12 Sep 2022
Stepping up but not speaking out: the trouble with some diverse boardrooms
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The slow move towards improved levels of diversity in senior leadership is to be welcomed, but are the outputs keeping pace?
Forward-thinking boards realize that they need to have an optimal composition that reflects both the strategic priorities of the business and, crucially, the diversity of its stakeholders.
Heterogeneity should boost the quality of decision-making too with today’s strategic complexities requiring diverse talent and perspectives.
So far, so good.
But what is emerging now is a less positive picture: it appears to be a lot easier to appoint a diverse board than to make it function well. For many boards, increased diversity doesn’t seem to automatically translate into improved outcomes.
Not speaking up
Researchers in the US have uncovered one possible reason why this might be happening and why the benefits of diverse voices are being lost.
As reported by HBR, from all the board minutes of 54 public companies over twelve years from 1994 to 2006, they reported a shocking statistic. When it came to the number of minutes each director spoke, white men spoke on average for 11% of the time, whilst black men spoke for just 4%. For woman, the figure was 8%.
As the researchers put it, “Without the participation of underrepresented directors, the potential benefits of board diversity are lost.”
Interestingly, what did raise minority participation was being a director who had already held a high-status role. For black men, there was a 150% increase, whilst for women who had been in a previous high-status role, it was 100%.
Not the only one
Another factor that was found to increase participation was the number of minority directors on the board. The more there were, the higher the level of participation.
The researchers suggest that those directors felt a kinship—even if their race or gender differed—that helped them hold their own in the group. Feeling more at ease and less like tokens or group representatives allows them to function as more effective board members.
While gender diversity is related positively to company performance, it has been shown by researchers in both China and the UK that that there must be at least three female directors on a board to have any positive influence. Surely no radical suggestion considering the male to female ratio in the wider population!
But numbers aside, the more important point, and its’ not just at board level, is that creating a workplace that provides psychological safety for everyone is key.
“If people don’t believe you can speak up, take risks and put forward ideas, questions or challenges without facing ridicule or retaliation, then the outputs are negative for individuals and teams”, states Veronika Ulbort, Partner at Odgers Berndtson Germany.
A NY Times article points out the downsides of a lack of psychological safety, and think about how this might apply board level, “more often than not, it’s women — and especially women of color — who don’t feel safe in their workplaces.
“When you’re in the numerical minority or different from everybody else, then you’re going to feel pressure to self-censor,” said Modupe Akinola, an associate professor of management at Columbia Business School. “Just by nature of being one of the only makes an environment feel less psychologically safe.”
And what happens when you feel isolated and ignored? You simply self-censor yourself.
“You don't speak up for fear of being alone in your opinion. Even though you’re on the board for your unique perspective. And whilst you’re not speaking out, there might well be other members with the same opinion, but they also remain silent, not realizing they’re not alone in thinking the same thing”, adds Gabriele Stahl, Partner at Odgers Berndtson Germany.
A truly stultifying and non-productive, potentially catastrophic state of affairs.
However, as the WSJ suggests, “the solution is not to give up and avoid diversity. Rather, boards need to minimize the friction that diversity often introduces. To unlock the benefits, in short, boards must learn to work with colleagues who were selected not because they fit in—but because they don't.”
They suggest an honest appraisal to begin with, asking some hard questions:
- Has your company's board gone out of its way to find people with complementary—and hence different—profiles?
- Are board members with atypical backgrounds accepted by all of their colleagues?
- Does your board engage productively in forceful discussions?
- Is there a board member designated to facilitate discussions and tease out potentially controversial positions?
- Do atypical directors get help making the transition when they join the board?
If too many answers are no, then perhaps there is work to be done to make sure that the benefits of having a diverse boardroom are not lost.
Choose wisely (and widely)
The optimum board composition starts, of course, with who you choose to be a board member in the first place. If a new board member is bringing diversity, do they have the self-awareness to understand how they might come across to others and are they capable of winning over potentially skeptical colleagues? Just one thing to think about.
The WSJ concludes that the “ability to disagree constructively should be high on the list of desired characteristics, as well as experience dealing with new kinds of people and situations. The newcomer needs to become part of the group even as he or she challenges it.”
Reap the full benefits
If you’d like to reap the full benefits of diversity at board level, or discuss your own particular career trajectory in the light of these issues, please get in touch. We would be happy to discuss how we find diverse candidates for boards and other senior positions in Germany and across the world.
To find out more about the current state of Diversity and Inclusion in German corporate life, why not download our recent survey and report.