A diverse board helps companies find innovative solutions to complex problems. Traditionally, directors have been largely been in the same age demographic group. This means that they often bring similar experiences and insights to the boardroom, leading to a narrow scope when it comes to decision-making. By bringing diverse perspectives to the table, you present a challenge to the orthodoxy and uncover new strategic options.
Thankfully, boards are becoming more diverse. In some cases, this is being led by mandatory quota legislation. For example, Belgium and the Netherlands require 33% of board members to be women, with that figure standing at 40% in France, Norway and Italy.
But, even where there is no law compelling boards to be more inclusive, the results speak for themselves. Those companies in the top quartile for both gender and ethnic diversity on their boards outperform competitors financially by 9%. And those in the bottom quartile are 66% less likely to outperform, and the gap is growing larger.
One way to help achieve better inclusion is to formalise your approach to gaining a better balance. This article provides a board diversity policy template to help you create a strategy that encourages positive inclusion on your executive team.
What is a board diversity policy?
A board diversity policy is a document that a company creates to outline what it wants to achieve in terms of diversity on its board of directors and the steps it will take to achieve that.
This document sets out its goals, the types of diversity the board hopes to improve, the steps the company will take, who will be responsible for setting in place the new processes and how they will be communicated to other stakeholders.
The policy should be easily accessible by directors and employees, as well as being part of the employee handbook and orientation pack for new directors.
Core elements of a board diversity policy
| Element | Explanation |
| Commitment to diversity statement | You should open with a statement highlighting why the company believes it is important to build a diverse and inclusive board. This adds credibility to the policy. |
| Clear diversity objectives | To be effective in your diversity processes it must be clear what constitutes success for the policy and strategy. |
| Scope of diversity | Diversity is not just confined to ethnicity, age and gender. It is also important to understand the benefits of diversity of experience, thought and expertise. Make sure you define what you mean by ‘diversity’. |
| Roles and responsibilities | Assign roles to those in charge of ensuring the diversity policy runs smoothly and is effective in its aims. |
| Selection and recruitment procedure | Outline how you will run your board succession processes to ensure that the nomination committee identifies suitable candidates that help to build a more balanced and diverse board. |
| Training and development | State how you will upskill your stakeholders to be able to implement the board diversity policy. |
| Monitoring and evaluation | To understand how successful your policy is, you should create key performance indicators (KPIs) and monitor your progress towards them. |
| Reporting and transparency | Reporting on your progress regarding diversity is important. Be transparent about your processes and the success of them. This holds stakeholders accountable for their contribution to the strategy. |
| Policy review and update schedule | State how often you will review your policy and update it in line with your findings. |
Steps to write your board diversity policy
Define the purpose and scope
The policy should be absolutely clear over its aims and intentions. This is why the purpose and scope are key to the success of your diversity strategy.
- Purpose: Explain why diversity is important to the board and what benefits a more diverse and inclusive board would bring to the business. Note that diversity will bring varied perspectives that will lead to better decision-making and that it will lead to better representation for a wider range of employees, customers and other stakeholders.
- Scope: Specify who the policy applies to, namely all current and future directors of the business and members of the various board committees. Also, ensure you add all the different types of diversity that should be represented, whether that is social diversity (gender, race, national origin, sexual orientation, disability and so on), professional diversity (outlook, experience, characteristics, etc.), or both.
Establish policy objectives
Make sure stakeholders understand what you want to achieve by implementing this policy. Make your objectives clear so that there is no ambiguity as to what would be deemed a success. This might include elements such as:
- Achieving a balanced representation of genders and ethnicities
- Ensuring a range of professional experiences and skill sets
- Promoting an inclusive culture within the board
- Better reflect stakeholder demographics
- Developing board skills and competencies
- Attracting and retaining talent.
Set measurable goals
Consider which goals will help you meet these policy objectives. Ensure they meet the requirements for SMART goals, in that they are Specific, Measurable, Achievable, Relevant and Time-bound.
By creating SMART goals, you ensure you are working towards aims that will make a real, tangible difference to your organisation. Goals that fit the profile for your policy could include, for example:
- Set a target percentage of 33% female or minority board members
- Add at least one board member under the age of 40
- Ensure that 50% of candidates for board positions are from diverse backgrounds
- Ensure 25% of directors have expertise in technology or digital innovation
- Set a target percentage of 30% for board members with degrees outside of business or financial subjects.
Develop selection criteria
Create criteria that the nomination committee can use to select appropriate candidates for board positions. Consider how they will emphasise the diversity that you want to see on the board, whether that is social or professional diversity.
