In recent years, a paradox has emerged with respect to diversity on boards of directors. On the one hand, recognition of the value in diversity continues to grow. At the same time, progress with respect to diversity’s advancement and acceptance within boardrooms has stalled across many international contexts. For example, the 2024 Q1 Gender Diversity Index reveals that women now represent 29.7% of all Russell 3000 board seats, up modestly from 29.4% in Q4 2023. The GDI report suggests that companies are not prioritizing gender diversity on boards at the same level as they once did, partially due to the focus on other forms of diversity, such as race, ethnicity and sexual orientation.

Many corporate governance, legal, and advocacy frameworks make the case for diversity on boards by invoking the benefits of both visible diversity in terms of (under-represented) social identity groups (e.g. gender, race), and in terms of non-visible diversity, generally described as diversity of thought, experience – or cognitive diversity.

Yet, we know little about importance nuances of diversity. Specifically, what are the differences in one’s cognition and what do we mean by cognitive diversity? Boards and other human capital management experts need to better understand how cognitive diversity might be related to diversity of experiences and how these might be informed by one’s visible/demographic diversity (e.g. gender, race).

In terms of board efficacy and composition, these relationships are important. However, there has generally been little research into the effect of demographic diversity and its impact on cognitive diversity. In trying to get at this question, researchers recently found that boards composed of directors who have heterogenous tenure, experience, and gender are more likely to dissent. These researchers suggest that directors who have diverse qualifications and skillsets as well as the inclusion of female directors enhances cognitive diversity which in turn helps increase monitoring effectiveness.
In the US, regulations allow firms to claim inroads into board level diversity if they have diversity of skills and experiences, versus having a board that is made up of diverse identities. In other country contexts, like the UK and the EU, that is not allowed. There is debate however about whether more visible diversity in leadership ranks genuinely fosters diversity of thought – or whether women and ethnic minorities who end up being leaders are pressured into adopting culturally prevalent ways of thinking, behaving, and leading (suggesting a loss of cognitive diversity). Power dynamics within groups mean that boardroom diversity isn’t synonymous only with variety (of skill, perspectives) but also with disparity (of status, influence) among board directors according to research into different types of diversity. This disparity can influence to what extent directors and boards genuinely leverage their cognitive diversity.

This all points to a need to establish the relationship between diversity of identity (i.e. largely visible, demographic data) and diversity of thought (i.e. largely unobservable, based on cognition, experiences and skills). An important initial line of questioning for boards and other governance experts starts with the following:

a. When does diversity of identity positively affect board dynamics (e.g. in creative situations, consumer facing firms)?
b. How does cognitive diversity show up in the boardroom dynamics? How does identity show up? How is the link between these two types of diversity experienced in the boardroom (by minority directors, and other board members)?
c. Is cognitive diversity a way to sidestep a focus on diversity of identity? What it the firm’s motivation for doing such?
d. How can we make the argument that both types are needed?