Diversity is important when it comes to board composition. However, boards should think about diversity beyond the conventional sense.
When building a board, it’s important to consider diversity in experience, skills, and backgrounds in order to keep it well-rounded. Balanced boards with diversity of thought tend to have better conversations, make smarter decisions, and employ a more holistic approach when handling issues. Understanding the concept of board composition helps to build a more diversified board.
Ready to effectively diversify your board of directors? Read on to learn more.
What Is Board Composition?
Board composition refers to the people in an organization’s board of directors and what they bring to the board table, such as their management background and skills. Board composition varies widely depending upon an organization’s goals and industry.
Diversity in terms of members’ experience, skills, and backgrounds can improve board performance. It offers deep insights, a wealth of experience, and the multiple perspectives necessary for an organization to tackle challenging industry issues.
Recruiting a Diverse Board
Identifying what diversity looks like is the first step toward building a more diverse board. Run an audit of your board’s composition and identify diversity gaps to identify where to focus. Consider all types of diversity, from race, gender, and abilities to backgrounds, skills, and qualifications. Diversify your board with these tips.
Cast a Wide Net
According to PwC research, one of the biggest misconceptions in organizations is that there’s a shortage of qualified candidates to diversify board composition. To reach more candidates, one consider expanding recruitment efforts one or two levels below the C-suite.
In addition, many boards rely on their internal networks when finding new members. Go beyond this inner circle to explore untapped recruitment opportunities who will truly diversify your board and drive real change.
Sources for finding qualified candidates include executive leadership programs, professional associations, local universities and colleges, and MBA programs. You can also use executive search firms if the organization’s budget allows it.
Add a New Seat
Low board turnover hinders board diversity. A recent study revealed that about half of America’s largest publicly-traded organizations hadn’t changed their board composition within the previous year.
Fortunately, there’s a simple way to solve this problem: A company can add a new board seat temporarily or permanently without waiting for a board member to reach their term limit or retire.
Have Adequate Succession Planning
Most boards only begin examining succession planning when a member is about to retire. And even then, they are not always clear about the succession plans. According to a survey of board members, fewer than half of the participants (49%) said their board shares succession plans with all directors. About 10% said their board didn’t have a plan at all, and the rest said their board’s succession plans were impromptu.
Last-minute succession planning hinders effective recruitment, which may hinder diversity efforts. Your board should have clear succession plans before they are needed. Then, it should regularly revise the plans to ensure they address changing requirements and priorities tied to diversity. Most importantly, the plans should be clear to all board members so they can voice concerns if diversity isn’t prioritized appropriately.
Use a Board Skills Matrix
An effective board skills matrix maps out directors’ attributes and skills to help companies identify what they already have and are missing. It helps identify when a board composition needs a refresh. Most matrices list characteristics of directors in an Excel-like format.
A board skills matrix covers various skill sets, values, and perspectives, including;
- Professional rank
- Area of expertise
- Years of board service
- Demographic information
When recruiting, consider a mix of first-time seat holders and veteran directors to maintain a good balance in the board composition. Boards with long-time directors provide insights that can only be acquired through experience and can help the organization stay true to its goals. On the other hand, first-time directors who are not retired can diversify the board by providing knowledge to handle current trends.
How Skills Tracking Can Revolutionize Boards
Tools within a board portal platform, like skills tracking, help add data to recruitment efforts. OnBoard’s purpose-built board management platform includes Skills Tracking, among other essential features for modern board governance. It helps boards:
- Manage skills tracking for their boards within the OnBoard platform
- Identify skills gaps in their current boards
- Make informed decisions for new member recruitment or succession planning that aligns with their strategic direction
- Save time and minimize complexity by having their board composition data in a central, secure location
Ready to create a more diversified board? Request a free trial today to see how OnBoard helps organizations make data-driven recruitment decisions.
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About The Author
- Josh Palmer serves as OnBoard's Head of Content. An experienced content creator, his previous roles have spanned numerous industries including B2C and B2B home improvement, healthcare, and software-as-a-service (SaaS). An Indianapolis native and graduate of Indiana University, Palmer currently resides in Fishers, Ind.
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