All discord, it has been said, is simply harmony misunderstood. And so it is with diverse boards.
Built around like-minded individuals and recruited largely from personal contacts, boardrooms were traditionally homogenous places – white males nearing retirement age with plc director experience, as Sir Derek Higgs reported in his 2003 review.
For boards, diversity posed an unknown risk and threatened the tried and tested ways of doing business. Commercial success, however, is not sustainable in isolation. Against the backdrop of globalisation, diversity has become a defining feature of high performing organisations – it drives innovation, expands access to talent and encourages independent challenge and debate.
The promotion of women to corporate boardrooms is an enhanced area of focus for governments, the media and companies themselves. Research continues to show that gender diversity, appropriately managed, challenges ‘groupthink’ and appears tied to superior financial performance.
Diversity however is not solely a gender issue. This paper, based on Odgers Berndtson’s extensive experience in helping boards recruit the most diverse teams, and our discussions with board directors, considers diversity more widely. Functional background, age, and cultural experience – as well as gender – are all important considerations in building diverse boards capable of providing a broad range of perspectives and challenge.
We conclude that creating a diverse, inclusive and distinctly talented board requires the leadership of a strong chair. He or she is tasked with managing the similarities and differences of the board to achieve enhanced business results.
No longer viewed as an indulgence or a commercial luxury, for global firms, diverse
board composition is not a question of ‘if’ but simply ‘when’.