Numerous studies show that diversity can have an impact on board performance. Diverse members can bring diverse perspectives as well as experiences and angles of tackling a challenge. This could lead to solutions that could otherwise be overlooked by an homogenous board. This is particularly the case for boards that comprise people from groups that are underrepresented. They will gain an understanding of the preferences and cultures of these groups, which can assist them in serving these groups better as clients.

Moreover, the presence of diverse backgrounds and experiences in the boardroom can boost confidence and morale. When board members feel their voice and experience are being represented they are more devoted to the success of the business. This is why it’s vital to keep track of the progress of your board in promoting diversity and identifying obstacles that must be addressed.

Diversification can also be used to reduce risk. A recent study by Berger et al. The study revealed that a greater gender and age diversity on the board resulted in more effective risk management, as well as an lowered risk of risk of being exposed to market risks. It should be noted however that the study indicates that a large amount of diversity on the board could cause issues with cohesion and communication.

Additionally, boards that have a diverse composition are more aware and attentive to the unique challenges faced by communities with a low representation. This may encourage them to take steps to promote social responsibility in their businesses. This is why it’s essential to continue to search for and recruit talented women as well as people of color and LGBTQ candidates for board posts.