Diversity Laws Can Make a Difference

by Julie Graber | on 15 Oct 2020

“When this California company tried to build a diverse board, ‘it was really hard to find people.’ ”

The headline is somewhat misleading, but the story is a perfect example of how California’s board gender diversity requirements are having an impact. 

In the article, CEO of Shift Technologies George Arison discusses his company’s effort to recruit a diverse board prior to going public. 

Arison clarifies what he meant by “it was really hard to find people” by noting that “The people [I] know are mostly men.” It wasn’t that there weren’t qualified female candidates out there, it was that Arison didn’t know any.

Fortunately, since state law in California has established minimum gender diversity requirements for boards, Arison couldn’t confine his search for directors to just his network. Arison turned to an executive search firm to identify additional candidates for his board, which now has eight members, three of whom are women.

  • Victoria McInnis, a veteran of General Motors Co. including a stint as Vice President of Internal Audit and Chief Tax Officer 
  • Kellyn Kelly, most recently Global CMO for Hilton Worldwide
  • Emily Melton, Founder and Managing Partner at Threshold Ventures

Shift had one female director prior to the recent additions (Melton). 

Arison claims to have been motivated by more than the law to seek out additional female (and other diverse) directors, acknowledging the performance-related benefits of a diverse board as well as the diversity of the company's employee and customer base. 

It isn’t clear, however, that without the additional incentive created by California’s board diversity requirements, Arison would have worked as hard to round out his board’s demographic profile as he did. 

The law required a change in behavior - looking outside the CEO’s known network for new directors. And the changes in behaviors required by the law can lead to changes in attitudes. 

Let’s hope for Shift, it sticks. 

*By the end of 2021, boards of six or more directors are required to include at least three women. And thanks to legislation signed into law just recently, boards will also have to include at least one director from underrepresented race, ethnicity or the LGBTQ community.

Tags:  In the NewsWomen on Boards