The Impact of Diversity on Board Performance
Numerous studies have shown that diversity can have an impact positive on the performance of boards. Diverse individuals can bring different perspectives or experiences, as well as different angles of approach to a problem. This can result in solutions that would otherwise be missed by an homogenous board. This is particularly the case for boards that comprise members from underrepresented groups. They will gain insight into the preferences and cultures of these groups, which will help them serve those groups better as clients.
Furthermore, having different backgrounds and experiences on a board www.boardroomsales.com/impact-of-board-diversity-on-company-performance/ can increase confidence and morale. If board members feel that their opinions and experiences are being heard and respected, they are more dedicated to the success of the company. It is important to track the progress of your board in promoting diversity and to identify any barriers.
Diversification is also a method to reduce risk. A recent study by Berger et al. The study showed that a greater gender and age diversity on the board resulted in improved risk management and less exposure to market risk. The same study also shows, however, that having a high level of diversity on the board could create problems with communication and cohesion.
Furthermore, boards that have a diverse composition are more aware and sensitive to the unique challenges that are faced by underrepresented communities. This can encourage them to take action to promote social responsibility in their businesses. It is essential to continue to look for talented women, people from diverse backgrounds, and LGBTQ candidates for board posts.
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