8. Diversity in the boardroom Flashcards
When did UK CG Code first recognise the value of diversity?
2010 Code - ‘search for board candidates should be conducted … with due regard to benefits of diversity on the board including gender’
2018 Code expanded on need for diversity and mentioned diversity of what 5 things in appointments and succession plans?
Gender
Social background
Ethnic background
Cognitive strengths
Personal strengths
Role of CoSec re. diversity (3)
Ensuring variety for its own sake
Being a key guardian of equity legislation
Understand, monitor and support handling of board and committee diversity to drive better conversations and better performance
5 categories and types of diversity
Social category difference
Differences in knowledge and skills
Differences in values or beliefs
Personality difference
Organisational/community status differences
Diversity - social category difference - 7 types
Race
Ethnicity
Gender
Age
Religion
Sexual orientation
Physical abilities
Diversity - differences in knowledge and skills - 6 types
Education
Functional knowledge
Information or expertise
Training
Experience
Abilities
Diversity - differences in values or beliefs - 2 types
Cultural background
Ideological beliefs
Diversity - personality differences - 3 types
Cognitive style
Affective disposition
Motivational factors
Diversity - organisational/community status differences - 6 types
Tenure or length of service
Title
Work-related ties
Friendship ties
Community ties
In-group membership
6 ways in which greater diversity improves performance - three internal, three external
Internal
- Reduction in cost of integrating new workers
- Orgs with diverse leadership groups are generally more attractive to prospective recruits
- Better customer strategy where that customer group is better represented
External
- More innovation and creativity
- Better problem-solving and decision-making
- Ability to flexible, agile and resilient
Other than for the benefit of moral equality, research suggests that having gender equality on boards has which benefits? (4)
- Take NED roles more seriously
- Prepare more conscientiously
- Ask more of the awkward questions
- Better appeal to general consumer base (70% of household purchasing decisions are made by women)
McKinsey research revealed that orgs in top quartile for gender diversity outperformed those in bottom quartile by how much?
15%
What is the evidence that suggests having more women on boards is causing better financial performance, rather than just correlating with it?
Research at concept of ‘collective intelligence’ found that boards with better collective intelligence:
- had more women
- had higher empathy scores (and greater empathy is generally found more in women)
- were more likely to have high levels of turn taking
- therefore, the greater empathy of women is clearly a key enhancer of performance
4 benefits of greater race and ethnic diversity (two internal, two external)
Internal - more inclusive leadership and enhanced culture
External - brand enhancement, attracting and retaining top talent
What is the key conclusion to take from research on board race and ethnic diversity - think context
Context matters - if there is a key stakeholder group that is not represented, the boardroom dynamics and other outcomes will suffer
What does research into benefits of age diversity on boards (and generally in the workplace) suggest?
Assumed generational differences are not supported by the scientific evidence, so should be less of a concern than other types of diversity
- often, assumed characteristic differences are based on stereotypes and largely insignificant
Potential negative of greater country culture diversity
‘Process losses’ through task conflict and decreased social integration - as individuals work less well due to difference opinions on how to get things done, less in common, etc.
Potential positive of greater country culture diversity
‘Process gains’ through increased satisfaction and creativity - as a result of the stimulus that their differences bring
Key takeaway re. country culture diversity
Again, context - if a key stakeholder is a specific cultural group or nationality, this cultural voice or nationality should be included in the boardroom setting
- NB - this is key re. other types of diversity - disability, religion, socio-economic status, sexual orientation, etc.
What is meant by ‘deep diversity’?
Cognitive and personal strengths
Which 3 methods can be used to consider cognitive differences of deep diversity?
Learning styles
Personality types
Team role types
Honey and Mumford - 4 learning styles
Activists - learn best through experience
Reflectors - learn best through reflection
Theorists - learn best through theory/concepts
Pragmatists - learn best through hands-on trial and error
Commonly used personality type test - name
Myers Briggs Type Indicator
What does Myers Briggs Type Indicator test test for?
Extroverted / Introverted
Sending / Intuition
Thinking / Feeling
Judging / Perceiving
