Board diversity is need for current highly changing environment along with that its also expected by Investors and also required by Law.
To improve both cognitive and demographic diversity in the boardroom, we recommend that boards recruit racially, ethnically, and gender diverse directors who enhance diversity on two additional levels: first, by adding professional backgrounds, skills, and experiences in areas that are needed to meet the company’s strategic and operating needs; and second, by introducing new views, perspectives, and approaches to problem solving.
Diversifying the board is said broadly to have the following benefits:
– More effective decision making.
– Better utilisation of the talent pool.
– Enhancement of corporate reputation and investor relations by establishing the company as a responsible corporate citizen.
Given the increasingly digital environment that businesses operate in, having a technology expert sitting in the boardroom could prove to be a strategically advantageous decision for a company.
Many survey’s showed that companies were not having much diversified board members in the organization previously, but then the importance of Diversity increased and in many countries the law and guidelines were also issued to ensure the diversity and then now a days good companies are having a diversified members of board.
Recommendations to increase Board diversity:
The following actions have been recommended by Lord Abersoch in February 2011 in a report commissioned by the Government
– All chairmen of FTSE 350 companies should set out the percentage of women they aim to have on their boards
– Quoted companies should be required to disclose each year the proportion of women on the board, women in Senior Executive positions and female employees in the whole organisation.
– The consideration of the diversity of the board should be the role of the nominations committee
– Investors should pay close attention to diversity when considering appointments.