Harnessing Board Diversity
Diversity anchored in long term strategy sharpens a board’s response to challenges and opportunities
Board diversity is as much about performance, risk management, and long term resilience, as it is about values. To harness its premiums, boards need an inclusive culture, a deliberate approach to composition, and structures that advance outcome-focused governance. Diversity translates into performance when the environment allows perspectives to be heard, considered, and built into the decisions that guide the organisation.
Practical Tips
- Take stock of where you are, and where you want to be. Start by setting clear goals for your board diversity. Leverage robust individual director assessments so you can evaluate whether each sitting director’s skills and attributes still align with the organisation’s strategy. Then shape a board for the future that has the right skills and diverse perspectives to steer the organisation to its ambitions.
- Refresh composition with a skills plus diversity matrix. When scouting candidates, move beyond generic “financial expertise + industry veteran” combinations or “CEO-only” requirements. Build a board skills matrix aligned to strategy and overlay demographic and cognitive diversity attributes. A matrix helps visualise the different experience and skills current and prospective board members can contribute. It brings a deliberate approach to board composition, and informs refresh cycles, retirement policies and succession planning.
I’ve seen first-hand how cognitive diversity broadens market insight, open new doors to networks and opportunities and drives effective strategies. But getting the ‘right’ diversity into any room is only the beginning. Inclusion is what puts diverse perspectives to work.
Loh Boon Chye, CEO SGX Group
- Enhance the board recruitment process. Charge the Nomination or Governance Committee with overseeing director search and nominations. A Committee that comprises members of diverse backgrounds can also strengthen the process of increasing diversity on the board.
- Tapping professional bodies and director development institutions (such as CBD, Institute of Singapore Chartered Accountants and Centre for Non-Profit Leadership) and Singapore Institute of Directors, for recommendations, board listing and board matching.
- Scouting other sectors where individuals have complementary skillsets, functional expertise or market expertise
- Engaging search firms that specialise in board appointments. They offer access to a broader talent pool and provide intelligence on compensation trends, skill needs and regulatory expectations.
- Cultivate an inclusive boardroom culture. Diverse board composition alone does not deliver better outcomes. To fully benefit from their perspectives and experiences, boards must create an environment where all directors can contribute meaningfully and influence decisions. Methods include establishing structured onboarding and meeting protocols that ensure everyone speaks.Board chairs play a vital role in shaping board culture. Building trust among directors, both within and beyond the boardroom, helps foster open dialogue and constructive challenge. Chairs must balance creating space for diverse perspectives with maintaining momentum towards decisions, ensuring discussions are both inclusive and productive.
As part of the journey towards better corporate governance, boards must learn to foster a culture where constructive challenge and debate are the norm.
Gan Seow Kee, Co-Chair, Council for Board Diversity
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- Maintain and disclose your board diversity policy and progress. Investors, employees and customers want to see a credible narrative linking board composition to strategy and risk. It is important is to demonstrate how diversity targets result in the skills, experience and values necessary to support the organisation’s long term strategic objectives, to futureproof itself against disruption and meet the pressing challenges of the day, such as digital transformation, human capital and ESG.
- Develop a diverse pipeline. A common barrier to board diversity is the perception that quality talent with differentiated experience is limited. Addressing this requires looking beyond the current boardroom. Directors can help shift this narrative by actively sponsoring diverse talent within their professional networks for board opportunities. They should also give their organisation’s rising stars the time and opportunity to develop and demonstrate their leadership – ultimately preparing them for board roles.
