www.boardroomsales.com/impact-of-board-diversity-on-company-performance/
Numerous studies show the positive effects of diversity on board performance. Diverse members can bring diverse perspectives or experiences, as well as different angles of approach to a problem. This can result in solutions that could otherwise be overlooked by an homogenous board. This is particularly true for boards that include members from underrepresented groups. They will have insights into the culture and preferences of these groups, which will assist them in better serving those groups as clients.
Furthermore, having a variety of backgrounds and experiences in the boardroom can boost morale and trust. When board members feel their views and opinions are heard, they are more committed to the success of the business. This is why it is crucial to monitor the progress made by your board in promoting diversity and to pinpoint any obstacles that need to be addressed.
Another area where diversity could make a difference is in reducing risk. A recent study by Berger et al. The study showed that a greater gender and age diversity in the board led to better risk management and an lowered risk of exposure to market risk. The study also shows that however, that high levels of diversity on the board can cause issues in cohesion and communication.
Furthermore, boards with a diverse composition are more aware of the particular challenges faced by the underrepresented communities. This can force them into action to promote moral conduct and social responsibility in their businesses. It is essential to continue to attract and search for skilled women, people of diverse backgrounds, and LGBTQ candidates to fill board posts.