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What Crucial Component Can Turn Your Board into a Rocket Ship?
If you’re a startup founder, a CEO, or a board member, you know how important it is to have a high-performing board of directors. A board that can provide strategic guidance, constructive feedback, and valuable connections can make the difference between success and failure, between growth and stagnation, for your company. But what makes a board high-performing? What crucial component can turn your board into a rocket ship that can propel your company to the next level? In this blog post, we’ll explore the answer to that question and provide some tips for how to implement it.
The Answer: Diversity
The crucial component that can turn your board into a rocket ship is diversity. Diversity in all its forms: gender, age, ethnicity, race, culture, experience, skills, and perspectives. Why is diversity so important for boards? Let’s look at some facts:
– Studies have shown that diverse teams make better decisions, are more innovative, and outperform homogeneous teams. For example, a McKinsey report found that companies in the top quartile for gender diversity on their executive teams were 21% more likely to experience above-average profitability than companies in the bottom quartile.
– Customers, investors, and employees increasingly demand diversity and inclusion from companies. According to a survey by Deloitte, 77% of millennials say that diverse and inclusive teams improve overall performance. Moreover, diverse boards can better reflect the diversity of their customers and markets, which can lead to better products, services, and branding.
– Regulatory and reputational risks associated with lack of diversity are increasing. Some countries, such as Norway, Germany, and France, have quotas or targets for women on boards. In the US and the UK, investors and proxy advisors are increasingly scrutinizing board diversity as a factor in their voting decisions. Also, lack of diversity can damage a company’s brand and customer trust, especially in sensitive issues such as privacy, security, and social responsibility.
Therefore, if you want your board to perform at its best and appeal to diverse stakeholders, you should prioritize diversity as a strategic goal. However, that’s easier said than done. How can you increase diversity on your board? Let’s look at some tips.
Tips for Increasing Board Diversity
1. Define and communicate your diversity goals: Before you can recruit diverse board members, you need to clarify what diversity means for your company and why it matters. You can start by conducting a diversity audit of your board and your company, analyzing your customer demographics, and benchmarking against your peers. Then, you can set specific diversity goals, such as increasing the percentage of women or underrepresented minorities on your board, and communicate them internally and externally. Be transparent about your progress, challenges, and opportunities, and seek feedback from stakeholders.
2. Expand your search criteria and sources: To find diverse board candidates, you need to look beyond your usual networks and pools. You can explore diverse professional associations, affinity groups, and online platforms, such as LinkedIn, Boardroom Bound, Women on Boards, Black Corporate Directors Conference, or Latino Corporate Directors Association. You can also partner with executive search firms that specialize in diversity and inclusion, offer training and coaching for board diversity, and tap into existing networks of diverse leaders. By expanding your search criteria and sources, you can increase the likelihood of finding talented and diverse board members who can bring new perspectives and skills to your board.
3. Focus on merit and fit, not just diversity: While diversity is important, you should also prioritize merit and fit when selecting board members. You need to ensure that your board members have the skills, experience, and character to contribute to your company’s strategic goals, culture, and values. You should also assess their potential conflicts of interest, independence, and commitment. By balancing diversity, merit, and fit, you can build a board that is both diverse and effective.
4. Create a culture of inclusion and equity: Having diverse board members is not enough if they don’t feel welcome, respected, and valued. Therefore, you need to create a culture of inclusion and equity that promotes respectful communication, active listening, constructive feedback, and meaningful participation. You should also provide training and education for your board members on diversity and inclusion topics and lead by example by promoting diversity and inclusion throughout your company’s operations. By fostering a culture of inclusion and equity, you can ensure that your board members can bring their full selves and talents to the table and contribute to your company’s success.
5. Measure and celebrate your diversity progress: To sustain and improve your board diversity, you need to measure and celebrate your progress in a systematic and meaningful way. You can use metrics such as percentage of women, underrepresented minorities, or diverse directors on your board and track them over time. You can also create a diversity scorecard that includes qualitative factors such as diversity of skills, perspectives, and experiences. Moreover, you can publicly recognize and reward your diverse board members for their contributions and impact on your company. By measuring and celebrating your diversity progress, you can reinforce the importance of diversity as a strategic goal and motivate others to follow.
Conclusion
Diversity is the crucial component that can turn your board into a rocket ship. By prioritizing diversity as a strategic goal and following these tips, you can increase your board’s performance, relevance, and resilience. You can also contribute to the larger goal of creating more diverse and inclusive organizations and societies. So, what are you waiting for? Take off with diversity!
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