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The Business Case For Board Diversity, And How To Increase Diverse Board Directors

How to create diverse board of directors for organization to promote DEI? Board Directors Tips

Better opportunities now abound for most people ever since policies for inclusion and diversity were institutionalized and adapted by most companies many years ago. The positives result from these policies include financial benefits for many, better social relations among people, and greater social harmony.

Companies and institutions also benefited enormously from these policies. Aside from expanding the labor pool, they also got to avail and tap talents previously unavailable due to policies of discrimination and exclusion. Increased patronage from marginalized and underprivileged is also one of the benefits of adopting the policies. 

Policies about inclusion and diversity include the boardrooms and the upper echelons of corporations. Be as it may, however, progress in this area has been slow, for most companies are reluctant to adopt policies for greater inclusion and diversity, for this means sharing power with the marginalized and previously excluded.


The business case for board diversity

If the experience of academe and the workplace were any indications, corporations stand to benefit from having board diversity. Issues of equal rights and privileges aside, board diversity offers many opportunities for corporations to maximize for better profit. All of it while performing their corporate social responsibility and civic functions. 

Among the benefits companies will reap by having diversity are: 

A deeper pool of talent

As proven by experiences in other institutions, talent is widely available across society, and among the most talented people are those who belong to the marginalized, like women, for instance. Promoting diversity and having a more inclusive board allows for the acquisition of talented and skilled people.

Companies are limiting their options when they exclude a lot of people. Since decisions made in the boardroom are of great importance, They must have all the necessary skills, talent, and expertise to help them come up with essential policies. One aspect of which those people can help is crafting policies for diversity and inclusion in the workplace.

Greater diverse representation

Powerful as the board may be, they are still answerable to the stakeholders, which, in most cases, is the general public itself. Ideally, a corporation or a publicly listed company must include the interests of everyone else, including the marginalized. It is entirely probable that among the stakeholders were members of a particular race, minorities, or gender. 

Therefore, it would be best to have board diversity and give voices to everyone due to the public nature of most companies and corporations. Having board diversity allows for crafting policies and decisions that are responsive to the general public and not just a few people. 

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The need to measure board diversity

Proper and adequate representation is the reason not only to have board diversity per se but also to have it in specific ratios. The representation must be in proportion to the overall stake the public has in a company. It must also be measured in terms of its overall clout, power, reach, and influence. 

It will not make sense, for example, to have a few women in a corporation that is national or even global in reach. Since women comprise a large number of the world populace, they must be on the board of companies that are global in scope. It would even be ridiculous if a company producing items for women will have, on the board, very few women. 

The scenario mentioned only illustrates why the fair representation of sectors of society in a board of a company is a must. Companies must ensure that they are responsive to the public in general, and not just a few. Underrepresentation would defeat the very purpose of having board diversity and being responsive to the general public, for neither would happen. 

Top barriers for board diversity 

Perceptions of board culture

The most common obstacle to improved board diversity is the resistance of business leaders and board directors to include other people, especially from the marginalized. The reason lies in the prevailing stereotypes or ideas about them and the board’s inherent conservativeness. 

Business leaders and board directors might be reluctant to challenge the existing order and power relations that brought about their success and emergence as top honchos. It is even more so if they are themselves beholden to that power structure and business culture. More than challenging perceptions and proposing changes, they might reinforce that culture diversity

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Stereotypes and discrimination

The business culture and power relations aside, the prevailing stereotypes and attitudes of the society might also influence their conduct, especially regarding inclusion and board diversity. Business leaders and board directors are only human, and as such, it will be hard for them to escape some of the prevailing norms and attitudes. 

Despite the success in the fight for greater inclusion, equity, and diversity in social institutions, some norms and attitudes still prevail. Culture is never uniform across institutions and geographical space, and some ideas from the bygone era may persist in some places and institutions while gone in others. 

Despite their education and good sense, some business leaders are still susceptible to these norms and ideas. That is why we must continue to fight for inclusion, equity and diversity even as there is so much success in erasing those norms and attitudes about certain people and gender. Some of its vestiges remain. 

Lack of network 

The business culture and stereotypes prevailing in the business environment make it hard for business leaders to fight for inclusivity and diversity. They do not develop the necessary network to tap the available talent from the marginalized, discriminated, and underprivileged. 

Some, for instance, still operate as an “old boy’s club.” Making the top echelon usually requires being a member of this club or sharing their beliefs and attitudes. Board diversity would be hard to achieve if the mentality of some of its leaders promotes exclusivity and exhibits all the attitudes that repel and turn off people from even considering working for them. 

Conclusion

Lack of sponsorship and mentorship

Unlike in the workplace, board diversity is complex, not only because people have to compete with limited spots or slots, but because companies rarely train the discriminated to become one of their leaders. This lack of sponsorship could be attributed to the still prevailing power relations in most companies and lack of exposure by the leaders to talented but discriminated people. 

Tools to improve board diversity 

Giving solutions to the problems mentioned above is one way of improving board diversity. Among these would include:

  • Greater representation.
  • Sponsoring talented people from minorities and the discriminated.
  • Grooming them to become leaders themselves.

These moves would entail erasing norms and attitudes that promote division, discrimination, and exclusivity. 

Companies, overall, must provide the appropriate environment that promotes inclusion and diversity. That would lead to acquiring more talent across sectors of the populace and would lead to better representation and inclusion. Having more talent means having more people available to be groomed as business leaders and board directors. 

Best practices for board diversity at the organizational level

Enticing people from different backgrounds, marginalized sectors, and minorities will allow the company to have a deep reserve of qualified personnel to be later groomed as leaders. Aggressive recruitment is a must, and getting talented and skilled people with a great attitude from the ranks of the discriminated people must be prioritized to improve board diversity. 

But companies can only recruit if they can provide the necessary environment for inclusion and diversity. It would be best if they do so, and they might as well provide incentives and benefits to show commitment to promoting diversity in the workplace and the boardroom. 

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How to improve Board Diversity?

  • Greater representation.
  • Sponsoring talented people from minorities and the discriminated.
  • Grooming them to become leaders themselves.
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About the author

Jess Man

Jessica is the Editor-in-Chief and Senior Diversity Advisor at Diversity Social. Jessica has over 10 years of working with and advising employers to be more diverse and create an inclusive working environment.
Jessica's experience spans private and non-profit sectors in multiple industries.
Jessica's expertise experience is beyond Diversity & Inclusion, she is also a certified professional IT recruiter in Data & Analytics, Database administration, Artificial Intelligence area.