Corporate Board Diversity
Customers, investors, and the general public are insisting that the board of directors of a business reflect the demographics of the society it serves. Diversity in the board increases the effectiveness of a board and gives it an improved image as an employer. Diversity in corporate boardrooms can mean different things to different boards and businesses.
The most commonly used definition of diversity includes ethnicity and gender, however the benefits of diversity extend beyond these traditional traits. Research shows that boards with more diverse functional backgrounds are less likely to be more prone to groupthink. The idea is that directors with different backgrounds and perspectives are better able to challenge the other’s views to produce strong discussions, stress test alternative strategies and make better informed decisions than those who have similar backgrounds.
It’s hard to argue with the need for more diversity on a corporate board, but it may be difficult for executives as well as board chairs to identify the most suitable candidates. Some advocacy groups provide lists of potential board members, but the candidates aren’t typically members of the chairpersons’ networks or haven’t previously been considered for a position in the top management.
Boards can begin by conducting an audit of their current members’ profiles. They can then use their annual evaluations to remove members who aren’t productive and discover new talent that best reflects the future direction of the company. They can also use their advisers and consultants to find pioneers who aren’t part https://board.international/how-to-encouraging-an-effective-advisory-board/ their standardized director pool.