Ash dieback threatens the survival of the Ash tree in the UK – and the flora and fora that depend on it. Listening to the Today programme I learned that the British Ash is more limited in its genetic diversity than Ash elsewhere in Europe, weakening its chances of survival. As the Forestry Commission comments: “the single best strategy (to improve resilience) is to increase the genetic and age diversity of your woodland”.
Diversity on boards is important for a number of reasons – to better reflect the communities we serve or understand markets and customers we may not be reaching, to ease succession planning and build capacity for renewal, to meet regulatory expectations and achieve fit with partners’ or customers’ policy objectives (1) – but the single most important reason to increase diversity is to improve the quality of thinking.
Self-evidently, the quality of thinking impacts on decision making. We know for example that faced with increasing complexity, cognitive limitations are a constraint on strategic thinking. Individuals develop unconscious thinking habits which are to some extent culturally influenced. The important role of a board team that has challenging conversations has been well illustrated by governance failures.
Furthermore, recent scandals have often had at their root a ‘disconnect’ between organisational values and business direction. Boards seem to have lost touch with their moral compass (2). Among other factors, we know that a group of similar and like-minded individuals – especially a long standing one – reduces the likelihood of prevailing assumptions being effective challenged (the well documented phenomenon of ‘group think’).
More positively a growing trend has been reported recently to put values and effectiveness at the top of the board agenda2. The importance of a balanced Board in terms of gender in particular has had a higher profile since the Davies report (2011) made recommendations for action to achieve gender-balanced boardrooms. Research measuring the share price performance of 2,360 companies globally over the past six years demonstrated that firms with women on boards consistently out-performed those led entirely by men. It concluded that “it would on average have been better to have invested in corporates with women on their management boards than in those without” (Credit Suisse Research Institute 2012) (1) Most of us would recognise a similar imbalance in the age and ethnic make-up of Boards.
Diversity without equality does not deliver – if new joiners have to fit in with the group, on the group’s terms, they will not produce the improvements in Board performance discussed above. Interpreting someone else’s difference from the perspective of one’s own ‘normality’ marginalises those perceived as different. Equality is about removing barriers and ensuring all groups (specifically those with “protected characteristics” who have legislative protection) have equal access and can participate on an equal basis. Their experience and skills are equally valued with those of others. This is often confused with ‘equity’ i.e. being fair (although fairness is not a bad moral touchstone) or treating people as if they are the same (hence a positive approach to diversity starts from appreciating difference).
Diversity means recognising that differences are individual as well as societal, cultural, religious etc. Each of us has an individual relationship with our own background and influences, and brings our own unique perspective to a Board team. Ticking boxes and counting numbers just won’t do it –it’s a means of measuring action, not action in itself. Truly diverse and equal Boards are leadership teams made up of individuals who all contribute from a position of equality and in their own unique way to collectively make the best possible decisions and guide their organisations through uncharted waters. As the old adage has it, if you do what you’ve always done, you get what you’ve always got – and in times of change that simply won’t cut it.
Author: Patricia McCabe FACGP
(1) Credit Suisse Research Institute (2011). The research identified several key reasons why greater gender diversity correlated with stronger corporate performance, which included greater effort across the board, a better mix of leadership skills, access to a wider pool of talent and better reflection of the consumer.
(2) Governance Insights- the tone of governance Grant Thornton October 2012