Board Diversity is a matter that has come into more focus due to major shifts in society and worldwide activism. Many view it now companies have responded by increasing the number of female and minority directors. However, a few companies are going beyond the limits of racial and gender diversity by assuring cognitive diversity (the range of skills, experiences and perspectives on issues that improve decision-making).
A diverse board can be more effective than a homogenous one. Boards with a variety of backgrounds and skills can solve complex problems in a unique way and avoid the groupthink that hinders thinking.
Many investors and activists are looking for boards that are more diverse. Being a part of a board that has different experiences, perspectives and views will help them react to major changes in the world of society more efficiently and effectively for instance, the rapid development of environmental governance, social and (ESG) issues.
Diverse boards are more diversified in their thinking. This means they can identify problems in their business quickly and efficiently. It is easier to address these issues when a range of perspectives are offered and when participants confront each other and ask hard questions.
A diverse board isn’t a panacea. Boards must be able to collaborate despite their differences. This requires a chair who understands how to promote productive discussions and teamwork among people with very diverse attitudes and worldviews. If not, it could result in a lack of productivity.
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