Is boardroom diversity a good thing?
Lexie Sims challenges us on the importance of diversity at board level; addressing the barriers and offering some solutions to successful implementation.
Diversity at board level is vital for effective corporate governance. Few would disagree with this. However, creating a diverse board and realising the benefits means organisations must be open to tackling certain issues. Only then will progress be made.
Listed are four key barriers which, if not addressed can slow acceptance and change – the first task is to identify the barriers affecting your organisation and then present solutions.
Change is hard
Some individuals find it difficult to see the need for change, especially when success has been achieved doing things the traditional way. Simply because diversity happens to be a hot topic the board doesn’t necessarily believe it will improve the bottom line.
In addressing this, your data matters. A director will have read statistics from management consultants’ reports.
They will know the McKinsey report showing 366 public companies found those in the top quartile for ethnic and racial diversity in management were 35% more likely to have financial returns above their industry mean, as those in the top quartile for gender diversity were 15% more likely to have returns above their industry mean.
Have you readied your environment and the board to ensure a successful appointment and transition of a director from an under-represented group?
You cannot present your case for diversity based on a ‘nice to have’ to your colleagues. Your business case must be based on facts and be specific on the purpose of investing in diversity. What is the competition doing? Are you losing customers and applicants to a competitor because of your lack of diversity? What are the market trends?
Do the research and answer these questions in presenting a must win business case.
Tried and tested
Your organisation has tried, you appointed diverse senior managers to the board, but it simply didn’t work.
The question here is, have you readied your environment and the board to ensure a successful appointment and transition of a director from an under-represented group? If you do not ensure they have the oxygen to be heard and succeed in your environment it has been a pointless and expensive task, and they will leave your organisation.
Whether an environment where the appointee does not feel valued is intentional or not, would you stay in a position where you were not truly heard?
Recruiting from diverse talent pools is hard. The number of candidates from under-represent groups can be smaller as diversity was not historically a priority. This will remain the case until there is more equity in senior appointments. However, it is not impossible if the board is serious about achieving a diverse and representative group of leaders for busines success.
It is about the leadership team showing empathy and understanding in providing a safe environment for the new appointee to add value, by offering multiple perspectives, resulting in more meaningful strategic decisions. An organisation needs the right culture and structure.
The best people
A belief that a successful board needs the very best people and individuals they should not simply be appointed to fill diversity targets.
If the best candidate for the role does not exist from an under-represented group, then fine. However, your recruitment partners must show you how they reached this conclusion. It should be clear from the search report that they actually put in the work.
Look at the recruitment agency’s board, are they walking the talk? Put a longlist criterion that agencies must meet of presenting diverse candidates in your bid process. And assess the validity of those presented, if half the names are highly aspirational and will never apply what is the actual value?
An honest question
Where does that leave me? Openly or behind closed doors, people will ask how an organisation’s diversity policy affects them. The policy is there to tap into a talent pool of under-recognised and under-represented groups and provide an equal playing field for everyone involved. Full stop.
It is important to reduce fear on a personal level and reassure an individual if they are the right candidate for the position, when interviewed they will get the role. Simple. No one meets the job description 100%. Every candidate will need support from the leadership team to fill a skills or experience gap.
What’s important is who is the best candidate for the role and ensuring they get the opportunity to be interviewed by the appointments panel.
The rationale for moving towards boardroom diversity far outweighs the arguments against it. For those who welcome change and make it happen, it will mean healthy debate, differing ideas, more knowledge, improved brand reputation and a more agile approach to business.
What’s more, the senior team by leading by example will hopefully filter throughout the organisation, affecting change and creating more diverse talent pools populating your succession plans that could be the key to ensuring your business edge.
About the author
Lexie Sims is director of executive search and D&I consulting at The Good Board
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