The Importance of Diversity for Municipal Boards

Municipalities and other nonprofits do not outperform private corporations in achieving demographic diversity in the boardroom. While 43% of board members are female among nonprofits nationwide, only about one in eight nonprofit executive committee members are female. Racial diversity is comparably dismal, especially in older age ranges within boards. Those results don’t improve in more diverse municipalities. (Seaworth) If Scandinavia sets the standards internationally, then the bar is already set fairly low. Among Scandinavian corporations, most board members are men aged 30 to 60 with management backgrounds. (Edling, et al.) Should municipal boards make the effort to increase their board representation of groups, setting a new high-water mark for all organizations?

Studies suggest that achieving more board inclusivity is well worth the effort. Sometimes, it is also a legal requirement; in Iowa, a 2009 law extended state gender balance laws to county and city boards and commissions. It is difficult to study the relationship of municipal board diversity to organizational success because both diversity and board efficacy are difficult terms to define. While measurements of diversity once focused on gender and race, many theorists would now include socioeconomic status, occupation, age, physical abilities, sexual orientation, educational attainment, religion and national origin. While corporations have a financial bottom line as a measurable barometer of success, nonprofit organizations lack such a clear-cut indication that they are doing their job well. Nevertheless, some specific correlations can be found between the inclusion of various groups on boards and an organization’s ability to provide a higher quality of service to more people. Diverse municipal boards gain advantages over their more heterogeneous counterparts, including: improved reputation, stakeholder representation, broader networks, mission consistency and a greater variety of decision-making styles.

Reputational Improvement

Public trust is the lifeblood of municipal organizations. Constituents must be willing to pay taxes, volunteer their services and follow laws. Studies from the social constructionist school of organization theory conclude that “more diverse boards of directors (based on various measures) are perceived by peers or community members to be more egalitarian, more responsive, and more creative in problem solving.” (Siciliano)

Board composition has a branding effect; it feels a certain way to be involved with the organization because of this visible social body. Even in the corporate sector, where experts are debating the impact of diverse boards on financial performance, they concur that more diverse boards do deliver improved public relations; it makes the entire organization seem more “friendly” to investors, customers and staff. (Chapple, Erhardt, et al.) The inclusion of women specifically is often interpreted to connote an attitude of concern for the environment and other people.

Stakeholder Representation

It is an established fact that “public sector leaders are expected to reflect societal characteristics.” (Gazley, et al.) A study of numerous community mediation centers showed that diversity along lines of gender or race do not themselves necessarily improve goodwill in community relations; a stronger correlation is detectable when that diversity mirrors the composition of the constituency served (residents, taxpayers, clients, volunteers and staff) (Gazley) This may seem improbable since a causal mechanism does not immediately present itself; it is not as clear a case as minority teachers evoking minority student success. In that case, the teacher is a daily role model. It is curious, then, that municipal board diversity also builds authority and credibility.

Reflection on one’s own personal experience bears out why such representation elicits greater cooperation. If someone from “my” group asks me to make a sacrifice for the greater good (say I’m an employee asked to work weekends to facilitate a particular campaign), I might demand my rights to a sane schedule, or I might loosen up and take one for the team. The latter response is far more likely if the people launching the campaign feel like they’re on “my team.” Such a request from a member of an alien group – especially if I perceive that group as exploitative – is more likely to result in my demanding my rights, in a spirit of self-protection.

Broader Networks

The study of community mediation centers found that collaboration increased measurably with the number of “boundary-spanning activities,” like ties with a large number of networks (Gazley). Indeed, the study found inter-organizational linkages to be the single greatest measurable benefit of diverse boards. Whereas boards have always benefited from board members’ networks, they have undoubtedly lacked access to entire segments of the community.

Broader networks clearly bolster board efforts that require a large number of people to chip in. When looking for volunteers and donors, it’s certainly an advantage to have 1,000 people in a collective Rolodex than to have 10 people. Studies concur that board diversity increases “the ability of a broad and inclusive board to secure public and private funding, case referrals, advice, expertise, and opportunities to achieve organizational efficiencies.” (Miller) Even for fundraising (where a small number of wealthy networks might appear preferable), studies bear out demonstrably better results with board diversity with respect to age, gender and occupation. (Gazley)

The Amherst Survival Center illustrates the link between broad board representation and a broader volunteer base. With five colleges in town, the center relies disproportionately on students for labor-intensive volunteering (e.g., moving furniture at an annual sale, transporting crates of food across town). To reduce the risk of losing that alliance, it began putting a college student on the board of directors. The pipeline to their key volunteer pool is far more secure as a result. And those college students hold all manner of high-energy dance-a-thons and car washes to bring in money for the survival center.

