This article was written by Olga Mack, originally published on Above the Law.
As I discussed in my previous article, in-house counsel wield the unique power of being in the same room as their CEOs and chairpersons. In addition to their roles as attorneys and risk managers, many in-house counsel are also decision makers and influencers. Because in-house counsel are such trusted advisors, make key decisions, and know their CEOs and chairpersons best, they are particularly positioned to advocate for board diversity in their companies. But once you have a seat at the table, what do you say? These seven compelling arguments can be used to convince your company to pursue board diversity.
- Diversity gives you an increased competitive advantage
Having a diverse board is like killing two birds with one stone, especially in the dynamic, fast-paced business world. With diverse business challenges, a company requires plenty of minds to help overcome the storm and get past challenges with ease. Without a homogenous talent pool, it is easier to make the best informed choices.
- Diverse boards are more effective at planning board work
There are certain procedures that need to be followed when participating in a company’s activities. With a handful of biased members, the chances of achieving success and effective planning are low. However, incorporating board diversity helps clear paths of uncertainty and mistakes since a larger number of people have vetted the concepts used and the strategies to be followed. According to Susan Baker, Vice President of Trillium, an independent investment advisor focused exclusively on sustainable and responsible investing, “Boards with diverse talents and perspectives inclusive of gender and race enhance the culture of innovation and critical thinking in the boardroom.”
- Diversity creates a positive change in the board’s overall behavior
A male-dominated board contributes to a traditionally “masculine” corporate culture. When male board members are implicitly expected to fulfill this “masculine” corporate culture, ineffective workplace behavior flourishes. Although outright misogyny or sexism only occurs in the most extreme cases, even well-meaning companies can develop a culture of unnecessary risk-taking, lack of communication, and inflated egos. When boards are diverse, more traditionally “feminine” values, which are historically less valued, can take hold. These include communication, collaboration, and acknowledging mistakes. This overall leads to a more effective company.
- Diversity leads to more effective corporate governance
In the face of challenges, board diversity promotes corporate governance in that the members brainstorm and come up with various incentives to manage the issues. A more diverse boardroom ensures that everyone has a voice to channel ideas and their views, which are all vital for governing the company and promoting its success. In fact, more effective corporate governance can boost diversity down the line, making for a more sustainable commitment to diversity. Of 15 companies Trillium engaged through dialogue and/or filing shareholder proposals over the past couple of years, all have revised corporate governance documents by adding clear commitments to gender, race, and ethnicity in the criteria they look to in building a board, and nine companies including eBay, Wabtec, Stifel Financial, Palo Alto Networks, Superior Energy, Hartford Financial, Lowe’s, Apple, Discovery Communications, and Cree have appointed one or more women to serve on the company’s board of directors.
- Diversity creates better redress to complex issues
To carefully determine solutions to complex, impactful issues, a company needs a larger number of people who will bring their minds together and share from their past experiences and the knowledge they have acquired. With a diverse board, your board members will have a wide variety of experiences, skill sets, and knowledge bases. You can expect to have better approaches to managing risks and alleviating the issues appropriately.
- Diversity enhances member and culture appreciation
Diverse boards can help your company tackle issues with a better head and from new directions. When making any decision, you should understand its impact. Every person associated with the board comes from a different background, with different beliefs and ways of thinking. By including these people in key decisions, you ensure that the company’s decisions accommodate and respect different groups and cultures.
- Diversity aids with re-evaluation of business goals and requirements
Once you have included board members from a wide variety of backgrounds, you must re-evaluate what the company needs and what you want to achieve at the end of the day. By spurring this re-evaluation process, a diverse board helps in rejuvenating the company.
Your company needs a diverse board, and as in-house counsel, you can help make that happen. Diverse boards have plenty of benefits — besides the fact that hiring diverse leadership is the right thing to do. But making this important change isn’t simple. In this new generation of business and technology, it’s important to rally as many supporters and key decision makers as possible so that the company can make progress, even in your absence. As key decision makers and influencers in close proximity to company leadership, in-house counsel are well positioned to lead this charge. With these seven compelling arguments, you can use your position as in-house counsel to achieve board diversity at your company.