Alongside its critical governance role, your board acts as a reflection of who you are as a business. It’s the embodiment of your commitment to financial responsibility, sustainability, innovation and inclusivity. As such, board composition is a critical consideration when it comes to making sure your business ‘walks the talk’.
Leadership consultancy Korn Ferry recently published research on The Optimal Board, which discusses how organizations can improve the performance of their board of directors by focusing on inclusion and personal development.
Because, one thing is clear. While organizations have made strides on bringing new faces and ideas in at board level, there’s still a lot of work to do. “Board chairs are very influential, and most chairs and non-executive directors are older, white men,” reveals Anthony Goodman, Senior Client Partner and Head of Board Effectiveness at Korn Ferry. “A lot of board chairs are unaware of any lack of inclusivity.”
Being proactive about the composition of your board of directors reaps rewards. Campaigns such as the 50/50 Women on Boards and International Women’s Day have brought about change. The FTSE Women Leaders Review revealed that women occupied 42% of board positions in the FTSE 350 in 2024, up from 24.5% in 2017. But there are still only 10 female FTSE 100 CEOs.
It’s much more than a box-ticking exercise. The Korn Ferry research reveals that 81% of board members surveyed recognized the benefits diversity brings.
“Diverse teams tend to make better decisions. Investors want diversity because boards are more likely to come up with a smart answer if you have a diverse background and skill set,” Goodman suggests.
Encourage voices from across the whole board of directors
However, the benefits will only materialize if directors are being heard. “A corporate governance myth is that new board directors shouldn’t speak in their first year. That’s absurd,” says Goodman.
“They have diverse points of view and they should be bringing their different experiences to benefit the organization.”
Onboarding is a critical point at which new board members should learn that their voice is valued, and how to use it. This should be supported by a mentoring program to enable them to build stronger relationships and understand how they can contribute.
However, the research shows that only 38% of board members had a mentor or a buddy, which can have a negative impact on collaboration and inclusion.
“We were working with two executives in an American business. A man and a woman, both African-American. They would meet before the board meeting to decide who would speak so as not to appear pushy and look like the black directors were ganging up on the white ones. What a missed opportunity to have a richer conversation and more diverse opinion,” Goodman warns.
A missed opportunity indeed, especially given the research’s findings that 70% of directors of color feel they have impacted board decisions compared to 78% of white board directors.
It’s clearly a very different thing to be included, as opposed to simply being invited. In the research, several directors voiced concerns about tokenism, or felt they were pigeonholed as diversity advocates. They also felt a pressure to conform, which means organizations aren’t benefiting from their skills and experience.
Board composition best practices
There are two ways organizations can achieve the optimal composition of the board of directors. First is to codify the board culture – write it down. “Collectively you can have the conversation about board culture and make sure it’s flexible so, as new people join, the culture welcomes them and doesn’t stifle them,” Goodman advises.
The second is to give feedback. Encourage everyone to use their voice and create channels – like the mentoring or buddying – to provide constructive feedback. In the survey, only 58% got regular feedback and women got less feedback than men.
“It’s incumbent on chairs or directors to be giving and receiving feedback,” Goodman insists. “It’s part of the job and one way to help is to pick people for those roles who already have these skills. Feedback isn’t about criticizing people, it’s about helping people do their job. It should be thoughtful, impactful and invited.”
Board composition is an ongoing challenge. To cultivate the right mix of people, you need to be flexible enough to invite change and transparent enough to foster conversation from every corner. Diversity is only the first step in becoming a fully-functioning board of directors, inclusion must be actively pursued.
“Every time a new director joins, it changes the culture. You should be open to that,” Goodman concludes. “All boards can improve. You can’t rest on your laurels.”
Anthony Goodman is a Senior Client Partner at Korn Ferry and the leader of the North American Board Effectiveness practice, based in the Firm’s Miami and Boston offices.
