Discuss the potential and actual benefits of boardroom diversity in publicly listed companies - Essay Example

Potential and Actual Benefits of Boardroom Diversity Potential and Actual Benefits of Boardroom Diversity Many countries of the world have experienced an increasing wave of support for boardroom diversity. However, much of the support for boardroom diversity in publicly listed companies is associated with government and regulators (Aguilar 2010; Byrd & Scott 2013). Norway was the first country to establish boardroom diversity quotas requiring a balanced presentation of both men and women on boards of companies.

But what are the actual and potential benefits of boardroom diversity in publicly listed companies? This paper explores benefits that accrue to a company that has a diversified board. Boardroom diversity enables a company to achieve global status of an equal employer, which is very crucial for the performance of the company (Buttler 2012; Kershaw 2012). People usually want to associate with companies that exhibit equal opportunity for both men and women (Adams, Gray & Nowland 2012; Baker & Anderson 2010).

According to Conger (2009), boardroom diversity ensures high management transparency and organisational performance. Diverse boards for publicly listed companies can lead to improved decision-making (Ahern & Clarke 2013; Sweigart 2012; Mallin 2013; Great Britain Parliament et al 2013). Diverse boards are perceived as more effective and in a position to better understand customers as well as stakeholder (Liswood 2010). This results from fresh and new ideas and wide pool of experience (Trautman 2008).

Diversity enhances business performance (Ahern & Clarke 2013). Companies with diverse boardroom are capable of easily recognizing potential markets, have competitive edge and have the ability to attract best personnel (Daniels & Macdonald 2005; Bilimoria & Piderit 2007; Byrd & Scott 2013). Boardroom diversity is inevitable for organisations in the present global market. Organisations that do not embrace diversity in their board composition are likely to be on the wrong side of the law as governments push for equality in the workplace.

Diverse boardroom ensures high performance of the organisation, swift market opportunity identification, and excellent customer management among others. Bibliography Adams, R, Gray, s & Nowland, J 2012, “Does Gender Matter in the Boardroom? Evidence from the Market Reaction to Mandatory New Director Announcements.” Viewed March 24, 2014 Aguilar, LA 2010, “Speech by SEC Commissioner: Diversity in the Boardroom is important and, Unfortunately, Still rare.” Viewed March 24, 2014 http://www.sec.gov/news/speech/2010/spch091610laa.

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