For companies, both public and private, the guidance and perspective provided by the board of directors are essential to their long-term success. It’s not new news that board diversity is becoming more critical. Many credible studies have proven that companies with strategically diverse boards deliver more robust financial performance, are more innovative, and are more resilient to changing market dynamics.
Over the last several years, many corporate boards have had to adapt to meet the changing business, consumer, and societal landscape of the companies they serve. The intentional refreshing of Director seats has been a significant shift in the evolution of board composition, which has allowed for greater diversity representation.
DHR has worked with many companies successfully to establish a diverse board. Board refreshment allows top leadership to adequately reflect and positively impact all stakeholders, not just shareholders alone. Here’s how they do it:
- Start with the strategy. Building a board for the DEI-valued future is dictated by the long-term strategic plan. Board composition needs to evolve to meet the organization’s changing needs. Gone are the days when a corporate board consists only of CEOs and CFOs. Today, companies recognize the need for a broader set of skills, deeper expertise, and a well-rounded business mindset at the board level to drive organizational change. Take the current focus on digital transformation as an example. Directors who understand and perhaps have led digital initiatives recognize the key contributors and the pitfalls of such a complex change. This board relevancy contributed by an experienced executive alongside the more traditional board competencies demonstrates successful board to strategy alignment.
Companies that create diverse boards first identify experience and skillset gaps noted as essential to directing the company’s future. Then they vet qualified candidates with the requisite background and skillset for culture fit, capacity, interest, and non-conflict ability. In this way, the board is directly aligned with the long-term strategic plan and poised for future success.
- Drive intentional board diversity. Companies that have successfully established DEI initiatives most often demonstrate commitment at the top with board representation that mirrors the organization’s stakeholders, including employees, partners, investors, clients, customers, and the community. What sets these companies apart is that recruiting directors with different skills and backgrounds includes an intentional focus on diversity to better serve the company and its stakeholders.
Directors that understand the “voice of the stakeholder” provide vital guidance to drive strategy and value creation. And it’s critical that each board member bring both unique skills and perspective and can opine across all board topics that are open for discussion, debate, and decision.
- Seek board-ready candidates. Boards that successfully lead with a strong DEI culture actively seek a more diverse slate of director candidates, including first-time corporate board members. Working with an outside executive search firm with a specialty Board & CEO Practice and a dedicated DEI Practice casts a wider recruiting net, opening the door to new and often unfamiliar board candidates. These candidates are not necessarily ‘green.’ They often have board-facing experience, including serving as an executive director, reporting to the board, serving on a not-for-profit board, or being educated and certified in corporate governance best practices.
High-potential executives receive board-readiness training earlier in their careers and have the most relevant experience through recent corporate transformations and technology advances. Strong potential board candidates who have less experience on corporate boards will benefit from more time and resources spent on introducing them to the company and the board. A formal onboarding program can significantly impact the new board member’s ability to contribute earlier and with a thorough foundation relative to the company, the sector, and the region.
Many DHR clients that have fully embraced DEI company-wide started at the top, with the board leading the way. Successful boards focus on diversity to develop an inclusive, future-ready board that aligns with company strategy and positively impacts all stakeholders. We partner with our clients to achieve boardroom and talent success, and we’re proud of those who have led the way.
Directors and CEOs Ready for What’s Next
Our Board & CEO Practice Group combines seasoned executive search consultants, who are members of prestigious and influential boards, with industry thought leaders who offer deep expertise in our clients’ business models.