With many organizations and policymakers putting diversity firmly on the agenda it was refreshing to read an article that moves us from hypotheses into action.
Diversity in the boardroom
Diversity is a broad topic of interest to me and the usual go-to category of ‘gender’ is simply one dimension. It seems a good place to start, however.
A recent Harvard Business Review (HBR) article makes a case for diversity in order to bring unique perspectives to the boardroom, for example, with resultant improvement to performance. The authors note that there has been slow progress among S&P500 companies in this regard with women holding just 24% of the board seats available.
Fortune favours the brave
Legislators in California recently passed a bill that will require publicly-traded companies with Californian headquarters to appoint at least one woman to their board by the end of 2019. Should the bill get signed into law, California would become the first state to adopt this approach. The legislation would require companies with five directors to add two women by the end of 2021, and companies with six or more directors to add at least three more women by the end of the same year. This is a bold move which I’m sure will catalyse others into action.
Rwanda, a proudly African example, was ranked in the top 5 countries for gender equality in 2018; with its government strongly committed to the cause. In the same year, the country announced a gender-balanced Cabinet with 50% women members. Rwanda’s president Paul Kagame was quoted saying, “A higher number of women in decision-making roles have led to a decrease in gender discrimination and gender-based crimes”.
Diversity and performance
A Bain & Co study indicated that decision-making is 95% correlated with business performance and that teams make better business decisions than individuals.
A Cloverpop whitepaper indicates that teams make better decisions than individuals 87% of the time and teams with gender diversity make even better decisions 80% of the time.
It stands to reason that more diverse groups of decision makers are more likely to consider more varied hires or promotions as unconscious biases are challenged or inherently less concentrated. For example, Cloverpop discovered that having more women encourages diversity in decision-making: “Mostly female organisations were 44% more likely to include both men and women in decision making compared to mostly male organisations.”
Inclusion plays an important role given that diverse teams make better decisions but struggle to put them into action. The authors of the white paper conclude that inclusive decision-making not only drives better decisions but also overcomes the increased operational friction of diversity by including wider perspectives. The benefits of inclusive decision making happen as soon as a group includes just one woman and one man, one older and one younger person, or someone from another geography.
Transforming intentions into action
The authors of the HBR article recommended some practical ways to implement a diversity-driven recruitment approach, which included casting the net wider and focusing on skills rather than titles. They also suggest starting with a pool of candidates, which has 50% of its participants from underrepresented groups. This method would ostensibly assist with unconscious bias at the screening stage.
A dose of reality
I have often been a minority (by many definitions) on boards and management teams but I am pleased to say that this too is improving. I’m not the greatest advocate of quotas but I have come to acknowledge that they do play a role in redressing imbalance and may be appropriate with a limited lifespan.
There is a long way to go to get to the ideal of ‘parity’ – however the signs are encouraging!