Poised for Change? Boardroom Diversity Survey

Melissa Aguilar is Director of Content Creation at the KPMG Board Leadership Center, KPMG LLP. This post is based on her KPMG memorandum. Related research from the Program on Corporate Governance includes Politics and Gender in the Executive Suite (discussed on the Forum here) by Alma Cohen, Moshe Hazan, and David Weiss; Will Nasdaq’s Diversity Rules Harm Investors? (discussed on the Forum here) by Jesse M. Fried; and Duty and Diversity (discussed on the Forum here) by Chris Brummer and Leo E. Strine, Jr.

A premium on thinking differently

Recent progress—and the continued push—toward greater boardroom diversity comes at a pivotal time for corporate America. The ability to challenge long-held assumptions; understand megatrends; and effectively calibrate strategy, risk, and talent in the context of heightened stakeholder expectations puts a premium on thinking differently.

To better understand how directors view the opportunities and challenges of enhancing diversity in the boardroom, the KPMG Board Leadership Center surveyed more than 700 directors around the world.

Among the U.S. respondents to the survey, it’s clear that:

  • Many directors would make moderate changes to their board’s composition if starting from a clean sheet
  • Directors have concerns about blind spots and missed opportunities due to a lack of diverse views.
  • Sixty-nine percent of directors say board diversity of composition and thinking is relevant or very relevant to the company’s consideration of its role in society.
  • While a majority of directors say board leadership is effective at drawing out the views of all members, achieving better boardroom discussions is a work in progress.
  • Racial and ethnic diversity and technology and digital experience continue to be in high demand.

These trends are also reflected in other countries around the world, with notable variations. (See global results in the complete publication, available here.)

We hope these survey results—and questions—help you drive robust discussions about diversity in your own boardroom.

Key takeaways

Many boards are poised for change

A slight majority of directors (52 percent) say their board would be moderately different if they rebuilt it to meet the needs of today and for the future, while 4 percent said their board would be completely different.

While all respondents anticipate turnover in their boardrooms in the next several years, the most commonly cited reason for the recruitment of new directors is the replacement of a retiring director (73 percent). Slightly more than half (51 percent) say recruitment of new directors would be out of strategic necessity or to stay competitive, while a combined 42 percent cite pressure to fill perceived gaps in diversity by either investors or stakeholders.

Broader C-suite experience is cited as the most important criteria when recruiting new directors, along with industry background and technology or cybersecurity experience. Interestingly, CEO experience and prior corporate board experience, once viewed as crucial for board consideration, are not rated most or second-most important by those responding.

If you were to rebuild your board to best meet your company’s needs for today and the future, how different would the board’s composition be—including diversity of skills and backgrounds—from its current makeup?

In your view, which of the following reasons are most likely to prompt your board to recruit new directors over the next several years? (Select up to 3)

Concerns about blind spots and missed opportunities

Thirty-eight percent of directors polled say they are moderately concerned that the lack of diverse views in their boardroom hampers insightful discussions or identification of blind spots or important issues, while 4 percent say they are extremely concerned. Among 67 respondents who self-identified as a member of an underrepresented group, one-third identified challenges, including dominated discussions (22 percent), discounted opinions (12 percent), and lack of an encouraging board culture (10 percent).

What additional type(s) of diversity would be most beneficial to your board based on the company’s long-term strategy?

How relevant is the board’s diversity—of composition and thinking—to the company’s consideration of its role in society going forward?

If you identify as a member of an underrepresented group (gender, race, ethnicity, or sexual orientation), what challenges do you face in having your voice heard during boardroom discussions?

[Results are based 67 respondents who self-identified as a member of an underrepresented group.] [1]

Achieving board diversity: Perceived impediments

Directors cited recruitment from narrow pipelines (among the CEO and board as well as outside search firms) as impediments to recruiting diverse directors. Almost a third of the respondents who identified as part of an underrepresented group cited the CEO/board’s inclination to recruit from a narrow social/business circle as the main impediment to recruiting more diverse candidates, followed by the board not having identified a need for greater diversity and a lack of qualified candidates. Yet, 30 percent of all directors surveyed continue to perceive a lack of qualified candidates as an impediment.

What are the greatest impediments to recruiting diverse board candidates? (Select all that apply.)

Rate the importance of the following criteria when recruiting new board members:

The endgame: Better boardroom discussions

Forty-one percent of directors say board diversity of composition and thinking is relevant to the company’s consideration of its role in society, and 28 percent say it is very relevant.

When asked how trust and transparency are demonstrated in their boardroom, the vast majority of respondents say directors freely question the information presented to them (80 percent), management welcomes an open discussion (74 percent), and constructive criticism is encouraged (72 percent). However, the survey results suggest room for improvement in boardroom discussions of strategic issues. While the majority of directors describe those discussions as probing, insightful, and adding context, more than a quarter describe them as inconsistent or perfunctory. Nearly a third (32 percent) of the directors say board leadership is only somewhat effective in drawing out the views, ideas, and concerns of all directors, and another 10 percent say their board leadership is not effective at doing that—either controlling the discussion too much (6 percent) or lacking the leadership to draw others out (4 percent).

How would you describe the questions and observations offered by the board during discussions of issues that are of strategic importance to the company?

How are trust and transparency demonstrated in your boardroom? (Select all that apply.)

 

How effective is your board’s leadership at drawing out the views, ideas, and concerns of all board members?

U.S. survey respondents

Results are based on a survey of 111 U.S. directors conducted August–October 2021.

The complete publication, including footnotes, is available here.

Endnotes

1Of the 111 respondents, 44 (40%) selected answer choice: “I don’t belong to an underrepresented group.”(go back)

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