Boardroom diversity drives results and diversity is more than a matter of gender, sexual orientation, or race; it is a constantly evolving concept. Boards, their chairs and their CEOs are now acutely aware that diversity in the boardroom leads to better business outcomes, and there are ten strong reasons why.
Serving on a board is now a viable option for people of all ages, genders, and backgrounds. The reason is simple – diverse boards make better decisions and ensure better outcomes for their organisations.
‘When we talk of boardroom representation today, we don’t just talk about the number of women with a seat at the table; it’s much wider than that. Diversity encompasses all aspects of the human experience, from age, culture, skills and life experience,” says Liz Bingham, a former managing partner for people at Ernst & Young and now the CEO of insolvency and restructuring association R3.
Boards need a broad range of experience
The purpose of a board of directors is to represent stakeholders and guide strategy. Therefore, they should be representative of all their constituents and stakeholders.
To deal with the complexities of today’s world, boards need to have a broad range of experience.
Change and development are taking place at such a rapid rate that boards must avoid “group think.”.
Therefore, when a boardroom is full of people with similar backgrounds and experiences, the results of an organisation tend to stagnate.
Ten good reasons
Mike Myatt, a leadership advisor to Fortune 500 CEOs and their boards of directors, is also the bestselling author of Hacking Leadership and Leadership Matters and is the founder of N2Growth, an executive search firm with more than 50 locations globally. Myatt sums it up best when he says there are ten reasons boards must embrace diversity and why boardroom diversity drives results.
1. It reflects the real world – something every company should be sensitive to
2. Healthy debate can lead to better decisions
3. Divergent backgrounds mean tackling the same idea in differing ways
4. Great ideas come from disruption of the status quo
5. Your clients and customers are diverse
6. This can make your company knowledgeable and sensitive to a wider variety of groups
7. Counsel from a variety of authorities is sensible
8. Setting an example at the top will hopefully have a trickle-down effect within the organisation
9. Improved reputation and brand
10. A variety of backgrounds can make the company more adaptable to its ever-changing environment
Follow the money
The diversity of people in senior roles is also associated with better stock market returns and higher corporate profitability. Just ask Google, Apple and Microsoft, to name but a few.
Your organisation’s strategic approach will be better aligned with your customers with a diverse management team.
Having old wise heads in the boardroom makes sense, but there needs to be a balance between older and younger perspectives when most of the population is under 50 years old.
In addition to bringing younger, diverse members into the boardroom earlier, it also allows them to develop their board skills while bringing an additional perspective to the boardroom.
If you would like to learn more about opportunities to serve on a board, download our free eBook below.