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The Impact of Diversity on Board Performance
Numerous studies show that diversity can have an impact positive on the performance of boards. A diverse group of individuals has different experiences, perspectives, and angles to approach 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 of groups that are not represented. They will have insights into the preferences and culture of these groups that can assist them in better serving those groups as clients.
The diversity of backgrounds and experiences on a committee can boost morale and increase trust. If board members feel like their voice and experience are being represented and they feel more committed to the success of the organization. It is essential to keep track of your board’s progress in encouraging diversity and to identify any obstacles.
Diversification is also a method to reduce risk. A recent study by Berger et al. The study concluded that a greater gender and age diversity in the board led to better risk management and an lowered risk of exposure to market risk. The same study shows, however, that a high degree of diversity on the board can cause problems with cohesion and communication.
Finally, boards with a diverse makeup are more observant and aware of the unique challenges faced in underrepresented communities. This could encourage them to take actions to promote social responsibility in their business. This is why it’s crucial to continue to seek out and recruit skilled women and people of color and LGBTQ candidates for board posts.