Corporate Board Diversity
A growing number of customers, investors and the general public are demanding that the composition of a company’s board directors reflect the population it serves. The addition of diverse members will improve the efficiency of a committee and enhance its image as an employer. However, diversity in a corporation’s boardroom could be different for various boards and companies.
Diversity is often defined in terms of gender and ethnicity. However, the benefits of diversity go far beyond the traditional attributes. Research suggests that boards that have a diverse set of functional backgrounds are less prone to groupthink. The idea is directors look at this now with different backgrounds and perspectives are more able to debate each other’s opinions to produce robust discussions, test alternatives and make more informed decisions.
It’s hard to argue against the need for greater diversity on corporate boards but it isn’t easy for board chairpersons and executives to select the best candidates. Some advocacy groups provide lists of candidates for board members, however these candidates aren’t typically part of the chairpersons’ networks or haven’t previously been considered for a job in top management.
Boards can begin by conducting an audit of their current member profile. They can then use their annual evaluations to remove members who are no longer productive and to find new talent that is reflective of the future prospects of the business. They can also use their networks to find pioneers who aren’t part or group of directors.