By adding this detail into your policy, you are being transparent and helping all stakeholders understand how the process will run in order to meet your goals.
This could include using a board skills matrix that will help you identify where the gaps are in your board’s make-up, allowing you to prioritise those potential board members who possess the necessary qualities.
Outline how this feeds into the recruitment process and how you intend to find the right candidates through using non-traditional recruitment channels and networks, as well as stating how diversity will be woven into sourcing, interviewing and selection.
Implement training and development
One of the key areas of development for those involved in the recruitment and selection processes is diversity and inclusion training. This should be ongoing in order to make fair decisions that provide opportunities for a wide range of candidates and work in the interests of the company as well. Consider modules on overcoming unconscious bias as part of this.
You can also provide development opportunities for candidates who might not usually see themselves represented at the executive level. This outreach will help you widen your pool of potential new directors for future positions.
Mentoring is another way to help ensure that your board is a welcoming, supportive and inclusive environment for candidates of all backgrounds.
Monitor and review
Establish a mechanism to monitor the progress of your diversity policy, using the measurable element of the SMART goals that you have put in place. If you are failing to meet your objectives, you will have to review your policy and adjust your goals to be more realistic or the methods by which you are attempting to meet these objectives.
Report on your progress to the board and consider ways to improve the policy so that you achieve your aim of building a more diverse and balanced board of directors.
Communicate the policy
The only way that a board diversity policy will help you achieve success is if you communicate it to all stakeholders, including fellow directors, employees, shareholders and the public.
Publish the policy on your website, on your staff intranet and in the company’s annual reports. The policy helps the company display its ESG credentials as well as attract and retain talent who will recognise your mission to create a more equitable board.
Board diversity policy template
To help you create your own board diversity policy, download our board diversity policy template. You can fill it in with the specific details of your company’s diversity goals and you will also get a number of complementary templates to help you with board management.
Meeting agenda, annual plan, board resolution and more templates to use in your meetings
Challenges in achieving board diversity
- Addressing implicit bias in board selection. The stereotypical view of which attributes make a board director can be subconsciously implanted in the brains of many decision-makers. This can manifest in them unwittingly skewing towards certain candidates and away from others. Countering this takes training and personal development.
- Adapting to changing demographics and social norms. Assembling a board with diverse talents can be a sensitive task, as social issues develop. Those in charge of the recruitment process must be fully versed in these matters and adjust the company’s approach to diversity so it does not seem just like virtue signalling.
- Navigating resistance to change. When directors are used to working with people of certain backgrounds and with particular attributes in leadership positions, it can take them out of their comfort zone when considering a more diverse boardroom. You should reassure them that the policy is in the best interests of the organisation.
- Ensuring diversity beyond tokenism. There must be substance behind your diversity policy and it should not encourage recruiting diverse directors just for the sake of meeting targets. Communicate the substance of the policy and the benefits for the business.
FAQ
How often should we review our board diversity policy?
Schedule regular reviews of your board diversity policy, ideally every year. At this stage, consider what is working and what is not. Adjust your policy accordingly to make sure you are working towards goals that will be of benefit.
Can a board have too much diversity?
Diversity is important for a board, but you are hoping to achieve balance in terms of skills and outlook as well as demographics. Simply choosing a candidate for their background or demographics is no use unless they also bring skills and expertise to the board. Board diversity means that you look beyond the traditional candidates to find talent from a wider range of potential directors.
How do we measure the impact of our board diversity policy?
Use a skills matrix to understand the gaps in your board and set SMART goals to fill those gaps with suitable candidates. That way, you can compare your progress against measurable targets to understand the impact they are making on your leadership positions.
How does equity differ from equality in the workplace?
Equity in the workplace focuses on providing individuals with the resources and opportunities tailored to their specific needs to ensure fair outcomes, while equality involves treating everyone the same, regardless of their different circumstances. Equity aims to level the playing field, whereas equality assumes a level field already exists.
Conclusion
The board diversity policy template linked in this article will help you create a strategy that will unlock the benefits of looking beyond the usual candidates to fill the roles on your board. Creating a more balanced board of directors with a range of skills, life experiences, outlooks and expertise will help move your business forward with innovative decision-making and strategy.
To help your leadership team collaborate and communicate effectively, use iBabs’ board portal. It enables directors to work together in the cloud, increasing camaraderie and helping them work as an effective unit in the boardroom. Request a demo of iBabs today.
