Diversity within the world of business has been a hot topic for decades now. While it’s an idea that has gained significant traction and attention, it’s also one that is largely under nurtured. Most business higher-ups have always been, and continue to be, heterosexual white males.
The idea of any business hire or appointment is, of course, to find the most qualified person for the job. When minority candidates are overlooked it’s not just unfortunate for the individual who didn’t get the job, it’s bad for the community they come from, and the business itself.
In this article, we discuss why corporate board diversity is important, and how you can capitalize on the benefits.
What Is Corporate Governance?
Corporate governance is the process by which large businesses balance their competing interests. At any given moment a large company must strengthen its bottom line, appeal to customers and shareholders, uphold ethical business practices, and, at least hopefully, keep an eye trained on sustainable business practices.
That’s a lot to handle.
Without oversite and input, some of those considerations are destined to fall by the wayside. Corporate governance is there to make sure that doesn’t happen. Corporate boards oversee operations and help a business better serve the public.
The Benefits of Female Leadership
Businesses with some degree of female leadership have been shown to experience up to 30% higher revenue than those with none. Of course, it’s difficult to pinpoint exactly why this is, though some experts believe it has to do with the way women problem solve. In industries that have had mostly male leadership, getting a female perspective can be a big boon.
Unfortunately, though the benefits of female leadership can be significant, representation continues to lag, with the majority of companies and corporate boards consisting primarily of men.
As with any hiring or appointment initiative, it’s all about finding the right person for the job. Businesses that can find a driven, knowledgeable female executive to lend their perspective and expertise may be surprised by how significant the impact is.
One of the benefits of a diverse corporate environment is that it helps you better represent the general population. Most likely, your demographic is made up of people from all walks of life. If your executive board consists primarily, or exclusively of people from the same background, they may not have the perspective required to adequately service your broader base.
As you board members sit down and think, “how would I want this product or service to represent me?” the ideal should be to have a wide range of different answers.
Appeal Better to Shareholders
Similar to our last point, a diverse corporate board is also better positioned to appeal to your investors. Shareholders will not come entirely from one background. They probably don’t want to be served by a corporate board that does.
A diverse roster of corporate board advisors are best positioned to listen carefully to the perspectives of all shareholders and use their backgrounds to act in a manner most befitting the situation.
Context Is Important
The question of maximizing the benefits of a diverse executive board is at least mildly uncomfortable. On the hand, any hire or appointment within a business is done strategically, with an eye for what can be gained by that individual’s unique attributes.
On the other hand, when said attribute turns out to be their gender, race, or sexual orientation the ethics of the situation become murky at best.
The idea is not to appoint people to your executive board because they fall into a minority category.
The idea is to look for the best possible candidates, recognizing that said candidates will come from all walks of life. Recognizing also that minority candidates, for a variety of reasons, may be fewer and far between, possibly necessitating a degree of outreach.
Representation is great. Tokenism isn’t. Pick people who would be great for the job regardless of their background, and then use the qualities that make them unique to strengthen your brand, and better serve the broader public.