Board Diversity Beyond Gender

Executive Team Development at Sterling Black

Board Diversity Beyond Gender

In the boardroom or in management settings, we often fail to acknowledge the benefits of diversity in multiple forms. Going beyond gender diversity, a full spectrum of diversity can bring multiple benefits to the organisation.

From creating a positive work environment to attracting diverse talent, the board is made better when individuals lead it with complementing strengths and abilities.

It is beneficial for boards to gain a broader perspective on issues affecting their organizations.  For one, diversity reduces groupthink and allows directors to be more open-minded, innovative and creative, which can lead to better problem-solving.

Diverse boards can have profound impacts that move beyond the board of directors itself and permeate a business environment.

Social Diversity

Social diversity is crucial to have for any board of directors. Ethnicity, gender, and age help comprise unique worldviews that can make more comprehensive, considerate, and wise decisions that will affect a company.

Ensuring that a board of directors has social diversity has been a hot topic in the last several years. Despite the seeming simplicity of carrying out such a goal, bringing it into reality has proven to be more challenging.

Gender Diversity

In Australia, gender diversity in the board of directors for upper-levels of companies has been growing. Still, it is estimated that newer companies are making less effort to ensure gender diversity in the boardroom.

Many misconceptions have kept gender diversity out of the board room in the past; women hold less than 18% of the world’s board seats. Out of that, only 5.3% have chair positions. It’s also more common for gender diversity to be in the position of CFO than that of CEO.

Ethnic Diversity

Ethnic diversity is another area that has been lacking within many companies’ boards of directors. As business simultaneously becomes increasingly global and also should seek to understand and support its local community better, varied cultural intelligence has never been more valuable.

Although many companies worldwide have committed to including board members from minority ethnicities, the results are lagging. Minority board members in particular find that their contributions can be overlooked, and they note that they often represent the only ethnic minority on their respective boards.

Age Diversity

In many organisations, board members are older, since experience is often equated with age. 

While age does bring wisdom, both younger and older board members can bring different levels of cultural diversity. This can create an environment full of complementing viewpoints that can help solve problems on multi-dimensional levels and create a more inclusive environment for both employees and customers.

Professional Diversity

While social diversity plays a crucial role in the boardroom, professional diversity is another often overlooked aspect of diversity that is important for boards.

It is beneficial to expand a board’s knowledge and improve its ability to advise and oversee management when directors from diverse professional backgrounds are appointed.

Boards with diverse professional backgrounds typically have healthier debates, more robust discussions and are more focused on making fact-based decisions. As a result, there is more cognitive diversity due to professional diversity.

Why is Diversity So Important Today?

A board needs the optimal combination of skills, expertise, and experience to be able to lead the business and strategy of the company. 

Because of this, the boardroom should be as diverse as the world that a company hopes to expand into. Business is simultaneously global and local, and any well-balanced board of directors should seek to mirror those values with socially and professionally diverse representatives.

Many companies cite excuses for not increasing their board of directors diversity. The time-consuming nature of making personnel choices and a lack of suitable candidates are the reasons that companies often give.

While it’s true that it takes time for board seats to open up and be suitably filled again, companies should keep in mind that the choices they make for greater diversity today will begin to yield benefits only in the future.

This is because, as with many things in business, cultural changes come over time. Trickle-down effects start to yield maximum benefits only after sufficient adoption.

From this perspective, many companies don’t have as long as they think they do to create a more diverse and dynamic board of directors for the good of their company culture and business. 

Taking action

Companies who want to see positive changes within their boards of directors that will subsequently improve their business as a whole should invest in diversity at a much quicker pace. Despite the value of experience from senior executives, boards may benefit from broadening their view of what is an “optional board member”. 

When it comes to the slow nature of board seat turnover, companies should consider adding more board seats that can be quickly filled with appropriate and diverse candidates. Without waiting for existing seats to become vacant, companies can move toward better inclusion much more rapidly.

Recruiting diverse board members from a wider candidate pool is another logical way to speed up creating a more suitable boardroom. Instead of pulling from only former CEOs or board seat holders, people with more diverse professional experience should be seriously considered.

It is possible to expand the pool of non-C-suite executives with important, interesting perspectives by finding, academics, heads of business units, entrepreneurs and government officials. 

Companies should also consider amending rules when it comes to boardroom tenure and perks. It’s essential to incentivise creative, innovative, and productive behaviour to attract diverse 

professionals and help retain them.

Final Thoughts

The world itself benefits from diversity of all kinds; boardrooms should do the same. 

Both social and professional diversity can help companies create inclusive environments for employees and customers. As the boardroom is meant to represent the interests of shareholders, it should be diverse enough to encompass a broad range of worldviews, experiences, and skills.

Diversity on boards won’t eliminate inequality. Collective knowledge and intelligence are only elicited by an inclusive leadership style. The board must ensure every voice is heard and can contribute equally. The chair must set the tone for all directors to participate in decision-making and promote respectful dissent and debate.

Companies should remember that boardrooms without diversity hold themselves back. It could take years for implemented changes to trickle down and change company culture permanently, so the best time to start is today.

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