Many studies demonstrate a positive effect of diversity on board performance. A diverse group of individuals has different experiences, perspectives, and angles to approach the problem, which could provide solutions that would otherwise be missed by a more homogenous board. This is particularly applicable to boards that contain members of underrepresented groups. They will gain a better understanding of the preferences and cultures of these groups, which will help them serve those groups better as clients.

Moreover, the presence of different backgrounds and experiences within the board can boost confidence and morale. If board members impact of board diversity feel that their voices and experiences are heard they are more devoted to the overall success of the company. This is why it’s vital to keep track of the progress of your board in promoting diversity and to pinpoint any obstacles that require addressing.

Another area where diversity can be beneficial is in reducing risk. A recent study by Berger et al. found that greater gender and age diversity on the board results in better operational risk management and a reduced risk of market risk. It is important to remember, however, that the same study also indicates that a high degree of diversity on the board may cause problems with cohesion as well as communication.

Lastly, boards with a diverse membership are more aware of the particular challenges faced by the underrepresented communities which can push them to take action to promote ethics and social responsibility in their business. This is why it’s vital to continue to find and find talented women, people of color, and LGBTQ candidates for board posts.