Four strategies to boost board diversity

The importance of diversity to a successful board is now widely accepted (even amongst the laggards). This trend is being reflected in new regulatory initiatives and is why the European Commission President, Ursula von der Leyen, is making a new push at boosting women's representation on companies' boards, trying to unblock legislation for a women's quota which has been stuck since 2012. Greater board diversity is important for several reasons, not least because it sets the tone for the whole company and its members serve as an example of what the company stands for. There is also an established body of research showing that diverse boards correlate with enhanced business performance, which is why the pressure is heating up from investors. Despite all this recognition and evidence, progress remains woefully slow and quite frankly, inexcusable. Women on Boards 2021 Hidden Truth report analysed board diversity across the FTSE All-Share and found that less than half of these companies (48%) have met the target for 33% women on boards and that 37% have only one or no female directors. What’s clear is that conviction alone is not enough. We need urgency and action, and the four strategies below are an excellent place to start. Get everyone on board The first stage is to make sure there is a consensus on your board. Recruiting for diversity requires a shift in mindset and approach, so it’s important that the existing Board is aligned around both the moral and the business case for change. Without this consensus there is danger of tokenism. Some pointers for making the case for change include companies with diverse boards are more profitable, gender diverse boards correlate with less excessive risk-taking and business failure, financial services regulators are encouraging diversity, shareholders and investors are increasingly positive about diversity, or even demanding it, and there’s an increasing reputational risk in a lack of diversity, with customers and staff. Add a new board seat One of the barriers to board diversity is that most boards have a very low turnover rate. An easy way to address this in the short-term is to add a new board seat without waiting for a director to retire or reach their term limit. This is one of the simplest ways to make change happen fast and to instill some urgency into your diversity plans. Longer-term, boards should consider the ways in which they can bring in new and diverse voices on a regular basis. Of course, there’s huge value in the experience and retained knowledge of directors with long tenures but putting in processes that promote routine turnover and emphasise the importance of succession planning will be key. Improve recruitment methods It pains me to say, but one of the most popular methods for recruiting new board members remains referrals from existing board members. If we are ever going to make progress then it’s vital that boards look beyond their existing networks and actively create new opportunities for women, people of colour and other typically underrepresented groups. Advertising your role openly and transparently will not only ensure a strong pool of candidates but can also increase your customers and staff confidence in the successful appointment. Women on Boards offers a bespoke recruitment service that helps you to bring in more diverse candidates and your own channels like social media and marketing should also not be underestimated as a source of candidates. Open recruitment will help to close the gap on board diversity but simply advertising a role does not guarantee broadening the perspectives available in your boardroom. To recruit people outside the 'usual suspects', you need to change your usual recruitment practices overall. This is not about giving women or underrepresented groups preferential treatment. It is a shift in focus to turn off the spotlight on familiar types of non-executive to turn on the floodlights to the full range of talent who can add value to your board. Make a Visible Commitment Transparency and accountability go hand in hand and disclosure drives action. Your approach to diversity should be detailed publicly and include measurable targets and timescales. A published board diversity statement is not enough, it’s important to provide insights into the diversity of your board and your goals. To stay focused on your dedication to diversity, monitor your progress regularly. Identify key metrics and publicly disclose your progress. This method will show commitment and hold the team accountable. Our recommendation is to set targets over a three-to-five-year time horizon and report annually on your progress. For more information visit www.womenonboards.net Fiona Hathorn is CEO and co-founder of Women on Boards UK, an organisation that supports women – from all sectors – to find their own pathway to the boardroom.