Numerous studies show that diversity can have a positive impact on board performance. A diverse group of people has different experiences, perspectives and perspectives on an issue, which can result in solutions that would otherwise be missed by a board that is more homogenous. This is especially relevant for boards that comprise people from groups that are underrepresented. They will gain an understanding of the cultural and societal preferences of the groups that comprise them, which can help them serve those groups better as clients.
Moreover, the presence of a range of backgrounds and experiences within a board can increase morale and trust. If board members feel like their voices and experiences are being represented they are more devoted to the success of the business. It is vital to track your board’s progress in promoting diversity, and also to pinpoint any barriers.
Another area where diversity can contribute to the mitigation of risk. A recent study by Berger et al. The study concluded that greater gender diversity and age-related diversity on the board led to better risk management, and an lowered risk of risk of exposure to market risks. The same study reveals, however, that high levels of diversity on the board can create problems with communication and cohesion.
Boards with a diverse makeup are more aware and attentive to the unique challenges that are faced by communities that are not represented. This could encourage them to adopt actions to encourage social responsibility in their business. This is why it’s essential to continue to search for and recruit talented women and people of color and LGBTQ candidates for board positions.