What’s Holding Back More Diversity on the Board?
Diversity on a board of directors has so many benefits that it’s difficult to count.
Still, when hearing statistics such as the fact that only 26% of seats are taken up by women on the S&P 500, it’s clear that diversity is still lacking on boards.
Of course, ethically, it’s just not particularly sound only to be hiring one kind of candidate.
Even then, many boards might end up bringing on diversity hires as a tick-box exercise if only to stay out of trouble. After all, in places such as California, boards of directors are facing sanctions for lacking in diversity.
What these boards – who are decidedly behind the times – are failing to realize, is that a diversity of people means a diversity of ideas.
What can that mean for businesses?
Diversity Means More Perspectives
Launching wide-sweeping initiatives, solving transcendent problems, and deciding upon the big-picture direction of an organization requires considerable thought.
However, what happens when everybody on the board comes from the same walk of life? While they all might put tons of thought and focus into each decision, their thought process and perspective might mirror one another.
Each issue must be analyzed and picked apart from every angle possible. In a boardroom filled with white males, for instance, boards won’t have the benefit of every available opinion and strategy.
Whereas a diverse board with members of several genders and races will have the different ideas that help develop the most insightful, well-though governance solutions. It’s quite clear that a more diverse boardroom will only be of benefit to the corporation and its bottom line.
In fact, organizations with diverse leadership teams generate 19% more revenue.
What’s Preventing Diversity?
One of the primary issues hindering diversity in the boardroom is the fact that boards are content with ticking the boxes, so to speak.
Let’s look at this problem through the scope of diversity laws:
California isn’t the only place mandating sanctions on boards who aren’t playing ball. Illinois has also followed suit.
Because these boards only do what they can to avoid trouble, they think one to three “diverse seats” constitutes a diverse board.
It’s only once the above mindset is eliminated that diversity can genuinely exist in boardrooms.
Boards must recruit and bring on directors with diversity at the top of their priority list.
Furthermore, boards must charge these with nomination and recruitment responsibilities. Until this happens, diversity will remain a tick-box practice and not something authentic and interwoven in the framework of the organization.
Is Your Board Diverse?
Something else preventing boards from achieving successful diversity is that they aren’t asking themselves the hard questions.
It’s integral for directors to look at themselves in the mirror. Then they must be honest about whether those sitting next to them are too similar to their reflection.
Regular self-assessment is essential to being successful as a board of directors. Otherwise, there won’t be any ability to improve, and the board will remain forever stagnant and in a holding pattern.