I did a talk for students of Maharashtra National Law University (India) yesterday, as part of their lecture series, on my new working paper, Strengthening Boards Through Diversity – A two sided market that can be effectively serviced by intermediaries. It is always fun to present ideas to and hear from students. Towards the end, we discussed more about what diversity is and I later had a follow up enquiry asking for my article entitled Defining Diversity in Corporate Governance.
A small excerpt from the latter article is below. It is in fact simply a description of the dictionary meaning of diversity and I think it is worth reminding ourselves of it:
The Oxford English Dictionary defines diversity as “[a] range of different things.” The Cambridge English Dictionary is a little more specific. It defines diversity as: “The fact of many different types of things or people being included in something; a range of different things or people,” as well as “the fact that there are many different ideas or opinions about something.” Thus, putting these definitions together, diversity can mean a range of different things including different types of people based on ethnicity, culture, and the ideas and opinions they hold. The latter part of the definition relies on different viewpoints; the former relies on different ethnicities and cultures.
Despite this definition, we have had almost a single-minded emphasis on gender diversity to the exclusion of other forms of diversity, including racial diversity. Thus, the other types of diversity seem to require a new justification.
I recently saw an article in the Brisbane Times which said:
The Australian public is multicultural, so companies selling products and services domestically will often benefit from insights of those from different backgrounds. Companies who want to export? Even more so.
However, the article goes on to suggest quotas and targets which I don’t think are the answer to improving any type of diversity. All the same, it is good to see the focus on other types of diversity. As the article said in the quoted extract above, certain types of companies may feel they value a particular type of diversity over others and prioritise it. If we want companies to truly engage with these issues, they should be given the leg room to decide their priorities and then work towards it. Otherwise, we will end up with a bunch of different quotas/ targets for various types of diversity with token compliance. As I explain in my new working paper (Strengthening Boards Through Diversity) such token compliance will not only be ineffective in terms of corporate governance benefits but also impose costs on the diverse candidates who are so appointed.