What Is Board Diversity?

Board diversity refers to the wide array of backgrounds, ethnicities, skills and experiences possessed by the board of directors as a whole. To ensure good corporate governance, boards must consist of individuals with a range of attributes, each bringing something different to the table.

Without diversity on the board, decision-making can be suboptimal. A varied collection of perspectives can lead to insightful discussions and a more efficient board.

Types of board diversity

Here are the common attributes associated with board diversity:

Ethnicity

Ethnic diversity on the board means having a mix of individuals from different races and cultures.

Gender

If history is any indication, boardrooms have always been dominated by men. However changes in the social constructs across much of the world are now challenging this practice. Many companies are beginning to recognise the benefits of gender-balanced boards.

Age

Often overlooked, age diversity is an important attribute to consider. Although many boards correlate older directors with wisdom and experience, having a significant proportion of young directors can bring much-needed fresh perspectives into the boardroom.

Expertise

The board’s work is varied and that means that the board of directors should contain members with a variety of areas of specialism. For example, having a financial expert, a lead on cyber security and someone with insight on sustainability would all help with developing strategy. 

Experience

Experience for a board member can mean having been on boards previously, but also experience in the sector or in positions elsewhere from which they can bring knowledge and best practices that will benefit the board. 

Challenges and barriers to board diversity

Many challenges prevent boards from diversifying their panels. A common barrier is tenure — too often, directors serve for consecutive years while boards rely on retirement or voluntary resignation to make changes. This window leaves significantly fewer opportunities to recruit fresh, unique talent and increase board diversity.

Another barrier is the common process of recruiting new members. Serving directors are typically asked to access their networks to help find potential candidates. Naturally, their networks consist of people like them, limiting the potential for a more diverse pool.

Legal diversity requirements for boards

The European Parliament has adopted a law that requires corporate boards to be gender-balanced. By 2026, the underrepresented sex must constitute at least 40% of non-executive directors or 33% of the board.