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‘Greater diversity of thought’ will be key for future boards
Having survived a global pandemic, future boards will place greater importance on diversity, The Future of the Board report has revealed.
Lauren Croft
The report, released by the Governance Institute of Australia last week, also found that future board discussions will centre heavily on business resilience, flexible working arrangements and strategic thinking as we enter a post-pandemic era.
Sixty-nine per cent of survey respondents are currently on a board, with 40 per cent on more than one.
With significant steps forward on gender diversity in recent years, attention is now turning to the diversity of director skills, experience and attributes, with these highlighted in the report as most important regarding board diversity and inclusion, with gender and ethnicity in third and fourth place.
As such, the number of board directors can and should be sitting on, and for how long, is likely to decrease moving forward. More than 70 per cent of survey respondents said there should be limits on the number of boards a director is able to sit on, with 54 per cent saying three to four boards should be the limit.
Governance Institute of Australia chair Pauline Vamos said that diversity attitudes within an organisation start at the board level.
“We know boards are becoming more diverse, but we cannot let the momentum drop. Greater diversity of thought will mean the chair must be a manager of diverse viewpoints, finding a consensus among diverse participants,” she said.
“As our report states, the chair will be tasked with creating an inclusive culture in the boardroom, which in turn will set the tone on diversity throughout the organisation.”
The 2021 Board Diversity Index found the total number of board seats occupied by women has increased by 60 per cent since 2016, with the number of ASX 300 companies with at least 30 per cent women directors tripling since 2016. Australia is also one of just three countries worldwide to have achieved the 30 per cent women on boards benchmark without quotas.
“Making the boardroom more representative of the community in which the organisation operates ensures it is more in touch with its customer base and with society. This is vital to retaining a social licence to operate: when boards are not in tune with the public, they are more likely to make decisions that damage their contract of trust with society,” the report stated.
“Participants in our second workshop agreed that skills and experience are the most important when it comes to diversity and inclusion. Their discussion framed the idea of skills and experience as looking as widely as possible for candidates that will bring the specific skills the board needs and thinking creatively about how to source and nurture talent.”
This sentiment was echoed at the Governance Institute National Conference 2021, wherein Byron Loflin, global head of board engagement at Nasdaq and founder and former CEO of the Center for Board Excellence, said that over the last decade, diversity had become front and centre of the governance discussion.
“Investors are paying much more attention to board diversity because the data is starting to show performance, productivity and better wrestling with boardroom issues. And how boards deliver by working with management strategy has become an important topic regarding diversity and bringing diverse voices into the room,” he said.
Lauren Croft
Lauren is a journalist at Lawyers Weekly and graduated with a Bachelor of Journalism from Macleay College. Prior to joining Lawyers Weekly, she worked as a trade journalist for media and travel industry publications and Travel Weekly. Originally born in England, Lauren enjoys trying new bars and restaurants, attending music festivals and travelling. She is also a keen snowboarder and pre-pandemic, spent a season living in a French ski resort.
