Numerous studies have shown that diversity has a positive impact on the performance of boards. Diverse members can bring diverse perspectives as well as experiences and angles of thinking to a problem. This can lead to solutions which would otherwise be missed by a homogenous board. This is especially true for boards that include members of groups that are not represented. They will gain a better understanding of the preferences and culture of the groups that comprise them, which can help them serve those groups better as clients.
Additionally, having a variety of backgrounds and experiences in the boardroom can boost morale and trust. When board members feel that their voices and experiences are being heard and they feel more committed to the success of the business. This is why it’s vital to keep track of the progress of your board in promoting diversity and to pinpoint any obstacles that require addressing.
Another area where diversity can contribute to mitigating risk. A recent study by Berger et al. The study found that greater gender diversity and age-related diversity on the board resulted in more effective risk management, as well as an lowered risk of exposure to market risks. It is important to remember however, that the same study also indicates that a large amount of diversity on the board can cause issues with cohesion and communication.
Additionally, boards with a diverse membership are more aware of the particular challenges faced by minority communities, which could prompt them to take action to promote moral conduct and social responsibility in their business. It is vital to continue to find and find skilled women, people of diverse backgrounds, and LGBTQ candidates for board positions.
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