SEC approves Nasdaq's plan to require board diversity | Hacker News Reader

SEC approves Nasdaq's plan to require board diversity

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17 pointswalterbell15 comments

I thought race/sexuality being a part of the hiring decision was the problem?

I think that this policy, and similar ones, will likely hurt the people it purports to protect. The perception will now be reinforced that women or minorities hired to boards are to "meet quota".

Also interesting that this article implied that some of these problems were fixing themselves, with the rate of female and black directors increasing.

If you believe that there is systemic racism, then you believe there is an arbitrage opportunity, which for profit companies are likely to take advantage of.

(This implementation however doesn't appear to be the worst implementation of this idea, so that has merit)

I don't suppose there'll be a requirement for someone from a poor background though. Not trolling, honest observation.

Or public colleges. A handful of elite schools continue to dominate decision making in corporate America. It’s disappointing. I’m from an area with a significant percentage of poor white people and the universal view is these types of policies blatantly discriminate against them.

Poor people can still become rich but you can't undo 300 years of racism, and policies like redlining. Also there HAVE been provrams for the kind of thing you are asking for, the home loan program after world war 2 where only 2 black soldiers were given loans and the homestead act where spccifically white people were given free land. Then there was stuff like taking away Bruce's beach under imminant domain. These policies are aimed at fixing a wrong that caused such lopsided poverty in one race.

I wonder how it applies to non-American companies listed on Nasdaq. I'm not sure who would count as a racial minority for Infosys.

Are these policies aimed at discriminating against "diverse" candidates?

Now on a board there will be those who got there on merit, and those who maybe got there on the quota or merit...

- so, how did you get there?

- well... they needed a woman to meet the quota

My experience is that this is a good thing for shareholders. The current qualifications -- part of a network -- aren't actually very merit-based or constructive. Boards composed of rich, white, Anglo-Saxon males tend to not understand customers or employees very well.

A bigger step forward would be international representation. Companies mess up or completely miss markets like the billion plus people in Africa, the billion plus people in India, or the billion plus people in Muslim-majority countries. Even nominal international representation would be huge.

People tend to fetishize the types of people on boards, but I've worked with a fair number, and the skills which they have -- being able to become a board member through complex political and networking games -- aren't actually very well-aligned with maximizing shareholder value.

If it’s better for shareholders, then why didn’t they vote for it already?

Your post implies that you believe that the white male board members are inept, there only for their network, and the new diverse members will be more competent in the specific business, better with customers and employees.

Please enlighten us with the evidence that supports this assertion.

My evidence is having seen boards operate. I wouldn't quite use the word "inept," but I would say the in most companies, at least 10% of the workforce would do a better job than the board members.

You live in a democracy. If your municipal politicians were corrupt, why didn't you vote them out?

The answer is that information is that the efficient market hypothesis isn't correct. Every so often, I receive a list of board members to vote for on the few stocks I hold. The list is as long as the number of seats. I know nothing about them except for at best a 1-paragraph description. If there were more, it would not worth my time as an individual shareholder to do more research.

That's a minority of my investments. Most are in index funds and mutual funds. There, someone votes on my behalf. I'm not sure who -- I know which company, but absolutely nothing about the person or process.

And yes, I've seen companies I've worked at or followed closely target 300 million person markets instead of 7 billion person markets.

That has zero relevance to your basis for the assertion that the new diverse members will be different. My observation is that diversity seats are given to an even smaller number of people that have even less involvement with the many businesses they sit on.

America is 30% African American or Hispanic. Most boards have no idea about how to target products to those cultures. Those are blind spots and missed opportunities.

If I had my druthers, a corporate board would include:

* An employee

* A customer

* 2-3 people from non-US countries

* A person from a minority American community (e.g. AA or Hispanic)

* .. and so on.

As is, boards include rich white CEOs, or sometimes professors, or similar, who have absolutely no first-hand experience with a lot of what's needed in the boardroom.

That’s a reasonable value proposition for the type of company that would be relevant for. I think a more relevant role for a minority board member in the way you describe would be marketing partnerships with other firms that would help reach that demographic. However, this would still be, as all board members are, chosen for their connections, probably even more so than the old fogeys that grew up with the business. But fundamentally I see your point, and my guess is that the firms that this is relevant to know their business better than anybody else, and have been trying their best to find someone that will be good for the business. If I had to guess at the difficulty, it’s that well-connected women and minority business leaders face so much pressure to deliver social justice rather than profits, and these businesses might not be interested in sponsoring that.

Your board makeup is very idealistic, as in, assuming that boards are active participants in the business. Think investor relations and partnerships. Expect the female and minority multiple representation trend[1] to accelerate with this mandate.

[1] https://corpgov.law.harvard.edu/2021/06/25/the-board-diversi...

I agree with your assessment about how minority hires happen in practice.

There are a lot of frictions, aside from pressure for social justice over profits. There are a lot of qualified minorities, but they're rarely hired into these roles. In most cases, boards have no way to identify qualified people from groups that don't behave like them. In many cases, the hired minority is either:

- an unqualified token member (there are people who serve on swarms of unrelated boards, since they're in the network and literally the only minority people know); or

- a person who might have a certain skin color, but is culturally a WASP, and has no insights into those communities.

I don't think marketing partnerships are at all helpful relative to having actual people from communities in the business. Cultural assumptions permeate every business decisions, and serving markets effectively can't be retrofitted. US companies often crash-and-burn with this approach (see all the failed entries especially into China, but more broadly as well).

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