Newsletter | Volume 1

Issue I
Issue II
Issue III
Issue IV
Issue V
Issue VI
Issue VII
Issue VIII
Issue IX
Issue X
Issue XI
Issue XII
Issue XIII
Issue XIV
Issue XV
Issue XVI
Issue XVII
Issue XVIII
Issue XIX
Issue XX

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The Board of Directors diversity agenda. Part I

The actual challenge is less about diversity, but more about can the board function when the realities of cultural differences, and the turmoil diversity of opinions should bring to the agenda. On the other hand, many outside 'experts' have also realized, how difficult it is to enter an established team of local old boys network. To have them 'change' their management style to include some international governance components is difficult. The Chairman of a diverse board must be able to manage the conflict of interests of a diverse board. If not, diversity beats the purpose and members will avoid conflicts by no longer expressing their views and become a 'lame duck'.

The diversity of experience and perspective is certainly more challenging to manage, but the survival, and continued success of enterprises depend on competitive innovation. Sustaining and gaining market share and improving margins requires debate, dissent and a healthy dose of familiarity with customers. A CEO and Chairman should welcome discussion by colleagues who tell them they are wrong. Don't we all wish there had been more debate inside the Lehman Brothers board?

Board appointments made on merit
Too many boards are unaware of their "blind spots" or inherent biases. Professor Banaji, from Harvard and Yale, has written a great deal on the topic along with a book by the same name. Lest one think this concept is purely academic, Professor Banaji is an advisor for some of the most respected business leaders of our time including Warren Buffet.

Corporate boards invariably perform best when the best people, from a range of perspectives trades and backgrounds, are included. The boardroom is where strategic governance decisions are made so that risks are not overseen. If the boards are further made up of competent high calibre individuals of mixed of skills, experiences and backgrounds near perfection is achieved.

There is a long track record of women meeting the highest qualifications however leadership positions and board representation about their male counterparts remains inadequate. They question whether the board recruitment is based on skills, experience and performance, or the lack of practical recommendations from the old boys network causes this imbalance.

Let the symbolic effort prevail
In Norway, the authorities felt that the only way to make the real change was by increasing the number of women on boards by introducing strict quotas. On the other hand professional women do not like quota as their preferred option.

In most EU countries, the decision so far is not to recommend quotas. The government must reserve the right to introduce more prescriptive alternatives if the recommended business-led approach does not achieve significant change.

Evidence suggests that companies with a strong female representation at board and top management level perform better than those without1 and that gender-diverse boards have a positive impact on performance. 2 It is clear that boards make better decisions where a range of voices, drawing on different life experiences, can be heard. That mix of voices must include women. The importance of improving the gender balance of corporate boards is increasingly recognised across the world.