Value of Nonprofit Board Service for Companies and Their Employees

December 5, 2017 Alice Korngold

The Nonprofit Board Leadership Study  “Better World Leadership” provides new and clear evidence of the leadership development value of nonprofit board service for business people. The findings show that this form of high level, high impact volunteering is an effective pathway for companies to achieve their goals in advancing diversity and inclusion, developing human capital for innovation, and fostering economic development and achieving the U.N. Sustainable Development Goals (SDGs).

Relevance to companies. This study is useful to companies that either have programs and seek to expand or enhance them, or companies that are considering offering such programs. The results are particularly compelling at a time when investors and the public expect companies to be more responsible in addressing social, economic, and environmental issues. In response, companies seek to optimize opportunities for innovation, economic development, and diversity and inclusion. Many companies today understand that they will profit and grow value by finding innovative solutions to global challenges.[1] To make this a reality, companies need more effective pathways to develop leaders who can maximize business opportunities and potential.

Survey responses. 957 employees from five multinational corporations completed the survey. Responses from employees who serve on boards (401 out of the 957 surveys) provide specific information about their experiences—how they contribute, what they learn, and how they grow.

A total of 556 survey respondents never served on boards, but 96% express interest in doing so. This suggests that companies can engage more employees in board service by enhancing and expanding board training, preparation, and matching services.

Diversity. Significantly, the group of people interested in boards come from more diverse backgrounds than the group already serving. There are more Millennials (47% compared to 23% who serve); more women (56% compared to 44% who serve); and more people from diverse racial and ethnic backgrounds (37% compared to 22% who serve). These results demonstrate the opportunity for companies to advance employees from many backgrounds. The added benefit is that companies would also be infusing boards with greater diversity, an important goal of nonprofits.

Experiential learning. Board service significantly contributes to people gaining appreciation for diversity and inclusion. Survey results underscore the value of active experiential learning over passive training. Respondents indicate that their nonprofit board experiences have brought about a deeper appreciation for the perspectives of people from backgrounds that were different than their own (78%); a deeper understanding of the challenges facing people who live in different circumstances than their own (78%); greater empathy for people from different backgrounds than their own (72%); and greater interest in people with different backgrounds than their own (73%).

Key findings. Board service is an effective pathway for companies to grow shareholder value in three ways:

  • Advancing workplace diversity and inclusion: Business people who serve on boards gain appreciation and understanding of people from backgrounds that are different from their own. This benefits companies since studies indicate that diversity and inclusion increase profitability. Additionally, companies have a significant reservoir of people from diverse backgrounds who would like to serve on boards, thus providing opportunities for leadership development.
  • Developing human capital for innovation: Business people who serve on boards confront challenges that stimulate their leadership, creativity, and innovation. Additionally, they improve skills that enhance their performance at work, including strategic planning, decision-making, listening, collaborating, and partnerships. This experience and expertise will help their companies grow value.
  • Fostering economic development and achieving the U.N. SDGs: Business people who serve on boards strengthen communities where their company’s employees and customers live and work. Board engagement also helps to advance U.N. Sustainable Development Goals (SDGs), particularly quality education, reduced inequalities, and sustainable cities and communities.

Meaningful service. Nearly every respondent reports that the work of the nonprofit is meaningful to them (97%), that they are able to add value (95%), and that they would recommend nonprofit board service to their friends and colleagues (99.5%). The majority of respondents serve in leadership positions on their boards (81%), some serving on multiple boards and in multiple leadership positions.

Recruitment and retention. By supporting and encouraging board service, companies can advance their goals for recruiting and retaining the best people from a variety of backgrounds. Employees who work at companies that encourage and support their board service report that the experience improves their impressions of their employers (54%). Some employees state that corporate support for their board service is a factor in their desire to stay at the company (37%). By supporting meaningful leadership and community engagement, companies can attract the best candidates from a broad group of people and grow their value to the company.

Now is the time for companies to invest in leadership development that works. Companies can further develop and retain more diverse, inclusive, and effective leaders and workforces by establishing high impact nonprofit board training and matching programs.

The study can be downloaded here.

[1] See Korngold, Alice (2014), A Better World, Inc.: How Companies Profit by Solving Global Problems…Where Governments Cannot, (New York: Palgrave Macmillan).

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