Going into a long-winded discussion about why diversity matters may seem redundant, but until it’s not an issue anymore, we’re going to talk about it. This time, let’s delve into why diversity specifically matters in the boardroom.
When asked to picture a board of directors, most people see the classic Hollywood image of a table of serious older Caucasian men. In many cases, that’s exactly what a board of directors consists of. 2018 has been an exceptional year for diversity, with 31% of new directors in the 3000 largest publicly held companies being women, the largest percentage in a decade.
On the flip side of the equation, the 12 largest companies in the USA don’t have a single woman on their board of directors. Private boards tend to have even fewer women, according to the latest Boardlist study. The key takeaway? Things are changing for the better, but we’ve still got a way to go.
Better Representation of the World
One of the main reason that diversity matters is to give people a better perspective of the real world in which we live. In her memoir, Shonda Rhimes says that to her, it’s not about diversity; it’s about normalization. Having a diverse board of directors is more representative of the world than the standard collection of middle-aged Caucasian executives.
For a business to thrive in the modern world, they need to be open to the experiences of others, especially if those experiences don’t necessarily align with those of the executive team. For example, women make upward of 75% of purchasing decisions in a household. Yet, they’re still wildly underrepresented at the board level.
While a board does need decades of collective experience to pull from, it also needs a better view of the customers and how the industry is evolving with the rest of society. Diversity on a board can offer those things.
Different Experiences Means Different Opinions
A board isn’t meant to agree all the time, with the business or with each other. They’re meant to offer different opinions and perspectives that other people hadn’t considered. Having different backgrounds and experiences will help that process along.
In 2000, a startup called Netflix made a radical proposal to Blockbuster. The newcomer to the industry would partner with the giant to take the Blockbuster offering online. Blockbuster declined, as there was no way the internet would ever replace movie rentals. Sure, looking at the internet speed at the dawn of the millennium, you can follow the line of thought. However, if Blockbuster had a more diverse board, perhaps someone with more understanding of the evolution of the internet, things might have turned out much differently.
Powerful solutions come from hearty debates, where a team of directors can come together and challenge one another and highlight problems or solutions others hadn’t considered. The more diverse your board, the more angles you’ll be able to tackle a problem from.
Brand Building and Publicity
By prioritizing a diverse board now, you’ll become a pioneer. You’ve already read the statistic about public companies, but what about private companies? The situation is no better for them, and in many cases it’s worse, with even fewer women on the board of directors according to the research conducted during the #BoardForward Awards.
As millennials take over the share of the consumer sales market, they’re looking for forward-thinking companies with which to spend their 600 billion dollars annually. Environmental consciousness ranks high on the list, as does diversity.
This is a huge opportunity for building your brand. Showcase your business as a company that’s embracing the future and open to change, and your customers will respect your brand in return. By being adaptable in who you select for your board, you will also be adaptable to further change in the future.
Last and not least, having a diverse board can have a significant impact on revenue. Having an gender-diverse or ethnically-diverse board can boost revenue up to 21% or 35%, respectively. If the social and ethical reasons for having a diverse board aren’t enough, this is the tipping point for most businesses.
When you look at the various pros of having diversity in the boardroom, the correlating increase in revenue comes as no surprise. You’re getting a better picture of your customers, and challenging ideas from more angles. Your brand gets a boost and you get more business as a result. All together, that equals better business and greater profits.
Don’t Check a Box
The biggest mistake a company can make-- next to refusing to change-- is hiring someone for the board of directors or any executive position just to check a box. Don’t hire “a woman;” hire the right woman. If someone who fits the classic picture of a board member seems better qualified, consider that they may have been given more opportunities during their career.
Should your board have the Hollywood-esque picture of a board member on it? Sure. But it should also have women, people of color, and someone from the millennial generation which will soon be the main target market for most businesses. There are enough private and public boards looking for directors that broadening the candidate scope won’t harm anyone.
Finding a Board Position
For those looking to land a board position who fall into the definition of a diverse experience, don’t lose hope. Work with a placement consultant to help you find the right board of directors position for you or a coach to guide you through the process. Highlight your skills and outline how your perspective could help revolutionize a business, because it can!
Additionally, look for those forward thinking companies who understand what’s at stake and value your unique perspective and experience. There is a shift in the way things are going, but there’s still a lot of work to be done. You can help pave that road for others, so that we don’t have to talk about diversity any more; it’s just normal.
Meredith Wailes is the president of Bloom Leadership, founder of SEED, and an advisor and builder of women who impact social change. Contact her via Bloomleaders.com or connect on LinkedIn to see how she can help you.