The board of a company is its backbone. It is the part of the company that oversees strategy and governance. It is the group of people responsible for making difficult decisions and ensuring the company and business are protected from all sorts of risks. Therefore, a company must have a competent and responsible board at its head, with which it can flourish and reach new heights. Conversely, an incompetent board can drive the business straight into the ground.
We often fall under the misconception that a competent board comprises of highly experienced individuals with years of service under their belt. However, there is more to the competency of board members than their years of experience. Several factors must be considered to make a good board other than experience. This includes skillset, background, qualifications, and personality. All of these must be considered to create a well-balanced board with competent and diverse individuals.
Diversity in the Boardroom
With words like background and diversity, it is easy to get a little confused as to the message of this article. Diversity does not solely refer to a mix of people from different races, gender, and religion. Instead, it means people of different ages, professional and cultural backgrounds, and skill sets. For any kind of company to succeed, regardless of its agenda, it is important to have a well-balanced board. As such, diversity on nonprofit boards, as well as for-profit boards, is crucial for the growth and development of an organization. These efforts can be made with women leadership development and diversity training.
Benefits of Diversity in the Boardroom
Since diversity is considered important, it is necessary to understand why. There are many benefits of diversity in a boardroom, which are pivotal to a company’s success. To help you understand, we’ve compiled a list of the key benefits of diversity in the boardroom.
A Balanced Perspective
With the way the economy has transformed due to globalization, it is now essential for every company to target different markets. With a diverse board, you can have a variety of perspectives from different kinds of people that will help you reach a broader audience and market. For instance, if you have a young professional on your board, they will be able to give you insight into how to get to the millennial and Gen-Z market. While if you have a board member from an immigrant background, they can provide insight on how to get to the immigrant communities.
Room for Debate
With a group of 40-60-year-old professionals comprising your board, there is little chance of disagreement and debate. These men and women grew up simultaneously and worked in the same industry. Therefore, their knowledge and tactics are mostly similar to each other. However, if you throw a 27-year-old entrepreneur into the mix, things will get a little heated. This is good! With the amount of competition in the market, you need new ideas and techniques. With a diverse boardroom, you open room for debate between different members, which can help everyone think outside the box and consider alternatives.
Diversity is one of the foundations of this century. With women, African Americans, Latinas, and other previously overlooked groups gaining traction, companies are pressured to be more inclusive. By having a diverse board, your organization can earn the reputation of being inclusive and supporting the cause of undermined communities. This is an added benefit of having a diverse board and works wonders for the success of a business, as most people support companies that support the cause they believe in. By earning a reputation as an organization that supports diversity in the boardroom, you can get more business than you can imagine!
Research suggests that companies with diverse boards report better employee satisfaction. There is a very simple reason for that. With a diverse board at its head, a company is more likely to adopt inclusive and new-age policies that benefit its employees. As a result, employee satisfaction increases with progressive management and employees being valued and appreciated. This is beneficial not only for the employees but also for the company. That is because high employee satisfaction means fewer employees leaving the organization, resulting in low turnover. This saves the company’s time and costs in recruitment, training, and salary negotiations and helps the business run smoothly.
Better Business Decisions
While making crucial decisions, a company’s management and owners rely heavily on their board members’ counsel. Whilst most boards are equipped to give good advice, a diverse board has the edge over others. Comprising of different people from different backgrounds, a diverse board sometimes provides contrasting advice, which allows the management to avoid tunnel vision. By considering the pros and cons of all possible paths, the management can make better business decisions.
There are numerous other benefits of having a diverse board as well. However, one thing is certain from the above benefits, that is that diversity in the boardroom is advantageous for a business. If you’re a business owner or part of a senior management and are entrusted with choosing a board, make sure to focus on diversity. When your company excels due to its terrific board, you’ll be glad that you did.