Board Diversity: Beginning to Unpeel the Onion

• Author: Amy J. Hillman
• DOI: http://doi.org/10.1111/corg.12090
• Published date: 01 March 2015
• Date: 01 March 2015

Board Diversity: Beginning to Unpeel the Onion

Amy J. Hillman

ABSTRACT

Despite progress understanding the costs and benef‌its of diversity in corporate boardrooms we continue to have many

unanswered questions. As questions begin to be partially answered, more questions arise. Here I explore those layers of the

boardroom diversity onion.

Keywords: Corporate Governance; boards of directors; diversity

Women and ethnic minorities look to the top of corpo-

rations, both the executive suite and boardrooms, for

evidence that they’ve made it, that times are changing and

that they are valued as equals. In many cases, what these

groups are looking for they don’t f‌ind.

So politicians and legislators in many countries in the

world have instituted quotas that boards of directors must

include 33–50 percent of women (Terjesen, Aguilera, &

Lorenz, 2014). In other countries it isn’t the government

requiring these changes but the weight of large institutional

shareholders and corporate board rating systems seeking to

pressure companies into adding diversity in the boardroom

(e.g., Institutional Shareholder Services, The Thirty Percent

Coalition [http://www.30percentcoalition.org]). Language

and rhetoric around these changes express a “value-in-

diversity” theme (Cox, Lobel, & McLeod, 1991; Milliken &

Martins, 1996), asserting that there is inherent value in

diversity.

Scholars, like those authors in this special issue, have simi-

larly sought to understand diversity in boards, but there are

many more unanswered questions than answers regarding

the benef‌its of boardroom diversity.

DIVERSE BOARDS AND

DECISION MAKING

Scholars studying diverse groups have found that decision

making improves with diversity. Creativity is higher and a

broader set of alternatives is considered, and f‌irms are more

innovative with diverse boards (Letendre, 2004; Miller &

Triana,2009; Nielsen & Huse, 2010). When groups are able to

consider more options, generated by having a more diverse

set of perspectives, their solutions are better. The broader set

of perspectives that diversity brings to group decision-

making processes helps avoid groupthink, status quo bias,

and other group-based decision biases (e.g., Milliken &

Martins, 1996).

A broader examination of issues is likely to lead to not

only better decision making but also better responsiveness

to media, employees, customers, and suppliers if questioned

about the rationale behind decisions. Media, analysts, and a

company’s primary stakeholders are sophisticated. Being

able to provide the rationale behind decisions and what

options were not chosen will enable the organization to

better communicate with stakeholders and get buy-in for

their decisions.

DIVERSE BOARDS AND ETHICS

Second, scholars studying differences in gender f‌ind strong

differences in ethical behavior between women and men

(Franke, Crown, & Spake, 1997; Kennedy & Kray, 2014).

Women are not only more ethical but ruminate over deci-

sions more than men (Knippen, 2014). By spending more

time considering decisions, women are better able to foresee

negative consequences. So diversity in the boardroom is

more likely to lead to moral decisions that are more ethical

than decisions made by a board of all men.

The neuroscience of decision making f‌inds that women

use both sides of their brain when making decisions

whereas men use only one, suggesting that decisions made

by women entail a broader consideration of implications

for multiple stakeholders/parties (Kansaku, Yamaura, &

Kitazawa, 2000). Decision making by men may be quicker,

but it may also be more singularly focused on the economic

costs/benef‌its without consideration of other decision

criteria.

*Address for correspondence:Amy J. Hillman, Dean and Rusty Lyon Chair of Strategy,

W. P. Carey School of Business, Arizona StateUniversity, PO Box 874006, Tempe, AZ

82587, USA. Tel: +1 480 965 3402; E-mail: amy.hillman@asu.edu

Corporate Governance: An International Review, 2015, 23(2): 104–107

© 2014 John Wiley & Sons Ltd

doi:10.1111/corg.12090

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