidate’s behalf.

From an organisational standpoint, we believe the selection process has to change.

How directors are recruited is critical in creating more diverse boards.

At this point, that process comes down to name recognition as opposed to capability.

As a result, there are many celebrity directors in high demand making it that much more difficult for new candidates to land that all important first directorship.

To help counter this, the ACCA/Commonwealth Business Council Report Paving the way to opportunities recommends the creation of a database of board-ready and board-potential women that spans industries and sectors and includes female entrepreneurs. It says, “National and international networks can be used to identify women with high potential and those ready for board positions.

“As the networks grow they will provide a rich source of talent for recruitment, enabling greater access for head-hunters and executives.” Another key recommendation: creating a media strategy that raises the profile of women in senior leadership positions. The fact is that one in five board members positions are filled with the help of search firms; 80 percent are not. Visibility is critical. There is no shortage of qualified, skilled women candidates but too often they are removed from consideration because they aren’t on the radar of nominating committees.

Maybe it’s time to take a page from the US National Football League (NFL) and The Rooney Rule, which requires every NFL team to interview at least one minority candidate to fill head coaching positions. Spearheaded by Pittsburgh Steelers owner Dan Rooney, the rule was established in 2003. Prior to its introduction, there had been just six black NFL head coaches throughout the 80-year history of the league even though 67 percent of players were African Americans. Since it came into effect, 13 coaches from diverse ethnic backgrounds have been hired.

It’s a start.

Source: News Today

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