Many studies demonstrate the positive effects of diversity on board performance. A diverse group of individuals has different experiences, perspectives and angles to consider problems, which can lead to solutions that would otherwise be missed by a more homogenous board. This is particularly the case for boards that comprise people from groups that are underrepresented. They will be able to gain insight into the preferences and values of these groups, which could help them better serve those groups as clients.
Furthermore, having diverse https://boardroomsales.com/setting-strong-goals-for-a-board-of-directors/ backgrounds and experiences on a board can boost the trust and morale of a board. If board members feel that their opinions and experiences are heard, they feel more committed to the overall success of the company. This is why it is important to keep track of your board’s progress in encouraging diversity and identifying any issues that require addressing.
Another area where diversity can be beneficial is in managing risk. A recent study by Berger et al. found that the greater diversity of gender and age on the board contributes to more effective risk management at the operational level and a reduced risk of market risk. It is worth noting however, that the same study shows that a high level of diversity on the board can result in issues with cohesion and communication.
Lastly, boards with a diverse membership are more aware of the particular challenges faced by those from underrepresented communities, which could prompt them to act to promote moral conduct and social responsibility in their business. This is why it is so important to continue to search for and recruit highly skilled women as well as people of color and LGBTQ candidates for board posts.
