SECTION 3: NOMINATION AND APPOINTMENT PROCESS

Section 3: Nomination and Appointment Process | 45 • Age. • Ethnicity and culture. • Geography. • Tenure. 3.5.3 Many Boards tend to have directors from similar backgrounds and networks. Most NCs and Boards tend to focus on skills diversity while neglecting the other equally important dimensions. An appropriately-diverse Board, on the other hand, offers the following benefits: • Avoidance of “groupthink” . Although each director may have different functional expertise (a common basis for Board recruitment), they may share very similar viewpoints due to a similarity in their backgrounds, education and networks. Such homogeneity is likely to breed “groupthink” and uncritical conformity where common limitations and biases may go unquestioned. A diverse Board injects fresh perspectives into Board discussions. It encourages a rigorous decision-making process by allowing diverse viewpoints to arise from different backgrounds, experiences and knowledge. • Better input to management . A diverse Board is more likely to challenge management and its assumptions on proposals brought before it. It forces management to think through proposals more critically and objectively, to arrive at better decisions. • Increased understanding of the business . Board diversity can help the Board understand the perspectives of various stakeholders including customers, suppliers, and employees as well as have a wider reach to resources and greater networks. The need for diversity increases as a company’s business becomes more international. Having a Board with members from diverse backgrounds helps the company assess if it is in tune with its key internal and external stakeholders’ perspectives. 3A-3 3B-1