At a Glance
The panel articulates the best response to questions about the value of board diversity from their view. They bring in research data, anecdotal experience, and high-level framing about the purpose of the board to answer this common question.
My personal experience…and all the research I’ve read…indicates that diverse teams make better decisions, more often. So, this question drives me to a very simple response: Boards, as a team, make important decisions. Diverse teams make better decisions. Boards should therefore be diverse.
I strongly believe that any Board committed to fulfilling their fiduciary duties to shareholders, employees and customers will want to give themselves the advantage of diversity from different backgrounds, genders, race/ethnicity, ages and work experiences. Board service is a challenging job with outsized impact. It seems responsible to take advantage of every proven opportunity to do this important work better
The best answer is that I’ve seen it. I’ve been on boards with people from the government in the private sector, boards with more women than would be typical, boards with people who’ve grown up overseas an not in the country with the board, and actually, they’ve been more effective. There are people who think diversity is just fashionable and it will all pass. Let’s be honest here, older white men can see it as a threat. The best answer is simply that I’ve seen board diversity and it works.
It isn’t just about the people you bring on, but how you assimilate them to the board. I’ve also seen that not work. When I was consulting at Citibank in the 1980s they were bringing in people from non-banking backgrounds and there was a lot of diversity – they were 30 years ahead of their time in that sense – but they hired these senior people and didn’t help them assimilate. Then they weren’t successful, and they all left. The project for including people without direct industry or board backgrounds is figuring out how best to transform a big lump of experience and skills into a new environment, so boards need induction processes which are alert to that challenge.
I can answer that question without the word “board.” Diversity makes a better team, and it makes a better organization. For boards specifically, the goal is to have generative conversations and debate around strategy, so increasing the number of angles from which people can come at a problem improves function. Diversity is also about more than the voice in the leadership, it’s about representation – makes people feel as if they have the potential to get to the top, and that makes people work differently.
When a board is wrestling with any particular issue, it’s really important to have different opinions from different perspectives. Diversity comes in many forms. Most commonly discussed is ethnic and gender diversity, both of which are very important. Age diversity is as well – I’m a young director at 48 and serve on 3 public boards which provides generational diversity in many cases. Different industry backgrounds matter. It’s all about being able to see a business from a variety of perspectives. We just added three female directors to one of the boards that I serve on and I am looking forward to how the board will evolve accordingly. I’ve seen boards begin to increase gender, ethnic, or age diversity by adding a single diverse director, however, one can be a lonely number. In summary, it is important to look at the diversity of the board as a whole, across many different factors.
Diversity is important because it is a critical component of what good board governance for the board to fulfill its fiduciary duties to shareholders or other key stakeholders. Yes, the board is there to assess the CEO, review the strategy, etc., but in order to do those things, they have to assemble the best team possible and that can’t be done using a siloed, uniform approach.
There are numerous studies that demonstrate and quantify the value of diversity, but it all starts with the boardroom conversation. When everyone is reviewing agenda topics, it’s important to have a different voice to say “what about this?” An example from my own experience occurred when I was audit chair. One of the questions I raised was “What has the company’s experience been with #metoo issues?” That’s beyond a typical audit committee, but it hadn’t come up in any other conversations, so I surfaced the topic. While the results were very good, we still needed to talk about it, and if we hadn’t and an issue had emerged, it would have been an even bigger problem.
Donna is on the Board of Directors at Betterment and Happy Money. She previously served on the board of Mindflash, where she was the President and CEO, as well as Boston Private.
Stuart is currently a Non-Executive Director at Lloyds Banking Group and Senior Independent Director at QBE European Operations. His previous board roles include being a Non-Executive Director at Provident Financial Group and a Senior Independent Director at Swinton Insurance.
Matt is currently the Chair of the Board of Directors at YMCA – USA. He is also a member of the board at Zumiez and the Executive Chairman at 5.11 Tactical.
John Hinshaw is currently serving on the Board of Directors at Sysco, DocuSign, BNY Mellon, and the National Academy Foundation.
Angela is an Independent Trustee at Guggenheim Investments (Guggenheim/Rydex) and the YMCA Retirement Fund. She is also an Independent Director at Infinity Property and Casualty Corporation. She served previously as a board member at United Way and the Executive Women’s Golf Association.