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Article

25 May 2009

Author:
Michael Skapinker, Financial Times

Diversity fails to end boardroom groupthink

Helen Alexander received two rounds of spontaneous applause without even speaking at the CBI dinner last week, such is the excitement about the British employers’ group having its first female president. Ms Alexander, whose election is expected next week, has called for greater boardroom diversity, saying it could put an end to the “groupthink” that contributed to recent financial disasters... Is there any evidence that diverse groups make better decisions? Yes, according to an excellent article by Lisa Fairfax, a law professor at the University of Maryland...Prof Fairfax cites studies that show heterogeneous groups make higher-quality decisions because of their disparate backgrounds... However, putting that diverse thinking into practice in the boardroom is another matter...The real problem is deeper: there is enormous pressure to agree with those sitting around the table with you...None of this is to argue against broadening the range of company directors. There are many reasons to do so...But we should avoid placing too much hope in what board members from different backgrounds can achieve.