BY David Carty I September 5, 2023
According to Entrepreneur, having a diverse board of directors might be more crucial than ever. In 2021, the Securities and Exchange Commission endorsed a Nasdaq Diversity Rule, stipulating that any Nasdaq-listed company must include at least two diverse board members. Non-compliant companies were obligated to justify their stance. Despite this mandate, companies are likely to discover manifold advantages in having a diverse board of directors.
As the co-founder and CMO of two publicly traded companies — Hempacco (HPCO) and Green Global International (GGII) — Jorge Olson understands the significance of cultivating a diverse Board of Directors. Both companies were established on the premise of leveraging diverse perspectives in the business sphere. Olson himself, a Mexican immigrant, hails from an upbringing devoid of electricity or running water.
Hybrid Cloud Strategies for Modern Enterprises: Insights from Srividhya Chandrasekaran Cloud Advisory and Delivery Leadership: Navigating Complex Initiatives with Prasanna B “At first, my solution was to pursue education and aspire to become a CEO. I know, quite ambitious for a youngster raised in Barrio Cuatro in Tijuana, but I believed becoming a CEO was my ticket out,” Olson shared with Medium, “The costs for bringing electricity to our house amounted to $1,000 per pole, and I also had to arrange for water piping and street paving in our rugged neighborhood. With the minimum wage pegged at $60 per week in Mexico, I reckoned a CEO could generate sufficient income to facilitate utilities installation.”
Olson’s professional journey has propelled him far from his humble beginnings. Presently, he adopts a pro-diversity stance in forging partnerships and assembling boards for his two enterprises.
Significance of a diverse board: The discourse on diversity in business is abundant, yet its pivotal role in business triumph might not be fully comprehended. To grasp the advantages of a diverse Board of Directors, one must scrutinize the evolving role of the board.
Primarily, the Board of Directors is tasked with safeguarding shareholders’ interests and offering counsel on management, decision-making, and the company’s trajectory. The very essence of the board’s function underscores the importance of diversity within its ranks. Without diverse representation, the interests of shareholders from varied backgrounds remain inadequately addressed. Similarly, sans diverse representation, the company’s direction is unlikely to cater to a diverse clientele.
Consumer behavior and entrepreneurship have undergone metamorphosis in recent years, with a heightened emphasis on diversity, equity, and inclusion (DEI). Contemporary boards must mirror the target market and embrace DEI initiatives in the modern business landscape.
For instance, Olson’s Hempacco has collaborated with diverse figures such as Snoop Dogg, Cheech and Chong, and Rick Ross to resonate with a broader customer base. Consequently, equitable representation on the Board of Directors is imperative to address the needs and desires of this diverse customer base effectively.
Advantages of a diverse board: In recent years, businesses have faced scrutiny over their DEI deficiencies. A 2021 report suggests that businesses with diverse boards, navigating economic downturns, societal shifts, or unprecedented events like the pandemic, fared better owing to the “wide spectrum of perspectives” on offer.
The world is perpetually evolving, birthing fresh ideas and business paradigms. Consequently, companies must revamp their leadership and Boards of Directors. Diverse boards confer a competitive edge, fostering a robust business environment with their diverse knowledge, experiences, and perspectives.
Sourcing a diverse board: Having recognized the benefits of a diverse Board of Directors, the next step is to identify avenues for sourcing diverse board members. Initially, it’s imperative to delineate business objectives and values.
Board members selected must espouse values aligning with the company’s ethos. If a company is committed to DEI initiatives, this commitment should resonate in its board member selection process.
Olson advocates leading by example and serving as a beacon for attracting diverse talent to his enterprises. “My life’s purpose and passion are centered around catalyzing positive change worldwide,” he elucidates. “I aspire to accomplish this by setting a precedent and charting a course through my companies.”
Search committees and approaches must prioritize diversity, ensuring it’s a paramount consideration for any prospective board appointment. Furthermore, after assembling a diverse board, each member should be accorded ample opportunity for meaningful contribution. Board appointments shouldn’t merely fulfill a diversity quota; they should serve the organization’s objectives meaningfully.
As the business landscape evolves and the diversity of decision-makers assumes greater significance, businesses must reconfigure their Boards of Directors to reflect these changes.
BY David Carty from Business Deccan
