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How to Encourage More Diversity on Boards

By Sue Langley | 10 August 2015

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The demand for diversity on boards is growing – we want more women, younger people, and a greater diversity of culture and thinking at the top.

The Australian Institute of Company Directors (AICD) is calling for all boards to ensure that 30 per cent of their directors are females, urging ASX 200 companies to meet this target by 2018. Yet an AFR article this week questions whether boards can meet these targets. A change in culture is clearly needed.

That diversity on boards is good for business is widely accepted; an array of studies links gender and racial diversity on boards to better business outcomes.

For example, a 2015 study of ASX companies by the Centre for Gender Economics and Innovation and Infinitas Asset Management, who has published a new Diversity Index, found that companies with 25 per cent female boards perform more than 7% better than those composed entirely of men.

Other studies indicate that women contribute positively to board and company performance by effective monitoring and strategy involvement.

Less understood is how to achieve and sustain a level of diversity that drives innovation and business success.

The innovation - talent challenge

As organisations face unprecedented challenge to innovate and succeed in complex and diverse business environments, board entrenchment can be a problem.

Lack of fresh opinions or opportunities for new talent stymies growth. A board consisting of white men of a similar age and class is unlikely to have the expertise, flexibility and depth to guide organisations successfully into technologically sophisticated digital and global marketplaces. Within these homogenous boardroom cultures, new board members don’t always flourish.

If boards remain open to the value that women, younger people and those with varied backgrounds bring — and are truly willing to make room for and support them — they can access more creative solutions and create pathways for succession and renewal.

It isn’t simply a matter of getting more women or people with diverse backgrounds and experiences on boards—the culture needs to be one that supports them to stay and fully contribute value.

Overcoming diversity blockers

To encourage diverse thinking and talent, boards need to overcome several barriers that are seldom considered when recruiting new members or conducting board business.

1. Challenge unconscious bias

One of the barriers to achieving greater diversity on boards is that our brains are prone to biases, conscious or not. Hidden biases may make boards more likely to dismiss
 a potential member’s viability based on assumptions about gender, race, nationality, background or age.

Bias can also function 
in reverse. It
 may blind directors and chairs from acting on poor performance by members or they may retain people from a similar background who has outlived their value.

The key lies in challenging assumptions, staying open-minded and consciously creating new connections. Look beyond the usual requirements when recruiting new members and examine any biases individuals and the group may have about people.

2. Create open dialogue

Diversity can lead to conflict in groups, while homogenous boards are prone to ‘groupthink’. When a level of diversity exists
on a board, the way the group chooses to address this conflict or desire for consensus makes all the difference.

The role of the Chair is critical in managing the decision-making process and ensuring each person feels safe to contribute and explore divergent or novel ideas. Create a Charter that defines the board’s purpose, shared values and how you will communicate and behave. Build
in guidelines and reminders to encourage open-mindedness, challenge assumptions and show appreciation for others’ views.

3. Improve board dynamics

Good governance relies on the positive behaviours of each board member. If dysfunctional behaviour and dynamics predominate, new talent may not thrive. Even if they arrive with an open mindset, vision and motivation to learn, this is likely to dwindle when the culture does not support or encourage it.

Self-awareness is critical here. In many cases directors need 
to step back and ask: How can 
I be more open-minded? What can I learn from my peers? What positive behaviours can I practice that will create space for new ideas?

4. Be more intelligent about emotions

Emotions are an everyday reality in the boardroom, just as they are in every leadership team. Humans are social creatures and our brains are wired for emotions. They influence how each board member behaves, handles diversity, deals with status and power issues, builds trust, thinks creatively and makes decisions.

Emotional intelligence can help board members monitor the emotional tone in the room and keep a positive, energising balance to move people productively forward. How can boards be more intelligent about emotions? They can start by selecting board members with higher levels of emotional intelligence (I recommend using the MSCEIT tool) or learning some EI skills.

Maximising talent

I believe that if boards maximise four critical success factors—positive climate, relationships, communication and meaning—they can create a culture that is more equipped to promote diversity, innovation and performance.

White-paper-0004-1200x628Our new white paper on diversity in the boardroom unpacks some of the key issues affecting boardroom diversity and explores these four success factors to help boards select, support and leverage the wider range of talent and ideas that exist in our workplaces and societies.

The paper brings together the latest research on board dynamics and performance with approaches from neuroscience, emotional intelligence and positive psychology. It also includes a range of recommendations and quick wins to get more women and diverse talent on board.

You can download our white paper below.

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Download Now

White paper: Diversity in the Boardroom

We bring together the latest research with approaches from neuroscience, emotional intelligence and positive psychology to help boards leverage talent for greater innovation and success. Download Now

About the Author: Sue Langley

Sue Langley

Sue Langley is a speaker, master trainer, global business consultant, researcher and leading advisor on the practical workplace applications of neuroscience, emotional intelligence and positive psychology. She is CEO and founder of the Langley Group of companies and creator of the world's first government accredited Diploma of Positive Psychology and Wellbeing.

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