Representative boards are on the increase. Proportional community representation is becoming a key driver of board composition.
20 years ago, a female company director was considered a strange and rare occurrence – unless their husband or father had died and they inherited the shareholding it was almost unheard of for large companies to have women on their boards. Now listed companies are scrutinised if less than 30% of the board members are female and a 50/50 gender balance is considered desirable. Government boards have led the way with gender balance now the norm.
Board attention has started to shift to national and cultural diversity. Government boards, in particular, are looking to retain their lead and reconstitute their membership to reflect their communities or to implement social justice policies.
This has led to an influx of people into boardrooms who have not had the ‘typical’ corporate background and who may lack the support of a peer group or mentor who can help them to succeed in the high stakes board environment. In particular, current governance ideals suggest that new directors should immediately have an impact and increase the relevant skills of the board.
A board is a decision-making body, and it is important that all directors contribute to, and support, effective decision-making. To do this, directors need to be able to influence the other board members so that their personal expertise and perspectives enrich the group discussion and consideration prior to each decision being reached. Diverse cognitive and discussion styles can hamper influence and even understanding. This can slow decisions and it is important that diversity never increases to the point that – like, for example, the United Nations – diversity slows decision-making and restricts the ability of the organisation to have an impact.
Three practices can help boards to get immediate benefits from their increased diversity without suffering the risks:
1 – Provide a board education session very shortly after the arrival of the new recruits to establish norms of conduct and expectations. A skilled facilitator will be able to speed up the process of forming (or reforming) the board into a cohesive team. Cover all the basics including conflicts of interest and their management, legal duties and responsibilities of directors, confidentiality expectations, etc.
2 – Develop a comprehensive director induction pack (welcome to the board pack for NFP boards). If at all possible this should be provided to prospective directors before they have joined the board. The pack should contain the forward schedule of board and committee meetings, protocols for minutes and papers, process for information requests, etc. If your new directors know what is expected they will find it much easier to hit the ground running and add value from day 1.
3 – Provide a ‘board buddy’ to help the new director during their first year on the board (either a professional board coach or an experienced director). It can be very helpful to have someone to discuss – in absolute confidence – any surprises or issues as they arise. Ideally this should be someone who is trusted by both the board and the new director and who has a depth of governance expertise to assist the new director.
Diversity makes board decisions better. It is worth putting in the effort to make the trend towards diverse boards pay off for your board.
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