Board diversity encompasses not only gender, but also ethnicity, age, disability, education, social background, nationality, career path and personality traits. This considers a breadth of perspective not merely the inclusion of diverse traits of individuals.
“Boards with a diverse mix of genders, ethnicities, career experiences, age and ways of thinking have, as a result, a more diverse and aware mindset. They are less likely to succumb to groupthink or miss new threats to a company’s business model. And they are better able to identify opportunities that promote log-term growth.” Larry Fink, BlackRock Chairman and CEO, 2018 Letter to CEOs.
Available research and our own findings through engagements with our clients, identify a range of benefits from diversity that help improve business performance. These include; a better understanding of customers, employees and business partners needs and preferences, attracting top talent, leads to more innovation, better risk management and more informed decision making due to consideration of a variety of perspectives. These are what culminate into the success and profitability of an organization in the long run.
A board needs to constantly challenge itself to keep pace with the changing dynamics a company faces. This is best done through a robust dialogue of differing views as long as they are offered respectfully and listened to carefully.
In times of crisis, the varying perspectives of the board members help to create strategies and solutions that safe guard the interests of all the stakeholders. The current unprecedented global pandemic has proven that nontraditional types of leadership skills; which include courage, more emotional intelligence, or comfort with a digital-first approach are needed more than ever.
Succession planning for the board should cast a wider net in sourcing for the right candidates by taking into consideration various aspects. Nominating committee members and others in leadership roles must commit personally to making diversity an absolute requirement
Businesses that are only sensitive to the needs of those who have traditionally held positions of power will lose their legitimacy to lead a broader set of stakeholders and find themselves ill-equipped to stay on purpose in an increasingly complex and polarized world.
Increasing diversity is not an overnight task. It takes commitment, clear policies and goals and investment in building the talent pipeline. It is therefore of utmost importance to intentionally aim and work to diversify early on, as a good business practice. In other words, it ought to be a deliberate strategy that starts at the top .
Below are our proposals on commencement on that diversity & inclusion journey
- Creation of awareness for diversity & inclusion at board level – recognize and name the unconscious bias.
- Identification of the desired diversity & inclusion profile of the board.
- Mapping the current gaps.
- Strategies for creation of a diverse and inclusive board particularly focusing on issues like:
- Adoption of a diversity & inclusion strategy throughout the organization.
- Augmentation of the Terms of reference for the Nominations committee.
- Director Pool management.
- Board skills matrix review.
- Development of a Board diversity & inclusion matrix.
Contact us today for a consultancy or advice on board diversity, and how to build and implement it in your organization’s board for improved business performance.