Corporate boards lack diversity in terms of skill sets and mindsets, preventing them from keeping pace with the evolving business environment, according to research by Deloitte. It notes that, while companies embrace innovation and new technologies in the production and business processes, the same cannot be said for the senior executive side of the business: “the recruitment and selection processes of the board often remain firmly stuck in the last century”. Nonetheless, the vast majority of senior executives agree that diverse perspectives and experiences provide a competitive advantage to improving business performance.
Disrupt from the top
But to break the cycle of appointing people with similar profiles and backgrounds to the board, companies need to make a conscious decision to prioritise diversity. Deloitte's US Chairman, Mike Fucci, said companies need to take an immediate and aggressive approach to board diversity: “We must fracture the current system and engage candidates who are not typical c-suite executives in our industry. In fact, those who fail to make this change may be at risk of backlash from business partners, as well as current and prospective employees, who are prioritising diversity when deciding with whom they want to work.”
The majority of board members in the US see retired CEOs as the ideal candidate to appoint to the board, while other key attributes include: c-suite experience, specialised business skills and approach to corporate strategy. However, board members are aware of how demographic diversity can benefit a company:
- 89 per cent of US board members believe moving beyond demographic diversity is necessary to be innovative or disruptive, and
- 95 per cent agree that there is a need for their board to proactively seek out a greater number of board candidates with diverse skill sets and perspectives.
Today's recruiting process 'broken'
Fucci stated. “As leaders, we must challenge the way we approach board composition and advocate to disrupt today’s evaluation and recruiting process, which is currently broken.” This could include having a retirement age for board members and a term limit to encourage greater turnover, as well as disrupting the traditional executive recruitment methods to reach nontraditional candidates.
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