California has become the focus of a battle over how companies should address the lack of diversity on their boards: Should they actively seek out directors who aren’t White males, or should they simply seek to treat all candidates equally? A Superior Court judge has ruled in favor of the latter approach, declaring unconstitutional a law requiring publicly traded companies based in the state to add as many as three board members from under-represented groups.
This is unfortunate, because the law was actually working.
Nobody in the California case challenged the idea that diversity is desirable. As the judge rightly put it: “A homogenous board is vulnerable to stagnant thinking and common assumptions; it is also less flexible in responding to challenges. This results in poorer business practices, less innovation, and ultimately less profit.” The key question in the legal challenge — filed by the conservative group Judicial Watch — was whether the state constitution allowed the legislature to advantage some groups over others in its efforts to address the problem.
