Many studies reflect the positive impact of diversity on board performance. A diverse group of individuals has different perspectives, experiences and perspectives to tackle a problem which can lead to solutions that would otherwise be missed by a board that is more homogenous. This is particularly true for boards that include members from underrepresented groups. They will be able to gain insight into the preferences and values of these groups, which could assist them in better serving these groups as clients.
Additionally, having different backgrounds and experiences in the board can boost morale and trust. If board members feel that their opinions and experiences are being represented, they feel more committed to the success of the organization. It is vital to track your board’s progress in encouraging diversity and to identify any obstacles.
Another area in which diversity can help is in reducing risk. A recent study by Berger et al. The study revealed that a greater gender and age-related diversity on the board led to improved risk management and less risk of exposure to market risks. The study also shows that however, that a high degree of diversity on the board could result in issues with communication and cohesion.
Additionally, boards with a diversity of composition are aware of the particular challenges faced by those from underrepresented communities which can push them to take action to encourage social responsibility and ethical conduct in their operations. This is why it is essential to continue to seek out and recruit skilled women or people of color and LGBTQ candidates for board positions.