The most progressive and innovative companies and organizations are pushing for a more diverse workforce to perform executive-level positions and to sit on their boards of directors. The idea has gone from being a practice that is simply the right thing to do or that is required toward a more pragmatic realization that it makes real business sense.

A variety of studies and surveys are beginning to document that those companies which add diversity candidates to their boards are convinced that the company benefits quantitatively and qualitatively. McKinsey conducted a study of business leaders who indicated that those companies with female directors saw financial improvement in their organizations. The Big Four public accounting firms and a number of other large public companies have invested millions of dollars in their diversity programs because they realize “diversity is good for business”. Similarly, smaller and privately held companies and their boards have recognized a number of additional benefits, including:

Positive Perception of the Company

• Management and employees realize that the company is committed to diversity, and they get reassurance that their career opportunities are genuine. Employee turnover is reduced.
• Diverse job candidates recognize the commitment to diversity and often select the company with the diverse board versus another opportunity.
• Customers appreciate the policies and programs geared to a diverse clientele, and they become more loyal, and possibly larger, customers.
• The board’s cultural awareness translates into a positive impact on the company’s brand recognition in the communities it serves.

Connections to New Customers and Communities

• Diversity board candidates are aggressively sought by nonprofit and community boards; thus, these people have extensive ties to their communities which will benefit the company.
• Diversity board members bring new customers that may have never been considered before.

Competitive Advantage

• Every company seeks to distinguish itself in the marketplace, and board diversity can provide that advantage.

Low Cost Positive

• During difficult economic times, a company is hesitant to add new employees or to invest heavily in a new program. The addition of a new board member with fresh ideas and a different perspective on the market can be a relatively inexpensive spark to help the company move forward.

Generally speaking, adding diversity to a company’s board will not work if it is done “because we have to”. However, if a board makes a thorough evaluation of its business and the talents of its existing board members, it may determine that the ability to more appropriately serve its various constituencies can be greatly enhanced by adding a director with the required skills and experiences who also possesses a different market perspective. It is this assessment that is leading top companies to make a genuine effort to add diversity to their boards.

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Carl J. Taylor & Co. is a management consulting and executive search firm. For an in-depth look at the firm’s diversity executive recruitment services, please visit DiversityExecutiveRecruiting.com. You may also call Carl’s office at (972) 490-7697.

The Board of Directors of any organization or company plays a critical role in that entity’s existence and success. Its many duties include establishing the strategy and direction for the organization, selecting, supporting, and reviewing the performance of the chief executive, ensuring the availability of adequate financial resources, accounting to the stakeholders for the organization’s performance, and many others.

In light of these important duties, every board wants to make sure that it brings together the directors who will enable the organization to be the best it can be. Each new or replacement director will serve a key role in the board’s ability to accomplish its objectives.

During the past several years, a number of trends are occurring which have a direct impact on a board’s ability to expand and/or replace its members. There are more independent, or outside, directors, especially in publicly held companies. The larger work load and the enhanced visibility of the board have significantly increased the amount of time an individual devotes to his/her board duties. As this time requirement has grown, experienced board members are reducing the number of boards on which they serve. Many experienced board members are retiring or they are reaching an age where they may not be as effective in a demanding board role.

As many boards seek new members, they often target similar candidates. Chief executive officers of other companies are sought by boards because of their professional success, their strategic role within their own organization and its board, and their demonstrated ability and willingness to contribute to the success of an organization. Unfortunately, the time requirements of serving as a CEO and as a director on another company’s board limit the number of boards on which these individuals may participate.

This shrinking number of traditional directors has forced companies to expand their horizons as they consider the addition of a new board member. In addition, boards are taking a closer look at the organization they represent and the many constituencies (employees, customers, vendors, stakeholders, communities, etc.) which they serve.
The marketplace is changing, and many boards are realizing they must change with it. As the recent Census confirmed, the U.S. is, and will continue to be, a country with a wide variety of people. All companies and organizations which seek to employ and serve this diverse population must make sure that they understand the various backgrounds, needs, and wants of these people as well as they can.
The most progressive and innovative companies and organizations are pushing for a more diverse workforce to perform executive-level positions and to sit on their boards of directors. The idea has gone from being a practice that is simply the right thing to do or that is required toward a more pragmatic realization that it makes real business sense.
These companies are not making revolutionary disruptions to their boards, but they are adjusting to the evolution in American business which will enable them to continue to lead the success of their organizations.

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Carl Taylor is President of Carl J. Taylor & Co., a management consulting and executive search firm. For an in-depth look at the firm’s board of directors and executive recruitment services, please visit www.carltaylorco.com. You may also call Carl’s office at (972) 490-7697.