The demand for diversity on boards is growing - we want more women, younger people, and a greater diversity of 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. Some question 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 and anecdotal evidence from board directors links gender and racial diversity 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 c￼￼￼￼ompanies 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.
Historically, boards recruited through the ‘old boy’s network’ of white males who had a lot in common. Board members were selected from the ranks of executives who had reached the pinnacle of their careers and wanted to share their knowledge and experience to make a difference in other organisations. A board appointment was viewed as a transition phase to full retirement, in some cases reward for long service. And as directorial positions do not have the same probationary period and termination provisions required for operational roles, board members frequently remain without delivering real value.
As organisations face unprecedented challenge to innovate and succeed in today’s complex and diverse global markets and business environments, board entrenchment can be a problem. A lack of fresh opinions or opportunities for others to contribute stymies growth. Moreover, within 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 sustainable pathways for succession and renewal.
Greater diversity requires greater motivation and skill to manage; board dynamics are already complex and less is known about how to achieve and sustain a level of diversity that drives innovation and business success.
Our new white paper on diversity in the boardroom by Sue Langley and Sophie Francis unpacks some of the key issues affecting boardroom diversity and explores four critical success factors to help boards select, support and leverage the wider range of talent and ideas that exist in our workplaces and societies.
It brings together the latest research on board dynamics and performance with approaches from neuroscience, emotional intelligence and positive psychology. We discuss:
- Why diversity on boards is important and what kind
- Challenges and barriers boards face around diversity including our brain’s leaning toward unconscious bias
- Four critical success factors to leverage talent and improve board performance
- A range of recommendations and quick wins to get more women and diverse talent on board.
Download our white paper below or ask us about masterclasses or leadership development programmes to minimise unconscious bias or build a culture of diversity in the workplace or boardroom.