Diverse Boards: Do They Deadlock More?

Diverse Boards: Do They Deadlock More?

It’s the new corporate board ideal, a board composed of directors of all different ages, ethnicities, and genders, each with unique expertise to help guide the organization to new heights.

But for all the good a diverse board can bring, a new study by a trio of professors says that it can have a surprising—and serious—side effect: corporate deadlock. Indeed, some of the most diverse boards wind up not implementing any new policies at all, according to a controversial new study. The insights that diverse, independent directors have as individuals don’t always gel into a cohesive board. “Heterogeneous director biases do not cancel out,” according to Deadlock on the Board, a new study from professors at Washington University in St. Louis, Boston College University, and Columbia University.

Deadlock already is a common issue in boardrooms. Two-thirds (67%) of directors report the inability to decide about some issues in the boardroom. Worse, 30% say they have encountered a boardroom dispute that threatens the very survival of the corporation. Deadlock can lead to entrenched management and other problems for the organization, as well. But the idea that a diverse board can exacerbate deadlock is not something many directors may think about.

That said, boards should not use a fear of deadlock as an excuse to keep their boards looking and sounding the same, says Nels Olson, vice chairman of Korn Ferry and co-leader of its Board & CEO Services practice. “The alternative to diverse views is groupthink,” Olson says. Other reasons for deadlock on the board include how long directors have been on the board and whether shareholders elect directors all at once or on staggered terms.

To read more about how to balance the vision for a diverse board while still avoiding deadlock, read on at: https://www.kornferry.com/institute/diverse-boards-do-they-deadlock-more?

And the full report at: https://www2.bc.edu/jeffrey-pontiff/Conference%20Papers/Deadlock%20-%202017-11-30.pdf

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