Diversity in the boardroom will be very beneficial to organizations as it will lead to well-rounded decision-making and better business performance
One of the major impediments while implementing diversity is the short-term view an organization takes or considers diversity a target quota commitment
According to your research, what is the co-relation between diversity and business performance?
I think diversity is all about business performance. However, it depends on a number of things. It is partly about the individuals who have the right skills and capabilities for the job and are part of the team and the organization. There is evidence to support this in our studies: A company did 66 per cent better sales returns, better equity and returns on capital due to the right mix of diversity and inclusion. There have been some failures, which at the core are often about the culture and the lack of challenges for different viewpoints in decision making. The financial crisis is a good example of where decisions with great risks attached to them were pushed through. Even though on paper these organizations had very good policies around risk management and diversity, in reality they were less diverse and had a particular makeup in their board room with no challenges posed to the decisions being taken. That is the thing about diversity; it is something that some may see because of their diverse backgrounds that others may not. That becomes a great benefit and leads to well-rounded decision making and better business performance.
What are the parameters for developing the senior level who are eventually successors to the board?
The first and the foremost is the belief of the senior management in the concept of diversity and a clear view of the goals. Only then can an organization look at statistics and worry that they are missing the right mix of talent to achieve their goals. The way to achieving diversity across different levels in an organization is by having a clear set of programs, both for the long term and the short term. Focusing on the long term is important to ensure that the right business decisions are being taken. A good thing to have is a clear form of measurement which is consistent. Soon, one will be able to see the shifts that are happening in the organization. It is not about changing everything at once but creating the right conditions and correlating them to performance over time. It needs a long-term commitment to make that happen effectively.
What are the impediments that you see in organizations executing the diversity and inclusion strategy?
One of the major impediments is the short-term view an organization takes or considers diversity a target quota commitment. The trouble with target quota is that even though it can focus the mind, it can also generate wrong behaviours and wrong results. If there is a quota in management positions for women, companies tend to achieve it with a lot of resentment. This can lead to decisions where the right person for the job is not selected and then they feel lost in the role because they are not nurtured and supported. The organization has to come about this with the right support to generate a pipeline and genuinely achieve the results they want. For men, the push on diversity can be quiet unsettling with doubts about a threat to their position or a bias to their views. So it is very necessary for a company to implement diversity with a clear view and structure.
From an individual perspective, when we speak to women in finance, there is still very less representation for them in senior roles. A major requirement for that is a good network with recognition in the company; as these networks predominantly consist of men, they follow a socio-economic circle which reflect the men’s business lives; be it time and place for meetings, social occasions or even dinners. This culture is not an easy fit for women. Other impediments can be the lack of role models, non-sharing of good practices and information and no awareness of the roles available. All these parameters have to be managed so that individuals do not feel isolated.
A crucial point in your research has been that more than 57 percent of women on company boards come from finance backgrounds. What does this mean for an HR professional? Why do finance professionals have a higher chance of success in senior positions?
There is always a demand for finance people. Also, finance is an accessible subject and people can train and nurture themselves in a very flexible way by studying at home or through different learning modules. Finance is also a career which supports taking career breaks. People with finance skills can take themselves out for a few years and come back to the industry again to pursue their careers. Things do change but the core principles remain the same and therefore the integration is easier. The fact that finance is accessible and gives more stability to individuals is perhaps one of the reasons that women opt for it. Another thing that we found in our studies is that finance provides the rite of passage to the board as it is one of the core specialities and people take that knowledge into consideration. This gives the women a right to be on the table, but this is not how it should be built into the system.
What are the recommendations from your study on diversity?
One of the biggest recommendations that came from the study was about creating the right network. It is not having the same networks that we have now for men. We have thousands of members across different levels and we can connect them suitably. Our networks have close to 45 per cent women. What we can do to help is to portray them, and have them talk about their experiences to inspire other people. A number of people often don’t realize that they can be role models because they do not recognize the impact they can have. Part of the learning is to encourage more people to grow and realize the role models they can be.
Creating the right role models came out very strongly in our study. We can bring some of our senior members to other groups to talk and share insights; this can create role models to inspire others. Even though the women in senior management positions are highly motivated, the right role models are needed to illuminate the path ahead. Part of the role models that one needs to create is the fact that people relate to them and not think of them as impossible achievements. The study also has key recommendations about using quotas and key performance indicators.
Stephen Heathcote oversees market strategy and leads the market teams across ACCA’s network of over 90 offices and other centres around the world. He is responsible for global and national Marketing and capturing market insight. His major responsibility is delivering ACCA’s global growth strategy. He oversees a portfolio of investment to deliver sustainable growth in reputation, influence and size. ACCA represents 169,000 members and 400,000 students in over 170 countries.