Board Diversity is a matter that has come into more attention due to significant shifts in society and worldwide protests. Many companies have responded by increasing the number of female and minority directors. However, some companies are moving beyond the limits of racial and gender diversity by making sure they have cognitive diversity (the variety of skills experience, perspectives and experiences on issues that could improve decision-making).
A diverse board can be more effective than a homogenous one. Boards with a diverse background and expertise can tackle complex problems in a new way and stay clear of the groupthink that restricts thinking.
This is one reason why many activists and investors want to see more cognitively diverse boards. Boards with different perspectives, experiences, and viewpoints will help them react to major changes in the world of society more efficiently and effectively for example, the rapid growth of environmental, social and governance (ESG) issues.
Boards with diverse backgrounds are more likely to be cognitively diverse. This allows them to identify issues more quickly and efficiently. It is easier to resolve these issues when a broad variety of perspectives is available, and when members challenge each other and ask tough questions.
A diverse board does not guarantee success however. Boards must be able work together despite their differences. This requires the chair to know how to conduct productive discussions and foster collaboration between people with different views and perspectives. Otherwise, it could lead to internal conflict and a decline in productivity.
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