Corporate Board Diversity refers to the diversity of individuals who make up a company’s board. A diverse board provides an array of perspectives and expertise that will help it make better decisions. It can also boost a company’s ability to adapt to changes and its reputation as an employer.
A diverse board is more efficient than a board that is homogeneous, according to research. It prevents groupthink, as different people are able to challenge ideas and offer fresh ideas that may not have been considered. This could lead to more thorough discussion and debate which in turn leads to better decisions and outcomes for the organisation.
Board diversity can strengthen the social contract that exists between the stakeholders of a company and the company itself. It does this by promoting discussion and debate. By reflecting the diversity of society, an organization can show its investors and customers that they are aware of them and is able to build trust.
It is also possible that a diverse board will be able to better understand its customers and their needs and this could lead to more innovative products and services. This is particularly relevant in the industries that are geared towards customers, such as banking and retail.
A diverse board can also bring new knowledge and skills to the table, which is particularly beneficial for technology companies. For instance having someone who has experience in sustainability or cyber security can be helpful. A diverse board is also more receptive to cultural shifts and changes in society such as an increase in concern for environmental and social issues.
