The top table of company chiefs has to be more diverse, according to the chairman of the Bermuda branch of the Institute of Directors (IoD).

Roger Gillett, an award-winning veteran of the insurance industry, said: “The more diverse the board, the broader its perspective.

“If we only invite friends or people ‘like us’ to join our boards, we will entrench our thinking. ‘Group think’ is identified by the IoD as a dangerous and regressive tendency.”

But Mr Gillett said Bermuda should not adopt a European-style system of guidelines on how many women should be on company boards or go a step further to quotas.

He told a meeting of Hamilton Rotary Club on Tuesday: “I’d suggest not as I think we should address this issue from the standpoint of diversity on boards creates a better company.”

Mr Gillett added: “Theresa May, the then British Home Secretary in 2012, stated that ‘there is growing evidence that companies with diverse boards perform better — achieving higher sales, returns on invested capital and higher returns on equity’.”

And Mr Gillett said that directors of companies had to take a hands-on approach and set company direction and strategy.

He explained: “Most people, when they hear the words corporate governance, think compliance, but of course it is much wider than this.

“Mere compliance is the lowest level of board effectiveness, important though it is.

“Where compliance may be described as doing things right, good governance is doing the right things.”

And Mr Gillett said that the IoD definition of corporate governance most used was that it was the way companies were “directed and controlled.”

He added: “The objective being to enhance shareholder value at the same time as ensuring its viability and taking into account the impact on other stakeholders, be they customers, suppliers, employees or the community at large.

“And yet, so much energy at board level these days is directed towards compliance that directors must be very disciplined to ensure that appropriate time is allocated to discussing the very important topics such as customer satisfaction, competitor activity, technology, the changes in the environment in which they operate, the culture of the company, strategy and so on.

“These are some of the subjects that will drive the success of the company.”

And Mr Gillett warned: “Directors cannot, and must resist, hiding behind the screen of compliance as this will be no defence from shareholders or other stakeholders, who expect and are owed a duty of care, skill and diligence.”

He added that — particularly since the global financial crash of 2008 — shareholders were taking an increasing interest in the companies they held stakes in.

Mr Gillett said: “Stakeholders expect directors to act honestly and again this goes beyond complying with relevant laws.

“Integrity should be at the centre of a board member’s conduct in making decisions and this should not be influenced by his or her shareholding in the company or any other relationship external to his or her duties in the company — that is, business, political or personal commitments.”

Mr Gillett added: “Shareholders now have a much greater interest in the affairs of the company and the company has an obligation to provide all the information they need to make decisions.

“There is great pressure to meet quarterly expectations and companies from time to time have succumbed to the temptation to hide information that might give rise to increased scrutiny or might cause embarrassment.”

But he stressed: “Stakeholders will no longer accept being left in the dark.”

Mr Gillett said the IoD was in talks with the Bermuda Monetary Authority about setting up a code of conduct for corporate governance, in line with Organisation for Economic Cooperation and Development (OECD) principles.

“It is my honest belief that Bermuda can become the gold standard in corporate governance and this will be another aspect of our infrastructure in which we can display that we are differentiated from other financial centres.”