Board diversity goes beyond gender diversity

A study by the National University of Singapore Business School's Centre for Governance, Institutions and Organisations claims that having women independent directors on a company's board would increase its financial performance and corporate governance (Women independent directors boost companies' finances: Study; June 30).

While the study is interesting, it seems like a sweeping statement, as it lacks an explanation of the causal factors.

Among the 500 companies in the study, those that fared relatively well may have done so for other reasons, rather than exclusively having women on their boards.

However, if the findings of the study are indeed true, does it mean that an all-male board is incapable of achieving good financial performance and corporate governance?

This also begs the question: Will companies that are not doing well have their fortunes reversed by admitting more women to their boards?

The study also says that board diversity results in wider and richer views and opinions that translate into better strategies and decisions.

This is incontrovertible. However, diversity should include a variety of experiences, talents, skill sets, abilities and relevance, and not just gender diversity alone.

Companies have a responsibility to shareholders to select capable individuals to be on their boards, regardless of gender.

In view of this, they should make a conscious effort to seek out individuals, including women, who have the right attributes.

Women must not be denied board seats. However, in the earnest push to increase their representation, we must not risk engaging in reverse rationalisation.

Lawrence Loh Kiah Muan

A version of this article appeared in the print edition of The Straits Times on July 03, 2018, with the headline 'Board diversity goes beyond gender diversity'. Print Edition | Subscribe