Does Diversity Matter in the Boardroom?

A company’s board is, essentially, a set of high-level consumer advocates: the board advocates for the customers of the business, so that managers know what customers want and what the board expects management to deliver.The board has the responsibility to provide the overall direction of the organization; it is then management’s job to execute that direction.The problem is that most boards have gotten into the habit of perpetuating kind. They hire board members from the same sorts of talent pools over and over again. In other words: large, major Corporation A hires board members who also ran large, major corporations B and C. The belief is that companies need people who have run corporations in the past to run their company in the present.

My contention is that is not what companies need, and doing so risks their becoming out of touch with consumers, and prevents them from delivering the best results.

The “Expert Model” Trap

Most organizations fall into the trap of the expert model they believe the best leaders are the so-called experts who have led other, similar-sized organizations. What we’ve discovered through Deliberate Diversity is that experts never come up with a more complete answer than a broad set of diverse opinions. Diverse perspectives will always outperform even the foremost expert. Corporate boards need to start understanding that. When boards fail to understand this, they underperform. We see this when boards are blindsided by their companies going out of business, or when board members have no clue that management is misbehaving, or when boards simply do what the CEO tells them to do. When boards act this way, they fail to serve as customer advocates, because they have no idea what customers want. They’re listening to high-level executives, not consumers.

Diversity in the Boardroom

What companies need is people on the board who can look at a CEO’s suggestions with the courage to say, “No, this is unacceptable. We can’t do that, and here’s why.” Every board needs a broad range of perspectives on the business and how it presents itself in the marketplace. They’re not going to get that from people who only think about it from the CEO or CMO level. Organizations need board members who look at it from the consulting standpoint, for example, or the operations standpoint. They also need people who look at it strictly from the customer standpoint: mid-level folks who understand the impact the business is having on society. These people can report vital information, such as what people are saying, what messages the company is missing, and what the company is failing to do well. A diverse board puts high-level leadership in touch with customers and all levels of the company, resulting in a more efficient, effective, and innovative business. Overall, there’s a plethora of reasons why diversity is important at the board level—and a plethora of reasons why we’re doing such a poor job of it now. The goal, then, is ensure that the board has a mix of diverse perspectives that can speak to the concerns of all consumers and company members.