In my last post, we considered the topic: Leveraging diversity, equality, and inclusion for Board effectiveness. Whilst we analyzed arguments for and against DEI in the previous post, today, I will be reflecting on yet another discourse on diversity in the Boardroom.
Can diversity be too much? When can we say a board is too diverse?
Whilst some theorists argue that diversity is not a strategic consideration, others insist that it is strategic, even though its application should not override the appointment of directors based on merit.
Differences versus Shared Goals and Objectives
A board has been duly constituted and its composition is very diverse. What next? How do they navigate the decision-making process efficiently, free of prejudices and analysis paralysis?
Indeed, in our efforts to create diversity on boards, we risk tilting the scales excessively in favor of differences, thus risking the shared goals and objectives of the corporation.
Differences in identity alone should not and cannot be the focal point of diversity. Otherwise, the boardroom might as well be diminished to an uncoordinated circus of some sort, lacking unity of purpose.
Where a board pays too much attention to differences rather than organizational goals, conflicts would be rife.
Notably, the effectiveness of a board is not improved by emphasizing differences. Rather, when directors focus on common goals and work in an environment where all directors have an equal say in decision-making, the board’s collective performance is optimal.
Are We Merely Seeking a Representation of Differences?
A newly appointed female director may feel as if she has not earned the position and that the concept of diversity was all that set her apart. This, I’m sure, is not the intent of diversity in the boardroom.
People of color on the boards of global corporations may have similar experiences – The idea of being singled out because of the colour of their skin rather than merit.
Despite their laudable and ambitious aspirations, what DEI proponents typically refer to as diversity is not actually diversity. No one is looking for persons of various races, ethnicities, religious beliefs, sexual orientations, socioeconomic backgrounds, or ideological viewpoints to sit at the table. This is a counterproductive approach to the principle of diversity.
To begin, we need a mindset shift from the mental barriers that limit diversity to criteria that must be satisfied to meet regulatory obligations in annual reports or board evaluation reports that are measured only once a year.
Furthermore, people should not be forced into categories that ignore the subtleties of identity for the sake of diversity.
Balance and tolerance, free of conscious and unconscious personal biases as much as practicable, are essential for success.
Board Skills Matrix
A Board skills matrix is a useful tool for ensuring better board composition. This matrix could help in identifying gaps in the composition of a Board and influence the process of recruiting directors. It is also useful in determining the induction programme of new directors or the training and development requirements of existing directors.
The categories in which the skills and attributes can be classified in the matrix are as follows:
- Expertise in a certain industry or sector
- Governance skills (e.g. Finance, Audit/Internal Controls, Risk and Compliance oversight, Strategy, Corporate Governance, Information technology, Operations, Commercial experience, Mergers & acquisitions experience etc
- Diversity-based criteria (e.g. Gender, Culture, Age, etc)
- Academic Qualification
- Previous Board experience
- Personal characteristics (e.g. Ethics, Leadership, Negotiator, etc)
Beyond ‘Diversity’, in selecting directors, contemplate the skills needed to deliver the strategy and vision of the corporation, consider the corporation’s current needs and envision the future demands, and examine the current board’s skill set in comparison to the talents required.
Thank you and see you in the next post.