How diverse is your diverse Non Exec Board?
Elevating Board Performance through Comprehensive Diversity – Article written by Pascale Gara and Martha Rutherford
UK listed companies are now mandated to disclose in their annual financial reports that:
These diversity measures have come under increased scrutiny in recent years, and there is much truth in the old adage “what gets measured, gets done.”
While gender and ethnic diversity are indeed critical, focusing solely on these areas may cause boards to overlook the immense value of other diversity dimensions that contribute to a much truer version of diversity – diversity of thought.
Diversity of thought allows people to bring unique perspectives to a situation, seeing threats or opportunities others miss. This chemistry of human interaction is a critical component of innovation and boards with more diverse approaches at their disposal have been shown to be more creative and perform better.
The Broader Spectrum of Diversity: Unlocking Full Potential
Effective boards thrive on three types of diversity: demographic, experiential, and cognitive. This holistic approach not only fosters inclusivity but also drives superior adaptability, innovation, and representation.
Demographic diversity is probably the one most boards are aware of, and many of these markers are visual. Age, sex, race are all considered demographic markers, but it also includes other essential perspectives that reflect broader society such as other social attributes, providing first-hand insights into cultural nuances, regional preferences, and societal trends to name a few. A demographically diverse board is able to resonate better with a wide range of stakeholders and navigate varied market landscapes.
There are 4 types of demographic diversity: internal, external, organisational and worldview. Internal diversity refers to differences in natural characteristics/factors, e.g. gender, ethnicity, age, and nationality at birth. External diversity also refers to differences in people’s characteristics, but ones that can be controlled and changed. Examples of external diversity include religious beliefs, socioeconomic status and education.Organisational diversity refers to differences in characteristics that are given to people by organisations. This can be things like employment status, how high up an individual is in a company or even where they work. Worldview diversity literally refers to differences in people’s views of the world. These views can change over time, and as a result of and in response to many different factors, such as an individual’s view of differences in political beliefs.
Experiential diversity delves into the lived experiences and perspectives that individuals bring to the table, arising from the vast professional & personal experiences of board members. This includes specialised skills, industry expertise, and knowledge of best practices. Board members with diverse career paths—ranging from corporate leaders to non-profit executives and entrepreneurs—contribute unique viewpoints on risk management, governance, and strategic initiatives. Couple this with diversity across lifestage, family dynamics, religious or spiritual beliefs and this variety in experience stimulates creative problem-solving and strategic thinking, essential for driving innovation and growth and contributing to a high performing board.
Consider the experiential diversity of a board member who has had over 40 years of experience in a corporate industry. Now combine those skills and experiences with a 30 year old entrepreneur who has achieved Unicorn status with a business grown out of his bedroom. Both of these viewpoints are incredibly valuable to an organisation in growth, and when combined, can accelerate innovative thinking and creative challenge in a board environment.
Cognitive diversity is about the different ways in which board members think. It encompasses a mix of analytical, creative, and strategic mindsets, shaped by diverse educational backgrounds and personal experiences. This diversity enhances decision-making processes, leading to well-rounded debates and robust solutions. It also positively influences the board’s ethical standards, stakeholder engagement, and societal impact.
Cognitive diversity often enriches a company’s culture, promoting empathy, teamwork, experimentation and a blameless culture and deliberately diverse organisations promote creative thinking. It is a fact that boards can become cognitively uniform, not intentionally, but perhaps because someone in the c-suite or chair position favours a certain university, or values the skills of a certain organisation and its people over others.
And whilst great talent can indeed be sourced in this way, the tendency for an employer to look for someone who conforms with the employer’s existing beliefs is known as confirmation bias. Whether it appears consciously or unconsciously, bias can lead to groupthink, the practice of discouraging individual creativity or responsibility, often to avoid conflict.
Bias and groupthink deter people with different ideas or perspectives from speaking up and contributing their unique ideas.
The Strategic Advantage of a Comprehensively Diverse board.
By integrating demographic, experiential, and cognitive diversity, boards can achieve a level of adaptability and innovation that is crucial in today’s complex business environment. This comprehensive diversity enriches the board’s collective intelligence, enhances risk management, and ensures more strategic decision-making. Ultimately, a board that embraces all forms of diversity is better equipped to drive long-term success and resilience for the organisation.
While meeting regulatory diversity requirements is now necessary, it is just the starting point. Embracing a broader spectrum of diversity can transform your board into a dynamic, forward-thinking leadership team, capable of steering your organisation toward a prosperous future.
At HW Global, we specialise in identifying the right diverse talent to create balance in Non-Executive and executive board teams. Our global network not only allows us to access top talent, it also allows us to identify the key skills that your board may be missing.
Get in touch to find out more.
Pascale Gara – email me at PascaleG@HWGlobal.co
Martha Rutherford – email me at MarthaR@HWGlobal.co
