The principle and practice of diversity

Why complementary? Because a group of people with high IQ and low EQ clearly wouldn’t get on.

Calling for diversity on boards is an attractive and easily made statement and is very much a hot button issue. It will remain so, for as long as women are under-represented on boards and a growing regiment of wannabes are pressing at the gates.

So, pack a board with a range of skills and talents that take into account ethnicity and gender and surely the probability of a successful board is optimised?
Were that it were so simple. On the face of it, it sounds so logical, correct and incontrovertible. Diversity is a keystone best practice concept of corporate board composition.

It is supposedly the antidote to "groupthink", which is both an indicator of over-concentrated or narrow interest as well as a collective loss of the grasp of (the wider) reality. So when it comes to appointments the conventional wisdom is “four legs (diversity) good, two legs (uniformity) bad." When everyone is more or less the same with regard to background, experience and so on, then it is less likely that the “conventional” wisdom will be challenged.

Prospects, issues and initiatives are unlikely to receive a good airing before an objective, defensible position can be reached. Diversity is supposed to lead to more innovation, more outside-the box thinking and better governance.
That is the theory. But in a recent Wall Street Journal article the authors, Manzoni, Strebel and Barsoux suggest that there is often a gap between potential and reality and pose the question: “why does it appear to be a lot easier to appoint a diverse board than to make it function well?”

They found that often when directors are appointed because their views and backgrounds are different, they end up isolated and ignored. Boards therefore must not only select carefully in the first instance but then work to create a suitable climate or culture of trust and candour in which diversity can work its magic. The authors argue that boards must learn to unlock the benefits of diversity and work with colleagues who were selected not because they fit in – but because they don’t.

Many directors, particularly women, who will sigh in agreement at their experience of being appointed on the basis of some diversity policy and then finding that they are sidelined. The clamour by women for recognition and change is increasing; at the current glacial rate of change this is likely to increase in volume as frustration and indignation mount.

What Helen Reddy sang about women went on and did, demonstrating that they can do anything: they are risk hungry, are forming their own companies in increasing numbers and are to be found everywhere, albeit as a minority, even in hard-edged traditionally male industries such as petrochemicals and mining.
It is “game over” in the debate about inter-gender innate weaknesses and capability. The argument should therefore focus on opportunity and change. It has to.

But how do you shoe-horn diversity into the cultural milieu? Quotas are one mechanism and are being threatened in Australia if self-imposed diversity targets are not achieved. In France a new law will force companies to put women into half their boards within five years. Iceland and Norway have also favoured positive discrimination.

But isn’t there something uncomfortably formulaic about the term “self-imposed diversity goal?" Isn’t the best board likely to be made up of the best minds, relevant hard and soft skills and a culture of constructive dissent and challenge? And couldn’t that be a single gender board? There are probably plenty of agri-business boards, for example, who would say “yes.”

What is clearly desirable is a culture where diversity is recognised as an inherent feature of good governance and not where there is pursuit of diversity merely for the sake of it. The latter smacks of political correctness which is a dirty word to most entrepreneurs.

The obstacles to achieving greater participation are perception, attitude and opportunity. Business leaders need to adapt and respond to the challenge and opportunity, open their minds as well as the gates and then proceed to operate as a meritocracy, appointing on suitability for the role, and only that.