7 Steps to Improve Board Diversity.
We all know, or should know, that diverse boards are better boards and have the capacity and insight to make better decisions. But this will not happen overnight and needs to be thoughtfully planned if you are starting from a low base of understanding.
Step 1: Start the conversation
Its easy to throw the words diversity (and hopefully inclusion) around, but what does it actually mean. Diversity will mean different things for different organisations and this needs to be understood. Most organisations service a customer or user base. A board that understands the diversity of that customer or user base has a better chance of succeeding. For example, it’s unlikely that an all male board will understand the needs and wants of a female customer base to whom they sell cosmetics will work.
So the first step might be that the Board asks a NED to present a paper on diversity to raise awareness. This should outline the benefits of board diversity and the obstacles to be overcome.
Step 2: Develop a Board Diversity policy
Assuming the board embraces the proposal then it needs to develop a policy for the board that makes this aspiration real. The policy should encompass targets for the board to deliver on the policy.
Step 3: Demonstrate the Boards commitment
Publish the policy on the company’s website, talk about it at AGMs, reflect it in the annual report. More importantly provide reports on progress against the targets set.
Step 4: Make sure the Nominations Committee are involved
A key role of the Nominations Committee is to recruit the future talent the board needs. The board may even need to review the composition of the Nominations Committee to ensure that there is no unconscious bias at work. Nearly impossible, but worth considering!
Step 5: Examine current board processes
The Nominations Committee will need to assess what the diversity gap and what they need to do to address it. Filling the gaps as director step down will provide the opportunities to bring balance to the board in terms of diversity.
Step 6: Recruiting the diverse talent
Diversity will different for different organisations. So the Nominations Committee will need to be very clear on the profiles they are seeking and the value they will add to the board. If the organisation was quoted company, any new board appointment should result in an increase in share price. The same would apply here.
Step 7: Welcoming and Inducting new board members
Newly appointed members coming from diverse backgrounds may have limited board experience. So your organisation will need to ensure that it has the appropriate induction programmes and mentoring programs in place to ensure new members have access to advice and support to facilitate their transition to being effective board members.