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The Impact of Board Diversity on Corporate Performance

mayo 23, 2023editorUncategorizedNo hay comentarios

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

An argument that is often cited is the fact that a board with a greater variety of genders and ages will have a wider knowledge base. This knowledge would not be available to the men and women who are all the same. In other words that a board with more diversity is likely to have more «cognitive variety» and have more options in deciding how to move the company forward than a less-diverse one.

But there are other elements in play. The people who are considered to be tokens or minorities in the group might self-censor and refuse to express opinions and beliefs that do not agree with the majority. The board may not be able take full benefit of its cognitive diversity.

In addition, although studies show that demographic diversity could influence board decisions, it also suggests that this isn’t the only thing to consider. Other aspects, such as the independence of board members and their educational qualifications as measured by the number of years of education that are beyond a bachelor’s level can have a significant impact on performance.

Companies seeking to improve their boardroom composition must be innovative in the search for new members. For instance, companies could, consider https://boardroomsales.com/ reaching out to business schools and universities to find potential candidates. They could also create task forces that are tasked with examining areas where the best candidates might not be readily available. This is a more effective method of increasing diversity than relying on consultants, whether internal or external.

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