Corporate Board Diversity

Corporate Board Diversity

An increasing number of customers, investors and the public demand that the composition of a company’s board of directors reflect the composition of the population it serves. The inclusion of diverse members improves the effectiveness of a board, and can also create an image that is more favorable as an employer. However, diversity in a corporation’s boardroom can be different for various boards and companies.

The most popular definition of diversity focuses on ethnicity and gender. However, the benefits of diversity go beyond these basic aspects. Research suggests that boards with a more diverse mix of different experiences are less likely to fall prey to groupthink. The idea is directors who have different backgrounds and perspectives are more able to challenge each other’s perspectives to produce robust discussions, test alternatives and make more informed decisions.

It’s hard to argue with the need for more diversity in corporate boards, but it can be difficult for board chairpersons and executives to determine the most suitable candidates. Some advocacy groups offer lists of potential board candidates however they aren’t often part of the networks of chairpersons or have not been considered for top management positions.

Boards can begin by reviewing their current member profile. They can then use their annual evaluations in order to eliminate members who are no longer productive, and to find new talents who represent the future state of the company. They can discover here also use their advisors and consultants to find pioneers who aren’t part their standardized director pool.