Corporate Board Diversity
Customers, investors and the general public are demanding that the board of directors of a business reflect the demographics of the society it serves. Adding diverse members increases the effectiveness of a board and gives it an overall positive image as an employer. However, diversity in a corporation’s boardroom could be different for different boards and organizations.
The most widely used definition of diversity involves gender and ethnicity, but the benefits of diversity go beyond these basic traits. Research suggests that boards with a wider diversity of experience are less prone to groupthink. The idea is that directors with different backgrounds and perspectives are more at challenging the other’s views to create robust discussions, test alternatives and produce more informed decisions than directors with similar backgrounds.
It’s hard to argue with the need for greater diversity in corporate boards however, it isn’t easy for chairpersons and executives to identify the best candidates. Some advocacy groups provide lists of potential candidates for board positions however they aren’t often part of the networks of board chairs or have not been considered for the top management positions.
Boards can begin by conducting an audit of their current profile. Then, they can utilize their annual evaluations to eliminate members who aren’t productive and discover new talent that reflects the future prospects of the business. They can also use their network to identify leaders who aren’t included in their group of directors.