11 Mar Diversity & Inclusion and Boardroom Performance
The world we live in now presents a brand-new set of questions and challenges for boards to confront and will continue to do so. There has never been a more important time to bring a range of different kinds of leaders to the boardroom table to be able to respond to the fallout of the global pandemic, the climate crisis and the rapid expansion of digitisation.
Six ways Diversity and Inclusion enhances Boardroom Performance
Here are six ways that diversity and inclusion enhance board performance:
- Boards debate and make decisions in groups. Heterogeneous groups are better at decision-making and more likely to make unbiased decisions.
- Role-modelling great diversity and inclusion at board level can have a positive impact on organisational culture. A workplace and a boardroom where everyone feels that they can be themselves and speak up is likely to be better at spotting blindspots and managing risk.
- An inclusive environment in the boardroom will lead to more open discussion and debate and is more likely to surface innovative thinking and solutions.
- Reliance on intuition and past experiences is a poor basis for decision making when the future operating environment will differ significantly from the past (as is the case facing most boards today). Having different kinds of people who are able to bring diverse perspectives to decisions challenges your intuitive responses.
- Boards where there is diversity of thought are more likely to spot and correct the default heuristics that people use to make judgements and decisions, known as unconscious biases, which lead to predictable errors (such as anchoring biases, overconfidence and confirmation bias).
- The expertise, professional and life experiences that are needed to find the right path through today’s challenges and opportunities are changing. Boards that find themselves with members who have expertise to help incorporate digital and ESG considerations into their strategy have a head start. Attracting this expertise is not enough for boards to take advantage of this knowledge, they must also be inclusive in incorporating these new viewpoints.
The Difference Between Good Boards and Great Boards
Good boards have moved beyond thinking of diversity as an exercise to tick a box and are reaping the benefits of having a broad mix of people sitting at the boardroom table. Those boards have probably also set real and meaningful objectives for diversity throughout their organisations.
Great boards have already realised that diversity alone is not the endgame and needs to be accompanied by a culture and environment of inclusion to reap the rewards of diversity of thought.
All boards should take note of the emerging evidence that organisations with diverse boards are performing better. There is a vast amount of diverse talent available that will enhance the boardrooms of those brave leaders who are prepared to be more imaginative about director recruitment, reach beyond their own networks and create a boardroom environment where difference thrives. The time to act is now.
Please feel free to contact Susan or Andrea if you would like to explore any of the themes in this article further. You can find their contact details below.
Susan Stenson is a director at Independent Audit, the specialist corporate governance consultancy. She has worked in boardrooms across Europe for almost twenty years and is passionate about helping boards to bring about sustainable improvements to their performance as a means of making stronger organisations that contribute to a better society.
Contact Susan: Susan.firstname.lastname@example.org
Andrea Dermody is a passionate and committed leader in Diversity and Inclusion, Talent Management and Learning. Equipped with twenty plus years of experience in the provision of consulting services in the corporate environment and externally, Andrea is managing director of her own consulting practice and is passionate about building inclusive organisations. She uses a pragmatic and collaborative approach with clients to drive culture change in organisations and in the broader marketplace.
Contact Andrea: Andreadermody@gmail.com