Corporate Board Diversity
Investors, customers and the general public are insisting that the board of directors of a business reflect the demographics of the community it serves. The inclusion of diverse members improves the effectiveness of a board and also gives it an overall positive image as an employer. But diversity in a corporate boardroom could be interpreted differently by various boards and companies.
The most common definition of diversity focuses on ethnicity and gender, but the benefits of diversity extend beyond these basic characteristics. Research suggests that boards with a wider mix of functional experiences are less likely to fall prey to groupthink. The idea is that directors with diverse backgrounds and perspectives are more in arguing against their own views in order to have strong discussions, stress test alternative strategies and make better informed decisions than directors with similar backgrounds.
It’s hard to argue against the need for more diversity on a corporate board, but it may be difficult for executives and board chairs to identify the most suitable candidates. Some advocacy groups provide lists of possible board candidates however, they aren’t typically in the www.board.international/how-to-transition-to-paperless-board-meetings/ network of board chairs or have never been considered for the top management posts.
Boards can begin by auditing their current member profiles. They can then make use of their annual evaluations in order to eliminate members who are no longer productive and to find new talents who represent the future state of the business. They can also leverage their network to identify leaders who aren’t included in their group of directors.