What is Diversity and Do Boards Really Care?
With this post, I'm probably jumping into a boiling cauldron of trouble with some people. As most involved in some way with governance already know, there is a huge push, domestic and international, to recruit women to boards. The topic of diversity on boards (and even in the workplace) evokes a lot of emotion. In the boardroom, when directors are asked independently if diversity is important, I've heard:
- It's important for many reasons (none specified, though)
It's important, but it takes five to six years to make an impact on a board
I think so, but our board is still all male and will probably be slow to change
Or board doesn't care and it's not a topic of discussion
Diversity of thought is more important
Do you mean male/female? I'm not in favor of quotas you know.
We've tried, but we can't find any
It took us two years to find a diverse director the last time around.
I'm the lone female on the board and I'm concerned that when I leave, the issue will be moot . . .
On and on and on . . Of all these comments, the one with the most legs seems to be "Diversity of thought is more important." However, it is more difficult than it seems to achieve this while demonstrating that such diversity exists when speaking to stakeholders. But more on that in a moment.
When speaking with executive management on board diversity, replies from women typically differ from those of men. Men most often respond positively, but then add a caveat such as: but we're really more concerned about finding the right person. A good percentage of women in management quietly state (as long as the conversation is confidential -- they say "don't quote me") that their CEO and Directors don't care and aren't concerned about the issue of diversity in the boardroom. Those who believe they already have a diverse board, on average, tend to be quite cognizant of the diversity differential.
Some, or all of the above, may make some of you squirm, or at least feel a wee bit uncomfortable. For me, (as a female, a director, and a board advisor) that's not the case at all. I see such conversations as opportunities to learn what's important to boards. Unfortunately, it seems to me that, at this point in time, diversity doesn't rate front-burner status with a number directors. This is because, thus far, when all is said and done, much more has been said than done.
Contrary to what they say, many believe that like-minded members reduce distracting contention, work to move agendas along faster, and amplify individual members' strengths. Of course, it also amplifies their weaknesses. Uni-dimensional perspectives, and blithe collegiality, have led countless boards into groupthink, overconfidence, and an unfortunate inability to see risks, issues, and opportunities before (or after) they arise, or to fully grasp their impacts.
True diversity in the boardroom is not just a US-centric challenge. Many foreign companies are helmed by (I like to think, saddled with) homogeneous supervisory and advisory boards. In many cases, this reflects the homogeneity of the societies within which they conduct business. Fortunately, the US is far from a homogeneous country, so this is no excuse.
Back to "thought diversity." How do you achieve it? It's easy to make a board look diverse: find a few different colored faces, add some vowel-ending names, one or more women, and ... voila! But, if all of these new additions grew up in the same culture, were educated alike, have the same values and interests, where will the real, new perspectives come from? As companies grow and diversify, their boards need new and varied ways of thinking about the business. New opportunities can often be found by viewing the same landscape through different perspectives. Different perspectives develop from experiences and values gained through living in environs and cultures, with all their unique challenges, as natives, not visitors.
Men and women, by the very nature of their different sex, will have some different perspectives. Is that enough? Depends on how many women are added to the board, and the ability of their male incumbents to accept and adapt to them. One of the most striking comments I've heard came from a friend (a minority male, actually) who said: "I'll always have an easier time than any female, because I'm firstly, male, and foremost, 'one of the guys in the locker room.' The men in the room are far less guarded in what they might say when I'm at the table."
Once there's an understanding as to why a board needs to be diverse (particularly in thought or perspectives), bringing it to the table becomes easier. One director recently told me that, beyond his accomplishments and competencies, the Chairman was interested in his service because of his Latino heritage, and experience working in international markets. That board understood it needed a director whose upbringing and experience would provide additional insight into the values and needs (of at least a portion) of its employees and customers, and how to better conduct business in those fast-growing markets. They understood that the company needed new perspectives to thrive.
So, how does a board find directors who truly have both valued skills, experiences, and variety in their perspectives? We will begin to address that in my next post.
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