New Zealand is wonderful country. We are fair minded and embrace multicultural society, doing pretty well at it for the most part. We’ve led the way on gay marriage, you might conclude equality is in our DNA. Yet the boardrooms of our nation remain, for the most part, very ‘unequal’, dominated by narrow slice of population: European males mostly 50 plus.
And we do talk lot about diversity. But are we all talk? Are we paying lip-service to the diversity debate by undertaking few token gesture initiatives without really committing to anything of real substance? Where are our women board members? And more than that, what about non-Europeans? And people with disabilities? And the younger directors?
Diversity is more than just gender. But that is certainly good start. What is crucial in the boardroom is the quality of the conversation. diverse set of thinking styles and perspectives enrich that conversation – and this leads to better outcomes. To anyone who has experienced the difference, the contrast between good and bad is stark.
So if the intellectual debate has been won then why do we struggle? Let us explore some of the ‘assumptions’ that perpetuate our current malaise.
1. We can’t find diverse hires for our board.
2. In order to succeed on our board, you must already be proven on another significant board.
3. Diverse hires on our board might disturb our collegial board culture.
4. We are different: our situation is so unique it justifies homogenous board.
5. Women need mentoring.
6. The diversity debate will just go away.
Let’s unpick these one by one.
1. If you can’t find diverse directors for your board, you simply aren’t looking hard enough. Clearly you can create set of criteria that all but excludes diverse hires, but if you do the job properly and extrapolate from the strategy of the organisation, through to the range of competencies, thinking styles and perspectives that might be required on the board, then you may just arrive at different answer. There is large, diverse talent pool out there just waiting to be tapped, but it won’t be found by relying on the standard functionally biased specification and the ‘old boys’ network’ method of recruiting directors.
2. We disagree. Boards are, essentially, teams of people who analyse situations, articulate independent views and make decisions. It is absolutely possible for someone with no board experience at all to add value. There are plenty of people who might never have considered board role who would undoubtedly add huge value to many of our boards … right now!
3. Yes boards might usefully be collegial; however, most shareholders would far rather they had healthy level of creative conflict and robust debate. It is the quality of the conversation that adds value, and the diversity of input that improves the quality of output. And you are simply not going to get that on homogenous board.
4. Every board can benefit from an improved governance conversation, and whilst it might be harder for some, it is not impossible!
5. We are big supporters of mentoring programmes – but let us be clear – it is not just the women who need mentoring! Many male board members need help understanding how to work with diverse board members. Having the word ‘mentor’ in the same sentence as ‘female board member’ perpetuates the notion that the female in the boardroom is subspecies of the real thing. To make the point again, there are lots of great women out there already, who don’t ‘need’ mentoring to add value to board.
6. Absolutely not. In fact it is likely to deepen further with the threat of quotas. Gender diversity is just the start. Where are people with disabilities on our boards? And despite the daily headlines on the ‘Asian opportunity’, how many of our businesses are tapping into the Asian ‘potential director’ talent pool? Not many! And then the value of youth perspective amongst the directors?…
This is not saying that if you are white European male late in your career that you cannot add value to board; quite the contrary. What we do assert, is that the boardroom operates best if the board ‘team’ is not homogenous.
So what is really going on? There are not an infinite number of board positions available, and those holding these roles are likely to resist relinquishing these sources of professional fulfilment and income, even if they agree with the idea. (Perhaps bit like taxes; you might agree that paying tax is fair and good thing as it has social use, say in funding our schools and hospitals, but then employ tax advisors to minimise your ‘tax burden’.)
In the spirit of how we can contribute to quality conversation about diversity, we now draw upon our experience in working with boards to offer concrete suggestions for boards to ‘walk the talk’.
1 Conduct board review
Our approach to evaluating boards (which our team has employed with ASX/NZX listed businesses, not-for-profit organisations as well as top teams of multinational businesses) aligns closely with the process described in Ram Charan’s book Owning Up. Our contention is that an online survey approach commonly fails to get to the ‘real’ issues. These are best distilled from confidential ‘guided conversations’ with key stakeholders. Furthermore to be useful, these must go beyond the directors and extend to executives (who, after all, are ‘customers’ of the board’s leadership), perhaps shareholder representatives, others who interact with the board such as professional advisors.
The review will cast light on key issues that are very relevant to the diversity debate
• Skills of the chair in leading the boardroom conversation.
• Relevance of the composition of the board to the future strategy of the organisation.
• Quality of the boardroom conversation and the dynamic that exists between the directors. (Sufficient challenge? Too consensus oriented? Lack of real independent thought being brought to the table by directors?)
In addition, the review should provide the objective analytical evaluation the board rarely does itself and be grounded in pragmatic ideas that actually work. We research and analyse great approaches from the best in the world in order to provide boards with menu of improvement options. And we facilitate debate amongst directors to ensure the results of the review are understood and contextualised.
The best boards are already conducting reviews similar to the approach discussed above. They get better faster than the average boards.
2 Get out of the boardroom
A good way to positively influence diversity of thought in the boardroom is to pursue experiences to challenge the status quo. The best boards we come across commit to range of ‘development’ actions. This could range from simply rotating the venue for board meetings to facilitate customer visits, meetings with shareholders etc, to more formalised development plans for each director that might involve attending course overseas. The key is to broaden the thinking.
3 Review the constitution
If you’re really committed to making an impact in this area, look at freeing up some places around the board table to enable more diverse composition to take shape. Review your constitution, rotation policies, and consider accessing more independent input to the nominations committee. It’s difficult to effect change when the structure is working against you.
4 Publish your own data
There is nothing like transparency to focus the organisation on what is important. The commonly chanted mantra, ‘you get what you measure’ applies no less to the board and senior leadership team than to the call centre teams, say, who work in the business. Much like in the world of quantum physics, you can’t measure something in an organisation without affecting the organisation!
We commonly measure too much at the lo