How Diverse is Your Board?
Diversity in the boardroom is critical to the effective functioning of a board and to the overall performance of a business. Too financially orientated and the board may lack the sales or marketing expertise to drive the business forward. Too similar in terms of background, education or experience, and the board may have a narrow focus, potentially leading to a group-think mentality. A higher male to female ratio, or vice versa, and the board is likely to lack the gender balance needed to bring differing perspectives and insights.
When considering diversity in the boardroom and how to improve it, boards should take the following into account:
Move beyond gender
Board diversity is often viewed through the prism of gender alone. However, it is goes far beyond just gender.
Boards should be thinking about diversity in the widest sense including race, ethnicity, education, skill set, geography and socio-economic background and striving to create a high-performance environment, which is reflective and representative of the wide-ranging interests of stakeholders.
Mind the gap
The first step in addressing board diversity is to identify where the gaps lie through the development of a skills matrix. By looking at the profile of people around the board table and determining what each director brings in terms of competencies and perspectives, a board can consider what capabilities, experiences and viewpoints are lacking and what is required to provide leadership of the business and challenge to management.
Boards should aim to achieve an appropriate balance in terms of gender, skills, experience, qualifications, and so on, and that starts by critically assessing the current structure of the board. Thereafter, the make-up of the board should be regularly reviewed to meet changing requirements.
Finding the right match
When seeking to address gaps on the board, is it important to develop a profile of the ideal candidate, defining what skills and personal qualities are needed. Being clear from the outset will better position the board to find the right candidate and to make the right appointment.
Look outside the box
Fundamental to improving diversity are wide criteria for selection which look beyond the board’s own network of contacts. The process should be handled professionally and, ideally, independently, with boards using experienced search agencies who can access a wide and diverse pool of candidates.
Putting policies in place
The board, as a whole, needs to take responsibility for diversity and show leadership in driving the diversity agenda. Every board should have a diversity policy which clearly outlines its position and objectives with regard to diversity. This policy should set the tone in terms of achieving and maintaining diversity on the board and should be a ‘living’ document, against which performance is measured and reviewed on a regular basis.