Corporate Board Diversity
Investors, customers and the general public are demanding that the board of directors of a business reflect the demographics of the community it serves. Diversity in the board can improve the efficiency of a board and improve its reputation as an employer. Diversity in a corporate boardroom means different things to different boards and companies.
Diversity is often defined in terms of gender and ethnicity. However the benefits of diversity extend beyond these traditional characteristics. Research suggests that boards with a greater mix of different experiences are less prone to groupthink. The idea is that directors with diverse backgrounds and perspectives can better confront each other’s views to create robust discussions, stress testing alternatives and make informed decisions.
It’s difficult to argue against the need for more diversity on corporate boards however, it can be difficult for executives and chairpersons of boards to select the most qualified candidates. Some advocacy groups provide lists of candidates for board members, but these candidates are often not part of the chairpersons networks or haven’t been considered for a job in the top management.
Boards can begin by reviewing their current member profile. They can then make use of their annual evaluations in order to remove members that aren’t delivering, and find new talent who reflect the future direction of the company. They can also use their network to identify leaders who aren’t included in their homogenous director pool.