What Directors Are Thinking: Lawrence A. Cunningham

Lawrence A. Cunningham 

Director, John L. Weinberg Center for Corporate Governance; director, Markel Group, Constellation Software Inc.

What kind of diversity is needed on boards right now?

Before asking what sort of diversity is important on boards at this time, we should first ask, “What is the board’s purpose?” The standard expectations are threefold — overseeing management, helping to shape strategy and serving as stewards of the corporate enterprise. To fulfill those functions, directors must bring business fluency and the judgment to ask discerning questions — the kind that get to the heart of a matter, stimulate productive thought and prompt potential actions, all without dominating discussion or undermining management.

Achieving that requires a group of individuals who are wise and judicious yet sufficiently varied in how they see the business to ensure no essential question goes unasked. The most relevant forms of diversity, then, are role and perspective diversity —drawing from different business functions (such as operations, finance, strategy, technology or marketing) as well as different vantage points on the company’s industry or sector. For example, a board in the consumer goods industry may benefit from having directors with experience not just in retail, but in logistics, branding or digital distribution. In publishing, directors with backgrounds in education, libraries or content platforms may bring useful insights. These combinations can offer potentially valuable context, improve decision-making and reduce the hazards of groupthink.

Demographic diversity — gender, race, ethnicity — has rightly received sustained attention for decades. The progress is notable. Board gender composition has shifted from token numbers of women to near parity on many boards. Racial and ethnic representation, once negligible, has grown meaningfully, particularly in the past decade. But in recent years, intense and at times disproportionate emphasis on demographic criteria has produced backlash and fatigue. A more balanced approach now calls for viewing these characteristics not as ends in themselves, but as elements within a broader evaluation of what each director contributes to the board’s collective capacity. Demographics may enrich perspective, but they are no substitute for business fluency, sound judgment or a relevant frame of reference.

Professional experience across industries, disciplines and roles can enrich board discussions, particularly when paired with independence, discernment and a commitment to the company’s long-term success. Ideally, directors should be the kind of people willing to buy the company’s stock with their own money, which demonstrates belief in the enterprise and alignment with those they serve. Ultimately, a truly effective board unites diverse expertise with shared commitment to the company’s enduring success. A board’s effectiveness lies not in a checklist of traits, but in its collective ability to function.

To be considered for “What Directors Are Thinking,” contact Bill Hayes at [email protected].