The Impact of Diversity on Board Performance

Numerous studies have shown that diversity has an impact positive on the performance of boards. Diverse board members can bring different perspectives experience, perspectives, and points of tackling a challenge. This can result in solutions that might otherwise be overlooked by a homogenous board. This is especially the case for boards that comprise members of groups that are not represented. They will gain an understanding of the preferences and culture of the groups that comprise them, which can help them serve those groups better as clients.

The presence of diverse backgrounds and experiences on a committee can boost morale and increase trust. If board members feel like their voices and experiences are being heard they are more devoted to the success of the business. This is why it is vital to keep track of your board’s progress in promoting diversity and identifying obstacles that have to be resolved.

Diversification is also a method to decrease risk. A recent study by Berger et al. found that greater gender and age diversity on the board results in better operational risk management and a less heightened risk of market risk. It should be noted however that the same study also indicates that a high degree of diversity on the board could cause problems with cohesion as well as communication.

Furthermore, boards with a diversity of makeup are more aware and sensitive to the unique challenges faced in communities with a low representation. This may encourage them to take steps to encourage social responsibility in their businesses. This is why it is vital to continue to search for and find talented women or people of color and LGBTQ candidates for board positions.