Corporate Board Diversity

Corporate Board Diversity

An increasing number of customers, investors and the public demand that the composition of a company’s boards of directors reflect the composition of the people it serves. Diversity in the board can increase a board’s efficiency and boost its credibility as an employer. But diversity in a corporate boardroom could be interpreted differently by different companies and boards.

The most popular definition look at this now of diversity involves ethnicity and gender. However, the benefits of diversity extend beyond these basic aspects. Research has shown that boards that have a diverse set of functional backgrounds are less at risk of groupthink. The idea is that directors with diverse backgrounds and perspectives are more able to debate each other’s opinions to create solid discussions, the possibilities and make more informed decisions.

It’s hard to argue against the need for more diversity on corporate boards however, it can be difficult for executives as well as board chairpersons to determine the most qualified candidates. Some advocacy groups offer lists of possible board candidates, but they are not often in the networks of board chairs or have never been considered for top management positions.

Boards can start by conducting an audit of their current member profile. Then, they can use their annual evaluations to remove members who are no longer productive and identify new talent that reflects the future prospects of the business. And they can tap into their network of advisers and consultants to find trailblazers who aren’t part of their standardized director pool.