The ongoing widespread clarion call for racial equity is heart-warming and reminded me of my previous article on unconscious bias. While it is widely accepted that training for senior leaders on unconscious bias is necessary, it is not sufficient to improve racial diversity in the boardroom. Nevertheless, the positive words from many organisations to do better is a positive sign. While it is understandable that some might be sceptical about the likely follow-through by many organisations. I think it is important to give such organisations the benefit of the doubt and not allow failed promises in the past to hamper this new wave of optimism.
The real challenge is translating warm words into credible results and one key area which has been challenging is improving racial diversity in the boardrooms across the private, public, and not for profit sectors. The reality is that improving racial diversity in the boardroom requires a number of interconnected steps. Some of those steps would focus both on the ‘supply’ side, which involves proactive engagement with the pool of readily available diverse talent as well as the ‘demand’ side, which involves creating more boardroom vacancies. In addition, a closer look at the selection process is a necessary step to ensure that it does not inadvertently prejudice its BAME (Black, Asian, and Minority Ethnic) candidates.
Despite my fair share of rejection for non-executive/boardroom positions, I cannot honestly say that the outcome of those applications was due to racial prejudice and it would be inappropriate to come to that conclusion. Nevertheless, what I have observed anecdotally is that the person specification for some board positions are so over-engineered that it is likely to discourage suitable candidates particularly those without access to relevant mentoring support.
While it is understandable the clamour for immediate change to boardroom diversity, it is critical to recognise the existing barriers to change in order to exercise appropriate patience underpinned by credible incremental progress.
Barriers to board diversity
Some of the existing barriers which in no way is an exhaustive list is as follows:
Low priority
Board diversity is not genuinely a high priority and therefore not deemed a critical factor and a key driver of the board appointments process. A strong indicator is the absence of consequences for failing to shift the needle over a number of years.
Traditional pathways
The over-reliance on the traditional pathways to the boardroom favoured by many boards particularly the strong demand for c-suite experience particularly for CEO and CFO experience.
Low turnover of board directors
The tenure of board directors particularly not subject to term limits could be on average about ten years, which means that vacancies for board appointments are relatively infrequent.
Narrow networks
The over-reliance on the personal networks of existing board directors to fill board vacancies. Tapping existing networks is not unusual to identify trusted partners. However, such an approach is unlikely to improve board diversity if the board directors are not currently diverse.
Risk aversion
There is a strong preference for experienced board directors in order to mitigate the risk of making the wrong board appointment, which makes it more difficult for first-time board directors. The problem with this approach is that if BAME candidates have been victims of a racially biased system, it is likely that this might be reflected in their type and scale of experience.
Excessive selection criteria
If the selection criteria are excessive, it is inevitable that they are going to be perceived to applicable to a limited range of individuals. Furthermore, such an approach could foster the adoption of criteria that are not really objective and unnecessary.
Lack of scrutiny
Good boards would normally have regular board evaluation processes but whether the board recruitment processes are subject to external scrutiny is questionable particularly through the lens of board diversity.
Poor diversity data
As the famous adage states “…what get measured, get done”, which emphasises the importance of capturing credible data to drive meaningful improvement. If racial diversity really counts, the obvious question is how come it is not counted. So not tracking racial diversity data is unlikely to lead to better outcomes.
Necessary measures
The overall approach to improve racial diversity must be holistic and systematic in order to achieve long-term and enduring positive outcomes. The opportunity to secure quick wins, which is commendable should not be confused with short-termism and its legacy of partial outcomes and adverse unintended long-term effects.
It seems to me that a multipronged approach is the only sustainable way to make board diversity business as usual rather than another persistent weakness to address.
The good news is that there are common key factors that drive success in terms of board appointments some of which are as follows:
Genuine commitment
It might be an exaggeration, but it is arguable that genuine commitment to racial diversity by the board is probably the most important improvement measure. Such commitment would be characterised by the purposeful intent of board leadership. The intentionality of the board to achieve meaningful diversity would be self-evident both in the new board appointments and the improved board culture that is truly inclusive, which is necessary to retain the diverse board members.
