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Over time as the world has rapidly changed and evolved, the role of the board of directors has evolved too. The changes were always on the card, as companies constantly strive to stay in or ahead of the competition. One of the primary reasons boards have embraced several changes recently is to align with beliefs about accepting and including more diversity in every field possible. It sends a strong message that the world has evolved enough where people can see beyond trivial beliefs of race, creed, age, and even skill sets.
The board of directors is appointed or elected by the company’s shareholders and is primarily responsible for the company’s shareholders' interests. The board, overall, sets the governance and policies of the company. Later appoints a CEO (Chief Executive Officer) to ensure the management has a representative who can align with the company’s vision. And, it is popularly believed that a company with the most diverse boardroom can have its visions achieved. Also, it can bring the company laurels from different corners of the world.
Another reason companies should lean more towards diversity is adaptation. Many surveys have shown that companies with diverse backgrounds have done well in times of transition. Such companies have even had fewer issues with various problems that can plague any company’s progress. Also, it will allow more women on boards. Now, here comes the difficult part - How do you achieve boardroom diversity? I have personal experience with it and, therefore, want to share some ways in which companies can promote and have a better diverse boardroom.
Boardroom diversity is important to achieve success. When a board has members from different places and of varying ages with different skill sets and knowledge it can effectively parlay decision making, risk analysis, management and guidance. It allows the company to thrive even in times of crisis, such as the recent pandemic where several companies folded or suffered heavy losses. You can even refer to the a Wharton Professor's Aadvice on building better boards. However, besides that, here are a few ways to bring more diversity into your boardroom.
Having a transparent process in the system can make things easier. Integrating this means the board will have to decide on diversity. Once a board agrees on the right mix of diversity on the board, like how many seats should be held by women, ethnic or racial minorities, the goals should become made public. It shows the company is ready to accept diversity at its core. Furthermore, it can set specific diversity goals. Also, it allows the board to commit to it, so stakeholders can hold the board accountable whenever required.
Public conversation about underrepresented groups can be effective too as it highlights a lack of diversity as a problem. The board can use it as a voice to mobilize powerful stakeholders and demand that companies take action.
The board should go beyond traditional recruitment channels and seek candidates to serve on the board from as many sources as possible. After all, for every business, diversity begins in the talent pipeline. Boards also need to have more diverse recruitment within experienced hires and senior grades that are then maintained within companies. Boards can also look for board candidates that can focus on functional or specialized skills. Also, try to look into expertise rather than executive titles, such as CEO, or previous board experience.
For a diverse board to remain united by shared values and goals, a meaningful board of directors evaluation process is required. Director appraisal and board evaluation should not focus on mistakes. Instead, it should emphasize ongoing governance improvement. The focus must remain on maintaining effective work for the benefit of the organization and its various stakeholders. Board evaluation should also provide an opportunity for useful peer and group feedback. The evaluation process can further be used to determine areas in need of improvement. Besides this, from an inclusion point of view, it can also ensure each member can voice their feelings amongst their fellow board members.
For a board to provide effective strategic oversight and corporate governance, collaborative communication is essential. This means shared perspectives cannot be assumed, or else you risk falling into the fatal trap of “groupthink” and damaging any inclusion measures. Each director or member should possess strong communication skills to be able to clearly and succinctly articulate their ideas, thoughts and opinions while respecting and learning from others.
Note that groupthink represents a set of collective individuals whose main focus is to attain census towards a decision rather than to argue its validity, credibility, and legitimacy.
A lot of times companies sit on several great potential talents. Such talents can become important board directors or members. However, to source, attract and retain talent at the board level, companies must identify potential or underrepresented candidates. Also, it must provide resources to prepare them for the role. Hence, it’s critical to identify areas of opportunity to encourage, support and nurture diverse groups of people into board positions.
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