Corporate Board Diversity

An increasing number of investors, customers and the public demand that the composition of a company’s board of directors reflect the demographics of the population it serves. Diversity in the board will improve the efficiency of a committee and improve its reputation as an employer. Diversity in corporate boardrooms is different for different boards and companies.

The most widely used definition of diversity is gender and ethnicity, but the benefits of diversity extend beyond these typical traits. Research suggests that boards with a more diverse variety of experiences in the workplace are less likely to fall prey to groupthink. The theory is that directors with different backgrounds and perspectives are better in arguing against the other’s views to produce solid discussions, stress-test alternative ideas and make better-informed decisions than directors who have similar backgrounds.

It’s hard to argue against the necessity for more diversity on corporate boards However, it isn’t easy for chairpersons and executives to identify the best candidates. Some advocacy groups provide lists of potential board members, but these individuals are typically not members of the chairpersons’ networks or haven’t previously been considered for a position in top management.

Boards can begin by examining their current member profiles. Then, they can utilize their annual evaluations to get rid of members who are no longer productive and to find new talent that best reflects the future prospects of the business. They can also leverage their network to identify pioneers who aren’t part or group of directors.

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