Clear definition of requirements
As indicated earlier, it is imperative that the board director requirements are not excessive and cumbersome and that they are essential to support the board’s effectiveness. An effective board skills audit should highlight priority areas to address gaps in the board composition mindful of the need to enhance diversity of perspectives relative to the organisation’s stakeholders.
Broaden networks
In order to improve board diversity, it might be necessary to require the Nomination Committee to consider a diverse slate of candidates. This would require the board to cast a wider net to attract a diverse pool of talent and look outside the traditional networks that have been used previously. Tapping relevant resource groups that have ready access to racial talent should be explored. It is understandable that some boards may be wary of using non-traditional networks in the first instance, but this could be mitigated by engaging with like-minded partners that share the same mutual objective of enhancing board effectiveness through appropriate diversity.
Broaden range of professional background
It is recognised that part of the challenge of improving racial board diversity is the reliance on the c-suite pipeline particularly the CEO and CFO roles as the primary pathway to board appointments. It is therefore imperative to broaden the professional background to enable professionals from other disciplines to obtain board roles. Such an intentional strategy would be particularly helpful to recruit first-time board directors.
Diversity committee
Depending on the progress of the board in relation to diversity, it might be necessary to create a diversity and inclusion committee to focus attention and maintain close oversight on the key actions to drive the desired improvement.
Improve accountability
The board should accept responsibility for the current level of diversity and be committed to being more accountable for improved outcomes in this area. In particular, the Chair should be accountable to ensure that tracking and reporting on progress as appropriate takes place. Part of demonstrating accountability is the board satisfying itself that the various measures are effective through external scrutiny of the board appointments process and independent assurance.
Board expansion
In view of the constraint on board vacancies cited earlier, it might be necessary to increase the number of board seats in order to facilitate the expedited appointment of new members subject to ensuring the increased size does not compromise board effectiveness. Such an approach could in any event be reverted in due course as appropriate when board diversity goals have been achieved.
Comprehensive diversity data
The board would need to capture and collate comprehensive data on key inputs and outputs in order to emphasise diversity in a measurable way. Such comprehensive data would be helpful to identify what measures are effective and those that require adjustment or rethink. Without such data, for example, it would be difficult to establish a link between the new BAME directors and their retention and the possible correlation to board culture.
Board culture
The board culture should foster a conducive and inclusive environment to retain diverse board members. In particular, the culture should value difference of opinions and perspectives that allows a broad spectrum of voices to be heard, avoiding a dismissive attitude to such views. In addition, a collegiate and supportive board culture would avoid the perception that some board directors have a greater and dominant voice irrespective of their specialist expertise.
Diverse interview panel
The board should adopt an intentional and disciplined hiring process, which would include utilising objective measures to assess candidate responses to interview questions. In particular, the use of a diverse interview panel is helpful to mitigate the risk of unfavourable subjective assessment. This approach was commended in ‘Fixing the Flawed Approach to Diversity’ (BCG) report, which was a study of 16,500 employees from companies around the world, the Boston Consulting Group (BCG) found that “half of all diverse employees stated that they see bias as part of their day-to-day experience at work. Half said that they don’t believe that their companies have the right mechanisms in place to ensure that major decisions (such as who receives promotions and stretch assignments) are free from bias” .Furthermore, the research highlighted proven interventions for each of the three groups analysed with employees of color considering measures related to recruitment as critical. For example, they ranked blind screening of résumés during recruitment and diverse interview panels for job candidates as effective measures.
So, what next, avoid taking politically expedient action fuelled by a desire to be seen to be doing something as it could lead to board appointments where those board members are tolerated rather than celebrated, which would be counterproductive. Instead, purposeful, and decisive action should be taken particularly the adoption of a realistic improvement action plan to implement clear strategic diversity goals underpinned by positive engagement with key stakeholders including diverse suppliers that can provide unique value.
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