On inclusion: No more business as usual in the boardroom

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On inclusion: No more business as usual in the boardroom

A diverse workforce positively augments company performance at all levels. However, for a diverse workforce to flourish—including attracting, retaining, and growing diverse talent—companies must also enhance inclusion.

Earlier this month International Women’s Day (IWD) showcased stories and important messages seeking to drive a more diverse, equitable, and inclusive world. A world where difference is valued and celebrated. Many events and businesses supporting IWD followed the theme of #breakthebias, which is a worthy and important issue, but worth noting that it wasn’t the UN’s (owner of IWD) official theme for 2022.

Theirs connected climate action to gender equality: “Changing Climates: Equality today for a sustainable tomorrow”. This links the need to balance diversity and inclusion with broader global and local issues and the role an inclusive board can play in ensuring a more sustainable and relevant future for the business and the community at large.

In addition to diversity we must also push for equity and inclusion. I love the expression that diversity is being asked to the party but inclusion is being invited to dance. Sums it up perfectly. The lesson for boards is that token diversity - asking someone from a non-traditional background to the board - does not make for better boards, better decision making and better outcomes unless they have a role and are respected, regarded and listened to for their valuable and diverse perspective.

“Boards are looking to change their composition out of strategic necessity and remaining competitive. What that tells us is different skills are going to be needed going forward,” says Susan Angele of the KPMG Board Leadership Centre.  KPMG’s report found that 42 per cent of respondents are concerned about boardroom blind spots and missed opportunities created by a group of directors lacking in diversity.

But what are these blindspots and what is the board’s responsibility to deliver on diversity and inclusion to avoid them?

Groupthink

The board must be prepared to divert from groupthink, a well written about practice that, at times, happens in all boardrooms. It’s also the reason why board tenure and turnover is crucial. Boards, and management, particularly a long standing CEO, often suffer from groupthink and associated bias which occurs when a lack of ‘outside the box thinking’, new perspectives and rigorous discussion on contemporary market and business developments occurs.

Innovation suffers, change is difficult to achieve and these businesses become laggards or end in the graveyard because fresh ideas, learnings from other organisational experiences and the internal culture is toxic to growth eventually allowing competitors to take over.

Boards are quite rightly spending a great deal of time thinking about composition issues such as director expertise and diversity as paths to more effective governance. But, according to a recent PwC report, Unpacking board culture: How behavioural psychology might explain what’s holding boards back, board members may be overlooking the importance of group dynamics — the human element and the biases that everyone naturally brings to the table that, when harnessed in the right way, allow board culture to thrive and deliver significant value to the business.

Some of this significant missed value relates to the important global challenges that must now be faced and dealt with, to the best of a board’s ability and the depth of understanding required to have robust and appropriate conversations. To apply the knowledge to our businesses and to ensure we listen and learn from others’ experiences.

It is a  fact, though, that while most boards work to solicit a range of views and come to a consensus on key issues, PwC’s Annual Corporate Directors Survey 2021 found that 36 percent of directors still have difficulty voicing a dissenting view on at least one topic in the boardroom.

The reason most commonly cited by directors for stifled dissent on their board was the desire to maintain collegiality among their peers. So while consensus-building is important, boards may still be too inclined to seek harmony or conformity – leading to groupthink - and greater board diversity and inclusion will help ameliorate this.

The board as a compass

Now that diversity and inclusion are tabled as critical board priorities, how can boards help companies embed these principals so that they evolve into their way of doing business rather than merely existing on paper?

McKinsey propose a model which covers two key employee elements:

  1. Personal experience: Captures how employees individually experience belonging and whether they feel encouraged to bring their full, authentic selves to work, together with how empowered they are to make meaningful contributions.
  2. Enterprise perception: Captures how employees view the strength of acceptance, camaraderie, and fairness across the enterprise.

These elements are crucial areas for boards and their directors to act on and for directors to reflect on the role we play to foster these important inclusive organisational behaviours. The same premises of personal experience and enterprise perception holds for board composition.

It’s a matter for the board and the executive team to decide when and how to bring these two elements to life within the business, so that they enhance operations and ensure that diversity and inclusion deliver better business outcomes and address the challenges and issues that will enable a more sustainable future.

One of the most important ways directors can promote diversity and inclusion within their companies is to table it at board meetings — even if the answers lead to uncomfortable conversations. Boards should ask questions about an organisation’s diversity data, training programs to foster a more inclusive culture, efforts to tap into a more diverse talent pool at every level of the organisation, and pay gaps that need to be corrected.

Moving forward

The bottom line? Diverse board talent is out there. You just have to put in the effort to find it. There are a growing number of global companies that are getting it right. Starbucks recently named its first Black female board chair (nearly half of the board is women), half of Archer Daniels Midland Co. board is women or people of colour, and Macy’s board is half women or people of colour. Others are also making strides, but more progress needs to happen.

I hope that these, and the numerous other diverse board members now joining boards can speak their minds, challenge the status quo, and are enabled to work in the best interests of all stakeholders.

It is important for diverse board members to bring their unique perspective and life experience into the strategic decision-making process, otherwise board outcomes won’t fit the needs of the company which include a sustainable and ethical future fit place in the market.

Diversity and inclusion do, however, require conviction. Real conviction on the part of leadership, which has the effect of flowing throughout the organisation and changing business as usual.

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