Success and Society: Why diverse boards make better decisions
So many decisions in business, and indeed the world, do not consider all of the relevant implications and repercussions: too often this is because people with different perspectives are not involved at the highest levels. Baroness Goudie, founding member of the 30% Club, reflects on why diversity in the board room is essential for companies, societies and fundamental human rights.
Many studies have shown that having a more diverse board is good for business. Having an effective board of directors is crucial. Even if one might not be able to name its members, they have a strong impact on how an organisation is run and makes decisions.
Bringing in a variety of perspectives, backgrounds and experiences can ultimately be key to an organisation’s success. One way to do this is through gender diversity on a board; and yet, women only make up a small percentage of boards of directors.
There are several reasons that companies with more diverse boards perform better. One is that they often more accurately mirror customer and client bases. Having a diverse board can improve your understanding of purchasing and usage decisions, particularly as studies have found that women often drive 70-80% of purchasing decisions, and help you better understand your customers. Without women on your board, you are missing a valuable opportunity to bring in voices that represent this broad swath of potential and actual customers and clients.
Another benefit of having diverse boards is that including women, especially in those companies involved in manufacturing, food supply and clothing is to have leaders in charge that are proactive in targeting the ever-present problem of human trafficking.
There are an estimated 40.3 million people in modern slavery around the world. Someone is in slavery if they are:
- forced to provide some type of labour or commercial sex act through coercion, or mental or physical threat;
- owned or controlled by an ’employer’, through mental or physical abuse or the threat of abuse;
- dehumanised, treated as a commodity or bought and sold as ‘property’;
- physically constrained or have restrictions placed on their freedom of movement
Every year, millions of men, women and children are trafficked in countries around the world. It is estimated that human trafficking generates many billions of dollars of profit per year, second only to drug trafficking as the most profitable form of transnational crime.
Human trafficking is a hidden crime as victims rarely come forward to seek help because of language barriers or fear, both of the traffickers and law enforcement.
The goal of every business is profitability and success but an additional challenge for companies is improving the overall wellbeing of society. It is now time for companies to commit to making an impact by understanding every level of their corporate structure and how each level impacts people’s lives. Having more diverse boards will broaden their power and drive corporate-wide ethical standards.
Forward-thinking senior executives are now realising the importance of a diverse workforce – powered by voices of people from different backgrounds, personalities and thinking styles – where all people are encouraged to draw upon their unique experiences. To achieve this in a global work setting, it is crucial to employ a diverse group of individuals, who can effectively develop corporate procedures and training plans to advance not only business goals but also equality and human rights.