Diversity on boards has always been a contentious issue. Investors are pressing for increased board diversity initiatives. Additionally, evidence shows that diverse boards typically perform better financially.
Most boards are aware of the advantages of having a diverse board, including more fruitful conversations, better decision-making, and enhancements to reputation and brand. But addressing board diversity, which includes finding the proper personnel and eliminating unconscious biases, may be extremely difficult.
Here are some doable actions you can start doing this year to start increasing board diversity in your company in order to close the inclusion gap.
Audit Your Diversity
Conducting a diversity audit to determine the make-up of your organization is a great beginning step. The demographics of your board and your employees should be compared. Do they differ significantly? Do you see any gaps? If so, it might be time to review your hiring procedures. In the end, the audit offers a snapshot of your development as well as chances for improvement.
Obtain a Board Commitment to Diversity
It’s crucial to get support at the highest levels. The board and senior management set the tone for diversity by giving certain initiatives top priority and allocating the required funds. Create a board diversity policy, if one doesn’t already exist. Diversity policy can be short and basic or long and detailed. You can modify your strategy as necessary as the organization develops. Most importantly, use it to direct future efforts at diversification and to promote openness.
Boost Your Recruiting Efforts
One presumption is that newly appointed directors must be C-Suite executives. Even if this strategy has its advantages, it would be wise to extend the search beyond the executive level. assemble a task committee to increase hiring efforts. Examine MBA schools, executive leadership programs, neighborhood colleges and universities, and professional groups to cast a wider net. If your budget permits it, think about working with an executive search firm as well.
Make Succession Plans Official
When a director is about to retire, boards frequently discuss succession planning. Even then, they are not always open about the details of their plans. Instead, boards should prepare official succession plans. And let all directors know about these ideas. This strategy offers additional chances to find varied, in-demand people.
To Boost Board Diversity, Add a New Seat
The fact that most boards have very low turnover is one of the main obstacles to boosting board diversity. One survey found that in the past year, the majority of the biggest publicly traded corporations in the U.S. did not alter the make-up of their board of directors. Without waiting for a director to resign or retire, one straightforward solution to this is to create a new board seat. In the long run, boards should think about implementing measures that shorten director tenure and encourage turnover to address low turnover rates.
Accountability and transparency go hand in hand. Utilizing a new Board Diversity Disclosure Benchmarking Tool is one method to promote openness. Board members, staff, and other professionals can compare board diversity practices by industry and company size using the free tool to identify patterns.
Monitor and Evaluate Development
Monitor your progress frequently to stay committed to your commitment to diversity. Using a diversity tracker, identify important metrics and make them available to the public. This approach will demonstrate dedication and hold the team accountable. A tracking system will also make it simpler to spot potential improvement areas.
Executives and board chairmen understand that promoting innovation requires a diverse range of experiences and viewpoints. Diversity and inclusion policies are also effective recruiting and retention tactics in the race for top talent on a global scale. Therefore, even if businesses have made some strides, there is still work to be done. It is crucial to keep looking for diverse individuals for board service since the future demands it. In the end, it’s beneficial to business.