Research into Board Diversity
The Importance of Board Diversity
Board diversity is a hot topic in the business world today. It's not just about gender or ethnicity, but also about bringing in a mix of skills, experiences, perspectives, and networks to the table. A diverse board can contribute to better decision-making, improved corporate governance, and enhanced business performance. Let's delve into the research that supports this assertion.
Improved Decision-Making
Research has shown that diverse groups tend to make better decisions. This is because they bring a wider range of perspectives, ideas, and experiences to the table. A study by McKinsey & Company found that companies with diverse boards are 43% more likely to experience higher profits. This is primarily because diverse boards are better equipped to identify opportunities and risks, leading to more informed and effective strategic decisions.
Enhanced Corporate Governance
Board diversity also contributes to improved corporate governance. Diverse boards are more likely to hold management accountable and challenge the status quo, leading to more effective oversight. According to a PwC survey, 94% of board directors agree that diversity brings unique perspectives, and 84% believe it enhances board performance.
Increased Business Performance
There is a growing body of evidence that links board diversity to better business performance. A report by Boston Consulting Group found that companies with more diverse management teams have 19% higher revenues due to innovation. This highlights the benefits of diversity for both the bottom line and the overall health of the business.
Challenges to Achieving Board Diversity
Despite the clear benefits, achieving board diversity is not without its challenges. These include unconscious bias, the perception that there is a lack of female and minority candidates in executive roles (we at Diverse Board Network know this is not a supply issue, but a pipeline issue), and resistance to change. However, these obstacles can be overcome and we are here to champion and enable this for forward thinking leaders and Boards.
Strategies for Increasing Board Diversity
So, how can companies increase board diversity? Here are a few strategies:
- Implement diversity policies and targets
- Develop a pipeline of diverse talent
- Provide diversity training for board members
- Seek external help to identify and recruit diverse candidates (look no further than Diverse Board Network!)
Conclusion
The research into board diversity is clear: diverse boards are good for business. They lead to better decision-making, improved corporate governance, and enhanced business performance. While there are challenges to achieving diversity, they are not insurmountable. With the right strategies and commitment, companies can reap the benefits of a diverse board.