`The number one issue in corporate governance is the diversification of boards.
The results confirm this as the Canadian Board Diversity Council found. Only 150 out of 1000 Canadian companies had any diversity on boards.
There is also evidence that women make better monitors of management and that performance of men increases when women join boards. The other business case for diversity is a simple talent issue.
So how do boards diversify themselves? What are leading practices the best boards are doing?
Step 1: Recruit directors solely on the basis of competency, not on whom you know.
A board is a team. Team members have different abilities. “Competency” can include experience, skills, knowledge and behaviours. A good board draws up a matrix of competencies it needs on one axis and individual directors along the other. It defines the competencies and the scale, and then individual directors assess themselves relative to each other.
Step 2: Recruit directors whom you do not know personally and who are first-time directors.
Once you have the desired director competencies, the next step is to recruit directors who fill this gap. Cast your net wide and go beyond personal and professional networks. Have a diligent way of short-listing resumes and ask candidates to address the specific competencies you need.
Don’t be afraid to short-list diverse candidates whom you likely will not know, including first-time directors who have stellar qualifications your board needs.
Step 3: Link director time on the board to performance.
Have on boarding, coaching and development for new directors. Then, assess each director on his or her contribution at regular intervals.
Step 4: Be prepared to be accountable.
Consistency and follow-through are the only means by which diversity can be achieved. We can expect that some current directors may object to these best practices. Change is difficult and upsetting the status quo is threatening.
Finally, you should disclose the basis upon which directors are recruited, developed and assessed so shareholders can vote meaningfully on each director at the time of renewal or removal. This sets the tone that the board holds itself responsible and accountable to shareholders in the same way it expects management to be accountable to itself. Your board and organization will be the better for it.`
This article is extract from: Four Steps to a More Diverse Corporate Board