Numerous studies show a positive effect of diversity on board performance. A diverse group of people has different experiences, perspectives and angles to consider an issue, which can result in solutions that would otherwise be missed by a more homogenous board. This is especially the case for boards that comprise members from underrepresented groups. They will have insights into the preferences and culture of these groups, which could aid them in serving these groups as clients.

The diversity of backgrounds and experiences on a board can increase morale and build trust. If board members believe that their opinions and experiences are heard and respected, they are more dedicated to the overall success of the company. It is important to track your board’s progress in promoting diversity, and identify any barriers.

Diversification is also a method to decrease risk. A recent study by Berger et al. found that greater gender and age diversity on the board can lead to more effective risk management at the operational level and a lower exposure to market risk. The study also shows that however, that high levels of diversity in the board can result in issues with communication and cohesion.

Furthermore, boards that have a diverse composition are more aware of and sensitive to the particular challenges faced by underrepresented communities. This could encourage them to take steps to promote social responsibility in their business. This is why it’s essential to continue to identify and recruit skilled women as well as people of color and LGBTQ candidates for board positions.

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