Diversity on the board of directors has numerous benefits for both the organization and its stakeholders. As the CEO of Boardsi, a Board recruitment company, and The Corporate Matchmaker book author, who has studied and taught about diversity and leadership, I believe that having a diverse board of directors is crucial for effective and responsible governance.
One key benefit of diversity on the board of directors is the ability to bring a range of perspectives and experiences to the decision-making process. A diverse board is more likely to consider a wider range of options and to be more open to new ideas, leading to better decision-making and problem-solving. This is particularly important in today’s complex and rapidly-changing business environment, where organizations must be able to adapt and innovate in order to succeed.
Another benefit of diversity on the board of directors is the ability to better reflect the diversity of the organization’s stakeholders. This is important for both ethical and practical reasons. From an ethical standpoint, it is important for organizations to represent the interests of all of their stakeholders, including customers, employees, and shareholders. From a practical standpoint, having a diverse board can help organizations better understand and meet the needs of their diverse stakeholders, leading to improved relationships and increased trust.
In addition to these benefits, research has shown that diverse boards are associated with improved financial performance. A study by McKinsey & Company found that companies with diverse boards had a 35% higher return on equity and a 34% higher total return to shareholders compared to companies with less diverse boards. This is likely due to the ability of diverse boards to bring a range of perspectives and experiences to the decision-making process, leading to better decision-making and problem-solving.
Despite the numerous benefits of diversity on the board of directors, many organizations still struggle to achieve diversity at this level. This can be due to a variety of factors, including a lack of diversity in the pool of potential board members, unconscious bias in the selection process, and a lack of commitment to diversity at the organizational level. To address these challenges, organizations can take a number of steps, including setting diversity goals and targets for the board, implementing diversity and inclusion training for board members and those involved in the selection process, and actively seeking out and considering candidates from diverse backgrounds.
In conclusion, diversity on the board of directors has numerous benefits for both the organization and its stakeholders. It leads to better decision-making, improved relationships with diverse stakeholders, and improved financial performance. While achieving diversity on the board can be challenging, there are a number of steps that organizations can take to increase diversity at this level, including setting diversity goals, implementing diversity and inclusion training, and actively seeking out diverse candidates. As an expert in diversity and leadership, I believe that it is crucial for organizations to prioritize diversity on the board of directors in order to be effective and responsible in today’s complex and rapidly-changing business environment.
Source: Martin Rowinski