Driving diversity and inclusion: Role of Chairs and CEOs
The case for diversity in corporate leadership has never been stronger. In recent years, women have made gains in leadership, especially at senior levels, but the pandemic continues to have a negative impact. They are significantly more burnt out than men. Despite the added stress and exhaustion, women are rising to the occasion as stronger leaders and are doing more to support their teams and advance diversity, equity, and inclusion efforts.
A McKinsey report of 2021 finds that companies in the top quartile for gender diversity on executive teams were 25% more likely to have above-average profitability. Many business leaders believe that having a diverse set of viewpoints is the best way to maximize defences against relentless disruption and diverse representation has been steadily increasing, the pace of change remains too slow relative to the challenges that businesses and society face—a clear indicator that there is still much to be done.
The path forward is clear. Women leaders who are driving progress must be recognised and rewarded. They also need to do the fundamental cultural work necessary to build a workplace that values all women equally.
The events of 2020 put extraordinary pressure on companies and employees. The COVID-19 crisis shook the economy and turned people’s lives upside down, both at work and at home. A heightened focus on racism and racial violence triggered a reckoning on diversity, equity, and inclusion. Companies’ current priorities reflect these changes: there has been an overwhelming recruitment drive for D&I Leaders as companies demonstrate their understanding that DEI is one of their key areas of focus.
U.S. companies are rushing to hire chief diversity officers or elevate existing leaders to the position in the midst of pressure to address racial divisions and inequities within their organisations. The role has long been marked by high turnover, with many in the position, known as CDO, leaving over a lack of resources, unrealistic expectations, and inadequate support from senior executives. Roughly half of S&P 500 companies employ a chief diversity officer, and a 2019 study by Russell Reynolds found that 63% of diversity chiefs in the S&P 500 had been appointed or promoted to their roles within the past three years.
So why is progress still painstaking so slow.
To learn more, I spoke to nearly 60 directors and senior executives in 2021 at large global companies across 10 countries who have helped foster change in their organisations. They consistently emphasised the critical role that the chair and CEO play in driving diversity and inclusion (D&I) in the workplace, specifically in terms of creating inclusive environments where everyone can thrive. From their insights, there are three sets of takeaways, detailing how chairs and CEOs can drive progress on the agenda.
Change Starts at the Top
As board leaders, the Chairperson can model an ideal culture within the boardroom by:
Ensuring that the board itself is diverse, including women, minorities, and diverse points of view; engaging in creative efforts to build the board candidate pipeline; and eliminating bias from the ideal director profile. Every member of a board can affect D&I efforts, however, board chairs have the most direct opportunities, as they are responsible for managing the composition of the board, running meetings and setting the board agenda. When the chair uses these functions to create an inclusive environment for the board, it becomes a model for the CEO and the rest of the organisation to follow.
Most of the time, we talk about boards and executive committees as setting the tone; I think it’s more important when they set the example. The obvious and often uncomfortable starting point is to take stock of how visibly diverse a board is. For better or worse, the composition of the board sends a strong signal about what the company values. To be effective, the group has to attain a critical mass of diverse viewpoints rather than simply including a symbolic woman or other minority representative. My own experience is that when you are a lone female on a board, you are seen as a female voice. Once you reach a critical mass of three or more female directors, you are just seen as a voice; gender is no longer a factor.
Creating an inclusive boardroom environment that fully harnesses the benefits of a diverse board and encouraging all board members to contribute and constructively challenge assumptions and perspectives. Just hitting certain numbers isn’t enough. To maximize the value of a diverse boardroom, a board chair must also create an environment that encourages participation from all members. Chairs who are able to truly get the best out of all the voices in the room tend to be genuinely curious about different points of view and experiences. They identify which voices are not being heard and actively create an environment in which everyone can meaningfully participate in the conversation.
Setting the tone that D&I is important to the organisation by keeping it on the board agenda, asking the right questions and monitoring the relevant data. Chairs and boards can and do have a direct impact on the success of D&I within the organisations they serve. The tone is hard to see or measure, yet it is a powerful tool with which chairs and board members can play a crucial role in advancing diversity and inclusion practices in the organisation. Through the behaviours and priorities, the board chooses, directors can and do have a significant ability to create change. The nature of a non-executive director’s role is to raise important questions with management. When board members make it a habit to regularly probe for details about efforts to improve diversity, they will encourage the CEO to pay more attention to it. That means asking direct and meaningful questions about the development paths of diverse talent and ensuring that they have the skills and exposure within the organisation to reach the top.
Chair and CEO partnership
Within organisations that lead the way on D&I, the chair and CEO are aligned on the importance of the topic. Together they:
Embed D&I into the organisation’s strategy and empower & remunerate the business to prioritize the topic alongside other business KPIs and objectives. This partnership can make a real difference in terms of progress, as it shows the rest of the organisation that diversity is something both the chair and CEO prioritize.
Make a shared commitment to role-model purposeful, authentic and inclusive leadership for the rest of the organisation. While the business case for D&I is powerful, it is the combination of the economic case and committed leadership that changes behaviour. The chair and CEO need to articulate this message authentically and personally, explaining it not as an initiative on the side but as part of the underlying culture of the business. If the company’s top leaders are simply checking boxes to comply with external pressures, the company is unlikely to achieve inclusivity and harness the benefits that diversity presents.
CEO Delivers Results
While the chair and CEO can partner on tone-setting and making D&I a strategic priority, it is ultimately the CEO’s role to deliver results. The best CEOs:
Gather data and set targets to ensure diversity across the business. This means going deep into the data around hiring and promotion decisions at all levels across the firm, analysing roadblocks and being transparent about success and failure in meeting targets.
What gets measured gets done. When I designed the D&I for a large $32b global technology organisation, I spoke to two Board members responsible for D&I that we were well below the target. Within 6-months we made 6-years of progress to close the gap. Such targets especially when publicly communicated create focus and the necessary impetus to change. When there is more pressure, people need to act on it, and that does tend to work in driving diversity.
Put structures and policies into place that encourage inclusive working environments and that provide diverse talent with the support systems they need to be successful within the organisation. Policies and structures that help to create inclusive working environments, such as mentoring and sponsorship, are critical to success. The barriers for diverse talent are a lot higher; mentoring and sponsorship are crucial to overcoming those barriers.
Naturally, it’s essential to understand what programs will be most meaningful and effective within a particular organisation. We have recently seen the rise of parental leave policies expanded to include new fathers and flexible working arrangements for entire workforces.
Coach and mentor leaders with the recognition that diverse teams require different management skills than homogenous ones do. Increasingly, leaders are recognizing that a bumpy transition period is an inherent part of moving toward diversity—and that many leaders need coaching and mentoring to manage through it. As the ultimate role model for inclusive leadership within the organisation, a CEO must not only learn how to do it, well but also be proactive in helping other leaders learn similar skills.
For all the challenges associated with corporate D&I efforts, the benefits that accrue to companies that meaningfully cultivate diversity and inclusion are too great to ignore. Diversity is vital to future-proof businesses and create organisational resilience, enabling organisations to more effectively mitigate risk and capitalise on a wider range of opportunities. As we look forward, it is the ability of leadership to create a culture and environment where the power of all forms of diversity can be fully realised that is the critical differentiator, and it will be one of the defining leadership attributes for the next generation.