Other board activities require selectivity; here, too, it helps to have more people from which to choose. A SUNY study of 53 nonprofit boards in New York and Connecticut shows that passion is the single greatest indicator that any board member will improve group dynamics and make a significant contribution. (Miller) Surely, such passion for the cause is not limited to any one religious group, occupation or ethnicity. The chances of finding outstanding, high-achieving board members increases if there are more people to choose from; thus, having connections with a wider array of social, cultural and religious groups is a bonus.

Mission Consistency

Nothing dampens community relations like the hint of hypocrisy. Whatever the particular function of a board – be it overseeing transportation or animal welfare – its status as a public entity makes it part of a democracy. And democracies enthusiastically promote equal opportunity. For instance, hostilities over voter registration are fraught with racial overtones. If a town’s board overseeing procedures and policies to register voters were all members of just one race, it would only fuel the flames of suspicion. Likewise, it would be hard for disabled constituents to fully trust an accessibility board on which no members had a visible disability.

Decision-Making Styles

It’s controversial to claim that different groups have different ways of making decisions; it elicits the history of Nazi phrenology and the dangers of stereotypes. Women are often thought be more cooperative than men. It is less controversial to observe different ways of communicating and making decisions in different cultures. Board members from different subcultures or national origins will likely bring to the table different dynamics for making decisions.

Be that as it may, even corporate studies (where there is considerable frustration because studies show mixed results on correlations between board diversity and higher stock prices show that members of boards with recent increases in diversity report the benefit of a greater variety of decision-making styles. (Rhode) Mindful of the risk of dehumanizing generalizations, there is preliminary evidence that decision-makers from different cultural backgrounds reach decisions in different ways, with many of them enhancing the deliberations that are part of board work.

Conclusion

Municipal boards have everything to gain and nothing to lose by broadening the base of demographic representation among their members. Their reputation in the community will benefit, as will their stakeholder representation, their mission consistency, the reach of their networks and their decision-making process.

Sources:

Chapple, Larelle and Humphrey, Jacquelyn, “Does Board Gender Diversity Have a Financial Impact? Evidence Using Stock Portfolio Performance,” Journal of Business Ethics 122:4 (July 2014). 709-723

Edling, Christofer; Hobdari, Bersant; Rondoy, Trond; Stafsudd, Anna; Thomsen, Steen, “Testing the ‘Old Boys Network’: Diversity and Board Interlock in Scandinavia,” chapter in Kogut, Bruce, The Small Worlds of Corporate Governance MIT Press 2012

Erhardt, Niclas L.; Werbel, James D.; Shrader, Charles B., “Board of Director Diversity and Firm Financial Performance,” Corporate Governance: An International Review 11:2 (2003), 102-111.

Gabris, Gerald T. and Nelson, Kimberly L., “Transforming Municipal Boards into Accountable, High-Performing Teams: Toward a Diagnostic Model of Governing Board Effectiveness,” Public Policy Management Review 36:3 (2013)

Gazley, Beth; Chang, Won Kyung; Bingham, Lisa Blomgren; “Board Diversity, Stakeholder Representation, and Collaborative Performance in Community Mediation Centers,” Public Administration Review 70:4 (July/Aug 2010): 6610-620, 523.

Miller, Judith Lynne, “An Ethnographic Analysis of Nonprofit Board Culture: How Board Members Enact a Repertoire of Skill,” Dissertation. State University of New York at Albany 2003

Rhode, Deborah L.; Packel, Amanda K., “Diversity on Corporate Boards: How Much Difference Does Difference Make?” Delaware Journal of Corporate Law 39:2 (2014), 377-425.

Seaworth, Angela D. “Limited Leadership: An Examination of Nonprofit Board Diversity and Whether Selection Processes and Executive Director Perception of Governance Models Affect Composition,” Dissertation, Indiana University – Purdue University Indianapolis 2016

Siciliano, Julie I, “The Relationship of Board Member Diversity to Organizational Performance,” Journal of Business Ethics 15:12 December 1996, 1313-1320


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