Most of us are already aware how essential diversity is in our modern world. But how is diversity important in the boardroom? And why is diversity good?
Diversity can have a big impact on the role of a board and its performance. That’s why it’s important to build a board culture that attracts and retains diverse talent from all walks of life. This means considering directors of different age groups, geographies, genders, ethnicities, professional backgrounds, expertise, and skill sets.
Most people have a tendency to surround themselves with like-minded people. However, this doesn’t make for the most effective group or board environment. Here are a few of the many benefits of diversity in the boardroom:
We’ll go through each in more detail in the sections below as we explore how diversity is important in the boardroom.
Productive conversations and debates aren’t always the easiest, especially in the boardroom. Emotions can run high when there’s a lot at stake, and everyone wants a chance to voice their opinion. In board meetings, directors discuss crisis response, major strategic issues, and complex processes, among so many other things. However, these kinds of conversations aren’t very productive if everyone simply agrees unquestioningly with every idea brought to the table, without first exploring other options.
The most productive discussions require diverse thoughts and opinions from diverse board members, especially with the complex issues that the world is facing today. Directors who positively impact the dynamics of the board, while challenging and improving on the ideas of others, are always the most useful. And though these kinds of conversations aren’t always easy, they help to make the board more successful and useful to the organization, in turn.
Diversity can also have a huge impact on board decision making. When boards are more diverse, groupthink is eliminated and creativity rules. Different perspectives allow for the best possible decision to be reached after productive debate.
After all, the best ideas emerge when the status quo is disrupted. Diversity in the boardroom sets the stage for tackling the same issue from a multitude of angles, and can even provide companies a competitive advantage when compared to their less diverse peers. With a diverse group of board members, you can be sure that directors will be more likely to explore all possible options to reach the best possible solution.
Having a diverse board can have impacts even beyond the boardroom. In fact, board diversity often trickles down throughout the entire organization and can have a positive impact on reputation and branding, making the organization and board “look” better to outside stakeholders.
Ultimately, a board should also reflect the organization’s shareholders and stakeholders. Research has also shown that these groups are often more comfortable with a board’s decision making process when the board reflects the diversity that exists within their workplaces and communities.
To successfully navigate our modern world, organizations are best served by a board with directors who have specialized skills, new perspectives, and a deep understanding of current trends. It’s also essential for boards to adapt to reflect the employees, communities, and customers their organization serves. Now that you understand why diversity is good for boards, let’s explore how you can support it with:
Make sure you understand what legislation is in place around board diversity in your area, and comply with it. For example, your country may have hard quotas, soft quotas, or disclosure requirements for gender diversity.
More legislation may be on the horizon as more and more governing bodies take notice of the importance of diversity and representation, so be sure to stay in the know and comply with new legislation once it’s been introduced.
When recruiting, make sure to cast a wide net. Look beyond personal networks and “look-a-likes” of your current board members. To attract the type of board members you’ve never had before, you need to use strategies you’ve never used before.
Consider seeking out candidates with unique backgrounds and experiences who will bring different viewpoints to tough conversations. Also take the time to think about what new directors from different backgrounds will expect from your board. Millennial directors will likely expect to use an intuitive software solution for managing board materials and meetings, for example.
While boards are making progress for diversity and inclusiveness, there’s room for improvement and board technology can help. Aprio’s board portal software helps keep directors engaged and ensures diverse voices are heard by:
If your board isn’t already using the Aprio board portal, we’d be glad to share how we can help you make board management and collaboration more efficient. Get in touch for a free tour of the software, and if you’re not quite ready, check out some of the other benefits of board portal technology now.