Board Diversity: Beyond the Backyard?

From Wall Street to Main Street, organizations are striving to diversify their boards of directors. The belief is that trustees should reflect and represent the varied constituents they serve.

An irony of boards’ seeking to reflect their communities is that they often have to look outside these communities to find diverse trustees—whether diverse is defined by gender, ethnicity, age, sexual orientation, or other criteria. “This just gives them a much larger pool of potential candidates,” says Jim Gauss, in an interview with Eric Short of Diversity Executive magazine.

Jim Gauss

Jim Gauss

What it means to go “out of community” depends on the organization, Gauss notes. A small hospital may have a service radius of only 20 or 30 miles, whereas a bank or manufacturer might serve a global community. “I would define community as the people and geographic sphere that an organization directly serves,” Gauss says. “This is important when considering out-of-community membership for boards; the point is that boards need to get trustees who bring objectivity, fresh ideas and viewpoints from beyond their traditional sphere of activity. You might say going out of community is a way for boards — even those of multinational organizations — to go outside their traditional comfort zone.”

Boards that go outside their comfort zones and challenge themselves are those that are best prepared to meet future uncertainties, he believes.

In a recent article for McKnights Long-Term Care News, Gauss again discusses out-of-community board recruitment—this time with a specific focus on long-term care and related organizations. These entities are retooling their boards to deal with the rapidly shifting healthcare landscape. In addition to fresh ideas and objectivity, trustees from outside the community bring a national viewpoint (critical in today’s highly regulated healthcare environment) and critical survival skills and competencies (for example, M&A experience).

In the article, Gauss provides suggestions for how boards can begin to cast a wider net. A key first step, he says, is for trustees to get comfortable with the idea of a membership composition that looks different from what it has in the past.

In summary, “out-of-community trustees are in,” Gauss observes. Board diversity is critical in this day and age, but often requires boards to go beyond their traditional backyards.

By Paul Thomas, Senior Writer

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