The Board of Directors diversity agenda. Part I
The actual challenge is less about diversity, but more
about can the board function when the realities of cultural differences,
and the turmoil diversity of opinions should bring to the agenda. On the
other hand, many outside 'experts' have also realized, how difficult it
is to enter an established team of local old boys network. To have them
'change' their management style to include some international governance
components is difficult. The Chairman of a diverse board must be able to
manage the conflict of interests of a diverse board. If not, diversity beats
the purpose and members will avoid conflicts by no longer expressing their
views and become a 'lame duck'.
The diversity of experience and perspective
is certainly more challenging to manage, but the survival, and continued
success of enterprises depend on competitive innovation. Sustaining and
gaining market share and improving margins requires debate, dissent and
a healthy dose of familiarity with customers. A CEO and Chairman should
welcome discussion by colleagues who tell them they are wrong. Don't we
all wish there had been more debate inside the Lehman Brothers board?
Board appointments made on merit
Too many boards are unaware of their "blind spots" or inherent biases.
Professor Banaji, from Harvard and Yale, has written a great deal on the
topic along with a book by the same name. Lest one think this concept
is purely academic, Professor Banaji is an advisor for some of the most
respected business leaders of our time including Warren Buffet.
Corporate boards invariably perform best when the best people, from a
range of perspectives trades and backgrounds, are included. The boardroom
is where strategic governance decisions are made so that risks are not
overseen. If the boards are further made up of competent high calibre
individuals of mixed of skills, experiences and backgrounds near perfection
is achieved.
There is a long track record of women meeting the highest qualifications
however leadership positions and board representation about their male
counterparts remains inadequate. They question whether the board recruitment
is based on skills, experience and performance, or the lack of practical
recommendations from the old boys network causes this imbalance.
Let the symbolic effort prevail
In Norway, the authorities felt that the only way to make the real change
was by increasing the number of women on boards by introducing strict
quotas. On the other hand professional women do not like quota as their
preferred option.
In most EU countries, the decision so far is not to recommend quotas.
The government must reserve the right to introduce more prescriptive alternatives
if the recommended business-led approach does not achieve significant
change.
Evidence suggests that companies with a strong female representation at
board and top management level perform better than those without1 and
that gender-diverse boards have a positive impact on performance. 2 It
is clear that boards make better decisions where a range of voices, drawing
on different life experiences, can be heard. That mix of voices must include
women. The importance of improving the gender balance of corporate boards
is increasingly recognised across the world.