Amazon came under fire last week after its board opposed a shareholder proposal to increase the diversity of the board. (Update: Amazon announced on Monday that it would adopt the shareholder diversity proposal.) CtW Investment Group, an activist shareholder group, requested that Amazon implement something much like the “Rooney Rule,” a requirement instituted by the NFL in 2003 that every team must interview at least one minority candidate for an open head coach or general manager position. In Amazon’s case, the proposal requires that “the initial list of candidates from which new management-supported director nominees are chosen should include (but need not be limited to) qualified women and minority cand idates.” Currently, all 10 of the directors on Amazon’s board are white, and seven are men.
What Amazon’s Board Was Getting Wrong About Diversity and Hiring
Amazon’s board recommended voting against a shareholder proposal that would require the board to consider women and minority candidates for director positions. The company’s communications representative suggested that using such a policy, similar to the Rooney Rule, might create a “check the box” approach to diversity and not produce real change. This suggestion seems to misinterpret research finding that interviewing not one but two women or minority candidates can make the difference and lead to their hiring. But Amazon’s resistance to a formal requirement about diversity isn’t unusual. Other research has shown that companies are often reluctant to change their board practices due to fear of change. CEOs who have pushed for diversity on their boards have been very focused on the benefits it would bring, while CEOs who haven’t tend to focus on the risks of change.