In 2018, the blue haven of California became the first state in the nation to mandate diversity for publicly traded companies headquartered within its confines. Under the new law, such corporations must have at least one woman on their board of directors by the end of 2019. By the end of July 2021, boards with five members must contain at least two female members, and there must be three women on boards with six or more members.
Despite the obvious constitutional concerns over the legislation, acknowledged even by arch-progressive then-Governor Jerry Brown as he signed it, the law has yet to face a court challenge. That likely has to do with the fact that it would be a public relations disaster for a corporation, or even a slighted male executive, to challenge the mantra of diversity in California. This is the unspoken climate of intimidation that comes with the cult of “inclusion” in modern times.
Illinois is now attempting to take things a step further, with a bill that has already passed the state House and is being taken up by the Senate, mandating that blacks, as well as females, be placed on the boards of corporations headquartered in the Land of Lincoln. Hispanics immediately cried foul, and Latinos were quickly added to the list of required board members.
That still may not be enough to assuage Democrats with eyes firmly fixed on all the various colors of the progressive rainbow.
Embrace Diversity, or Else
“[W]e have a lot of people that have expressed some concerns here that this bill really is not as inclusive as some would like it to be,” Senate Commerce and Economic Development Committee Chairwoman Laura Murphy said of the legislation, “because there are various groups that are left out of the discussion.”
The resulting chaos of including every possible demographic group under the sun, from Asians to homosexuals to left-handed redheads, surely should be seen as an impediment to companies that simply want to add the most qualified people to their boards. Here lies the heart of the matter. For those pushing the mandatory diversity legislation, the mere fact of having a variety of human difference in and of itself makes for better corporate boards. Which leads to the interesting question: Are free American citizens allowed to disagree with such a notion today? The purpose of passing laws would seem to indicate an effort is underway to ensure that they are not.
“Data from the Credit Suisse Research Institute and Harvard Law School Forum on Corporate Governance shows that companies with diverse corporate boards perform better than their competition in a variety of ways, including profitability, risk management, share price and social governance,” declares Rep. Camille Lilly, a House sponsor of the Illinois bill. This is a theme repeatedly touched upon by supporters of corporate diversity legislation.
“We find clear evidence that companies with a higher proportion of women in decision-making roles continue to generate higher returns on equity, while running more conservative balance sheets,” a 2014 Credit Suisse report did indeed emphatically state. “In fact, where women account for the majority in the top management, the businesses show superior sales growth, high cash flow returns on investments and lower leverage.”
Losing the Individual
However, Katherine Klein of the University of Pennsylvania’s Wharton School finds this to be an example of “cherry picking” from among “hundreds of studies” on gender diversity to reach a sweeping conclusion. “When you look at the meta analyses on these — which are statistically rigorous efforts — they essentially find zero relationship between the diversity and the gender diversity on the board and company performance. There is no business case for putting women on the board. There is no business case for putting men on the board. Gender has zero impact.”
In other words, there are competent and incompetent businesswomen, just as with males. To claim that adding females to corporate leadership in and of itself magically leads to proven financial success is on its face an absurd statement to make. Yet this belief is being used to push state legislatures to codify diversity into law.
“I have also worked on teams that have great diversity and teams that don’t,” Shannon Gordon, CEO of theBoardlist, who supported California’s mandatory diversity law, said in an interview posted at Medium.com. “The quality of debate, quality of outcome, and culture between the two are dramatically different. There’s plenty of data to show that diversity leads to better performance and my personal experience has been no different.”
Gordon is using the power of law to require that her “personal experience” become enforced business practice for corporations operating in a given state. Patricia Lenkov, president of Agility Executive Search, uses a similar argument in an article for Ellevate Network, an organization for professional women, in which she encourages companies to include homosexuals on their boards:
“The assertion for diversity in the boardroom has also been shaped by the fact that diverse groups make superior decisions. Decision making is central to the work of boards, and often the issues they are faced with are complex and multi-dimensional, so the decisions must be reflective of this. Without diversity, the pressure to conform may prevent debate and constructive discourse. Decision making may thereby be sub-optimized.”
Again, this is nothing but sheer personal opinion. The promoters of mandatory diversity are telling all Americans that your personal qualities – your intelligence and gifts, your drive and dedication – do not matter. Your group identity – the color of your skin, your gender or what have you – is what makes all the difference. It’s quite a dreary belief system when examined closely. People are certainly entitled to believe what they like. It should be beyond the pale, however, to force Americans to accept such an individual-negating worldview in their own places of employment. If Illinois passes its bill, let us hope a court challenge quickly follows.
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