Conference Forum: International trends and emerging issues in corporate governance
International director network releases landmark paper on board diversity
- Date: 06 Feb 2013
- Type: Media Release
The Global Network of Director Institutes (GNDI) has today released their joint policy perspective setting out the significant and positive impact a diverse board can have on business outcomes and arguing that mandatory quotas is not the most effective way to improve board diversity.
At the release of the policy paper, Chair of GNDI and CEO of the Australian Institute of Company Directors, John Colvin FAICD said that the paper highlights that improvements to board diversity should be driven by recognition of the benefits of diversity.
“Board diversity is an important governance issue but is a means to an end, not an end in itself,” said John Colvin.
“If all individual directors on a board view issues in a similar way, there is a risk that the board will approach issues too narrowly, suffer from “group think”, or fail to adequately consider and evaluate alternative ideas or options in relation to the organisation,” he said.
“Boards that are composed of directors with different perspectives, experience, backgrounds and views in relation to issues affecting the organisation, may contribute to better problem solving and decision-making, foster greater innovation, and enhance board effectiveness and performance,” said Mr Colvin.
The paper emphasises that diversity encompasses, but is not limited to, gender, ethnicity/race, nationality, religious beliefs, cultural or socio-economic background, and age.
It reflects a clear view from the director institutes of the GNDI that because systems of organisational governance vary significantly around the world, the approach that each organisation takes to diversity will vary; all organisations are different and there is no “one size fits all” formula.
“Each organisation must examine its individual circumstances, existing board composition and should ideally conduct a skills gap analysis to determine its specific needs,” said Mr Colvin.
“For this reason, the GNDI does not support mandatory, externally imposed quotas and argues there are many other effective mechanisms to improve board diversity,” he said.
Initiatives and practices which may be employed by organisations to increase the diversity of their boards could include establishing diversity policies and objectives, improving transparency in board selection and appointment processes, and implementing board evaluation processes that assess the board’s performance and the potential contribution of diversity to board effectiveness.
“Companies could also better encourage diversity throughout the organisation, especially in the ‘pipeline’ of middle and senior management,” said Mr Colvin.
The Global Network of Director Institutes (GNDI) was founded in 2012. It brings together member-based director associations from around the world with the aim of furthering good corporate governance. It is an international network among nine leading membership organisations for directors in Australia, Brazil, Canada, Europe, Malaysia, New Zealand, South Africa, the United Kingdom, and the United States. The following membership organisations are members of GNDI and collectively represent more than 100,000 corporate directors worldwide:
- Australian Institute of Company Directors (AICD)
- Brazilian Institute of Corporate Governance (IBGC) in Brazil
- European Confederation of Directors Associations (ecoDa)
- Institute of Corporate Directors (ICD) in Canada
- Institute of Directors in New Zealand (IoDNZ)
- Institute of Directors in Southern Africa (IoDSA)
- Institute of Directors (IoD) in the United Kingdom
- Malaysian Alliance of Corporate Directors (MACD), and
- National Association of Corporate Directors (NACD) in the United States.
Read the GNDI policy perspective paper on board diversity.
For further details please contact: Michelle Wood, Media and Government Relations Advisor,
(02) 8248 6612 or 0466 655 115, firstname.lastname@example.org