The case for diversity
The widely held belief that diversity is good for organisations has been extensively researched by academia and business and encapsulated in regulation.
“I believe that the qualities necessary for an effective contribution to the board can be acquired from a variety of backgrounds. The interplay of varied and complementary perspectives among different members of the board can significantly benefit board performance.” Derek Higgs
“Diversity in board composition is an important driver of a board’s effectiveness, creating a breadth of perspective among directors and breaking down a tendency to ‘groupthink’.” FRC
Much of the focus has been on gender diversity, tracking female representation at board level and in the pipeline. Globally, governments are establishing regulation to encourage diversity. Some have set and monitor quotas. The richer understanding of diversity seems to have been lost in the drive to establish compliance with gender diversity targets.
The rationale for creating more diverse boards is to improve the quality of strategic decision making and the resultant organisational performance. By bringing together people with a diversity of backgrounds and thinking, consideration of diverse stakeholder interests would be improved; alternative options would be explored; constructive challenge would increase; different insights would be debated; criteria for choosing between strategic options would be broader.
Organisations which have successfully reaped the benefits of diversity, point to the quality of their chairperson, the creation of a common purpose and the development of shared values. The last point is clearly critical. Professor Katherine Klein at Wharton School of Management highlights the link between values diversity, conflict and difficulty in achieving common purpose.
The practicalities:
Cranfield School of Management’s research for the UK Government highlights three key barriers to increasing gender diversity on boards, the appointment process, boardroom culture and individual perception.
If clients and consultants work together to establish clear role and person specifications and a wide spectrum of potential sources, overt bias can be avoided. Addressing the covert bias associated with not approving people ‘who aren’t like me’ takes time and effort. Making the appointments process transparent can help.
An effective chairperson can ensure that an appropriate behavioural contract exists for board members to follow during board events and also in their wider involvement with the organisation. Ensuring that diverse board intelligence reaches the boardroom and that all voices are heard and considered, will also improve decision making dynamics.
Personal development, including board ready programmes, coaching and mentoring can all address individual perceptual barriers.