Numerous studies have shown that diversity has an impact positive on the performance of boards. A diverse group of individuals has different perspectives, experiences, and angles to approach problems, which can result in solutions that would otherwise be missed by a board that is more homogenous. This is especially applicable to boards that have people from groups that are underrepresented. They will gain insights into the preferences and habits of these groups which can help them better serve those groups as clients.
The presence of diverse backgrounds and experiences on a committee can increase morale and build trust. When board members feel that their opinions and experiences are being represented and they feel more committed to the success of the organization. It is important to track the progress of your board in promoting diversity, and also to pinpoint any obstacles.
Another area in which diversity can be beneficial is in managing risk. A recent study by Berger et al. found that more gender and age diversity on the board results in improved risk management in the operational area and a reduced risk of market risk. The study also shows that however, that high levels of diversity on the board could cause issues with cohesion and communication.
Furthermore, boards with a diverse makeup are more aware of the particular challenges faced by the underrepresented communities and can prompt them to take action to promote ethical and social responsibility within their organizations. It is important to continue to recruit and find highly skilled women, individuals from diverse backgrounds, and LGBTQ candidates for the board positions.
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