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Corporate Board Diversity

By 26.10.2023No Comments

Corporate Board Diversity

A growing number of customers, investors and the general public demand that the composition of a company’s board of directors reflect the makeup of the people it serves. Diversity in the board increases a board’s effectiveness and creates an improved image as an employer. Diversity in corporate boardrooms can mean different things to different boards and businesses.

Diversity is usually defined by gender and ethnicity. However the benefits of diversity extend beyond the traditional attributes. Research shows that boards with a more diverse background are less likely to be at risk of groupthink. The theory is that directors with a variety of backgrounds and perspectives are more in arguing against their own views to create robust discussions, test alternatives and make more informed decisions than those with similar backgrounds.

It’s difficult to argue against the need for more diversity on corporate boards however, it isn’t easy for executives and board chairpersons to find the most qualified candidates. Some advocacy groups offer lists of potential candidates for board positions, but they are not typically in the network of chairpersons or have never been considered for top management post.

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 discover new talent who reflect the future of the business. Additionally, they can use their network of advisers and consultants to find trailblazers who aren’t part of their group of directors.