Corporate Board Diversity

A company’s boardroom is a crucible for its organization strategy and a key signal of its social responsibility. A racially and male or female diverse board is essential with regards to better understanding the external environment, identifying stakeholders’ claims and answering them in a well-timed manner.

Studies have shown that the diverse boardroom improves its role-performance/-effectiveness by providing better access to the diversity of external inputs that aid to address stakeholders’ claims and enhance the quality of decision-making (Bowen, 1994; Kakabadse and Vafeas, 1998; Johnson ou al., 2013). Furthermore, that enables better utilisation of this talent pool by allowing for boards to appoint the best participants for their certain functions.

Nevertheless , there are many problems to putting into action such measures. The first challenge is that reaching diversity takes a considerable efforts. It may need a large financial commitment in selecting and training. It also demands the introduction of a favourable board traditions, which can be complicated for some panels.

Another difficulty is that attracting and recruiting directors is definitely difficult, particularly when the number of job hopefuls is low and when you will find few methods available to sponsor from the wider community. The recruitment method often involves relying on a select few people who may have worked in the field or had an opportunity to build relationships in the business.

As a result, a small quantity of individuals who fulfill the requirements happen to be appointed towards the boardroom. This is sometimes labeled as “tokenism” and is a problem that could weaken the board’s role-performance/-effectiveness.

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