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The Impact of Board Diversity on Corporate Performance

The benefits of diversity on boards are well-documented, and efforts to improve the representation of women and minorities in the boardrooms have begun to pay off. However the impact of this diversity on the performance of corporations is still largely unknown.

A common argument is that a board with greater diversity of genders and ages will have a wider knowledge base. This knowledge would not be accessible to a group of men and women who are all the same. A board that is more diverse is expected to be more “cognitive” and explore many options when it comes to how to move a company forward.

There are other elements involved. People who are viewed as minorities or tokens of a group may self-censor or avoid expressing opinions and beliefs that do not agree with the majority. In the end, the board might not be able to fully take full benefit of the cognitive diversity it has incorporated into its makeup.

Furthermore, even though studies show that demographic diversity can have a positive influence on board decisions, it suggests that this isn’t the only factor that is important. Other characteristics, such as board independence and educational qualifications, measured by number of years of college education https://boardroomsales.com/ beyond a bachelor’s degree, can have a significant impact on the performance.

Companies looking to improve their boardroom composition must be creative in the search for new members. For instance, they could consider reaching out at businesses and universities to find potential candidates. They could also form task forces that are tasked with examining the areas where the most qualified candidates may not be visible. This is a more effective strategy to increase diversity rather instead of relying only on consultants, whether internal or external.

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