How can you effectively negotiate board diversity with founders?

The conversation changes and the things a board will consider when diverse voices are at the board leadership table. At Per Scholas, we say that DEIB is in our DNA. The metaphor is particularly important for our board work. Similar to all of our key stakeholders: learners, staff, employer partners, funders, and suppliers, the members of our board must embody the traits, skills, behaviors, and characteristics reflective of our culture. How the board makes important decisions must be viewed through the lens of DEIB principles important to what we stand for as an organization. A mismatch in how we see ourselves and how the board does its work will derail the growth and progress of an organization.

Research suggests that social diversity makes groups smarter in various aspects: Diverse teams are more likely to reexamine facts and remain objective because members of the group force each other to be aware of their assumptions and biases; Diversity causes people to work harder when making decisions because disagreement stimulates increased cognitive action, which can lead to better outcomes; and finally, diverse groups process facts more carefully, and are more open to innovation. For example, a 2012 study found that companies that prioritized innovation saw greater financial gains when women were part of the top leadership ranks. These advantages are essential for fiduciaries fulfilling their duties of care through diligent governance.

Board Diversity in Gender, Experience, and Knowledge can help a startup grow. Here are 3 things a Board Member needs: i) Bold Thinking: Startups always tackle significant challenges with innovative solutions. The BOD also needs members with fresh, bold thinking to contribute. ii) Entrepreneurial Experience: BOD members should have entrepreneurial experience With BOD members who are startup entrepreneurs, they contribute practical experience to the CEO that has led to success before. iii) Expertise in a Field: If a BOD member is an expert in the field the startup is involved in, it gives the startup a significant advantage. The BOD member's industry experience and connections will aid the rapid development of the startup.

Board meetings occur for most boards quarterly. It is crucial to add DEIB topics to the board agenda. Inform the board of how the staff and key stakeholders are intentionally focused on DEIB principles. Chart progress and measurable key performance indicators that the organization tracks and suggest that the board develop KPIs. When progress is made on any of the board-developed KPIs, inform the staff and celebrate the accomplishments of the board. Communicating the positive progress of the board in the DEIB space is important. It is also critical to inform and update funders in the non-profit space. Why? Funders look at the diversity of the board and may decide to bypass funding an organization that does not take diversity seriously.

PE/VC investors can take steps to diversify private company boards by making it an integral part of their post-investment platform strategy. This can be achieved by setting clear expectations with founders. Furthermore, the PE/VC industry can show that it is serious about addressing diversity by taking steps to diversity itself. While writing about the need for greater gender diversity in tech, scholar Margaret O’Mara put it best: “Venture capital investment has been and remains the tech ecosystem’s least diverse domain... [The lack of diversity] not only determines who gets rich. It also shapes the kinds of problems technology companies set out to solve, the products they develop, and the markets they serve.”

A balanced ecosystem of key stakeholders focused on the importance of DEIB principles is critical to the success of an organization that serves a diverse population. Begin the effort of prioritizing diversity principles on the board by taking an honest look at the current makeup of the board. Discuss, agree, and prioritize the importance of board diversity. Determine together, and that means with the majority of members, achievable diversity goals and decide on measurements of success. If it is not tracked and the status of progress is not communicated, staff members and your board colleagues will not take the effort seriously. Have the board vote to ensure DEIB is a budget line, putting company resources where their mouth is.

In order to retain a diverse board, your company must create an enviornment of psychological safety, build core competencies, and promote inclusive decision-making within the board.

Board diversity is not just about representation; it is about ensuring responsible fiduciary stewardship. Amidst the evolving business landscape, startups must recognize board diversity as a strategic imperative ensuring intelligent decision-making & diligent oversight. A true commitment begins with an internal readiness to embrace innovation and new perspectives. Startups with critically designed evaluative processes will excel in their efforts to diversify, while effectively mitigating risk. And to ensure the sustainability & retention of board diversity, startups must invest in strong talent pipelines and in creating ecosystems of value. Only then can startups unlock the full potential of diversity to generate financial & social returns.