HR & Management

As companies look for global expansion, they need diverse boards

2 min read

30 October 2014

Companies are often more successful when each board member provides a diverse insight into critical issues such as globalisation.

In a recently-released ‘2014 Global Board Index’ (GBI), published by Egon Zehnder, it was found that despite global growth becoming a key to success since the 2008 recession, there has only been a 5.5 per cent increase in global expansion since the index was created in 2008.

The report notes that even veteran executives often find it hard to think outside their “home culture”, and that what many boards seem to lack is a global perspective. This also means that boardroom diversity has not kept pace with international business demands.

A study this year, published by professors of Kings College London, found that more than half of the FTSE 100 had an all-white board, with two-thirds only having part-time minority executive directors. In June, a Business in the Community review also revealed that only 7.9 per cent of management positions were held by black, Asian or ethnic minorities in 2012.

Author George Davis said: “Companies with global expertise in the boardroom have a better understanding of how to leverage the opportunities associated with global expansion and are better able to exploit the upside and minimise the downside of operating overseas.”

And although the research does show a marginal increase, “[the] analysis reveals that even among those companies that have improved their global capability, there is still significant room for improvement.”

With SMEs, and even larger companies, setting their sights on exports and overseas expansion, its time to purge the boardroom of the once stereotypical setting. 

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