The Benefits of Diversity in the Boardroom

DiverseOver the last two decades, corporate board diversity has been growing steadily. In 2015 women held nearly 18% of the board positions at Fortune 1000 companies—a percentage that has doubled over the last 20 years.

As for racial minorities, they hold about 15% of board roles in Fortune 250 companies and are continuing to make gains.

Regardless of where the current statistics fall, though, the bottom line is that studies show diversity in the boardroom brings many benefits.

We’ve compiled a few of these benefits to share with you:

A diverse boardroom provides a diversity of thought

All board members bring their own personal background and experiences to their position in the boardroom. Each individual mind is capable of offering unique ideas, solutions, and strategies. For boards with a more diverse membership, the breadth of personal experience is wider and more comprehensive.

A diverse boardroom helps address complex, corporate issues

According to a recent study by Russell Reynolds Associates (executive search consultants), “A board needs to constantly challenge itself to keep pace with the changing dynamics a company faces. This is best done through a robust dialogue of differing views as long as they are offered respectfully and listened to carefully… having multiple views on the possible outcomes of an action results in a more thoughtful decision-making process.”

A diverse boardroom is more representative of shareholders

Since boards exist to serve the best interests of shareholders, it makes sense that board membership should reflect the diversity of those very same shareholders. Not to mention, a diverse boardroom is also more reflective of the base of potential clients or customers.

A diverse boardroom increases revenues

For many of the reasons stated above, companies with diverse boardrooms are out-pacing more homogenous organizations in profit growth. According to a recent study from McKinsey & Company, “For companies ranking in the top quartile of executive-board diversity, ROEs (Returns on Equity) were 53 percent higher, on average, than they were for those in the bottom quartile.”

Are you interested in helping add to diversity in the boardroom at your organization? Check out the resources at Catalyst and Alliance for Board Diversity.

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