Board diversity has been a hot topic for years, but the reasons are stacking up to make 2021 a year to make board diversity a requirement. Investors are pushing for more action on board diversity. In December 2020, the Nasdaq Stock Market filed a proposal to encourage greater board diversity and enhanced diversity disclosures. Plus, research continues to show diverse boards tend to have improved financial performance.
Most boards understand the benefits of board diversity – more productive discussions, better decision making and improvements to brand and reputation. But tackling board diversity including attracting the right talent and removing unconscious biases can be downright challenging.
To help close the inclusivity gap, here are 5 practical steps you can take to start improving board diversity in your organization this year.
Establishing and executing a board diversity policy is new for many boards and it’s wise to ask for expert help. Consider adding HR expertise at your boardroom table, just as you commit to having specific domain expertise like legal or finance. If your board is small and limited in seats, engage an expert consultant to help you to set a board diversity policy.
Audit what diversity means to your board today while considering the future requirements for representation; do you want to be reflective of the members you serve, your customers, or who your customers will be in two years. Ask questions, encourage challenging discussions, and understand the current perspectives. These conversations may be challenging so be sure to use helpful guides and tools. For example, using a common vocabulary can help avoid misunderstandings and misinterpretations. We suggest using the Racial Equity Resource Guide glossary.
To ensure the governance of the board includes diversity, prepare a formal policy to outline the commitment to equality. A clearly defined policy, made widely available, with impartial recruitment goals will increase the organization’s opportunity to benefit from all available talent.
If your current net cast isn’t attracting the diversity you’re looking for, try tapping into new talent pools and communities. Consider many of the board services that now exist like the Boardlist to help our companies find qualified diverse board members. Recruiting outside of your geographical area should be challenged too. As the world gets more comfortable working remotely, invest in new technologies to mitigate the challenges of location and time zones.
Take a fresh look at your organizational materials, performance and recruitment processes for potential biases. For example, requiring past CFO experience rather than industry experience can bring possible age and socio-economic biases in applicants. Remember, you’re not only checking boxes to meet requirements, you’re recruiting to empower.
In boardrooms and C-suites around the world, diversity and inclusion are shifting from buzzwords to reality. Activating leadership diversity requires an ongoing commitment to deliberate and sustained action within an entire organization, not quick fixes or superficial recruitment. Board diversity action is hard work, but the outcome is well worth it.
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Ian Warner, President & CEO
Ian has been leading Aprio since 2010 and believes in passionate leadership, values, transparency and personal accountability. Before joining Aprio, he was the COO of Canada’s largest credit union, Vancity. He is a lifelong learner and marathon runner.