SEC Chairman Mary Jo White is strongly considering mandating corporations disclose their boardroom makeup, focusing on race and gender. Some feel that this may ultimately lead to a quota system, forcing companies to hire or promote under represented groups like women and African Americans. This, in some people’s mind, will hurt companies ability to operate and may affect its bottom line.
And then the world will end and everyone will die!!
The truth is, mandating companies release boardroom makeup numbers is a good concept. The only organizations who will have issues with this possible rule, are those who do not have much diversity at their higher levels. This additional information allows for investors who care, to support companies who not only are growing in profit, but are also reflecting the values of said investor.
The argument that the possible boardroom rule will make for large investment decreases if a company has low diversity numbers isn’t a strong. Look at Google and Facebook. Their stock prices are hitting all time highs despite their acknowledgement of having terrible employee diversity statistics. What these numbers will do is identify where American companies currently stand and grant an opportunity to create ideas for improvement with those who want to.
PS: There are countries that have quota systems for corporations. Germany, Norway, France, Spain, and the Netherlands to name a few, all have gender quotas to help drive opportunities for women. Although, I do not support a quota system for boardroom diversity, I do support a reward system for companies who excel at it. Similar to the Billion Dollar Roundtable, a group of companies who spend in excess of a billion dollars with minority and women owned suppliers, a group or reward for those companies who reach 50% or more when it comes to boardroom diversity would be a good way to push for greater representation.