Reigniting a Dormant Success Practice

James O. Rodgers, Ph.D., FIMCThe Chairman of Deloitte summarized their 2017 Board survey by saying, “while executives believe in the benefits of diversity among board members, many have a difficult time defining it and developing practices for promoting it.” This represents the dilemma of advocating for board diversity. Most people believe that a more diverse board is a good thing. Few, if any, of them can prove that it matters at all. Accordingly, it is hard to argue with those who hold to old criteria for board membership and who declare support but never do anything to produce more diversity on boards.Like any discussion about diversity in the workplace, we need to first ask, “what problem are we trying to solve?” In other words, why does it matter that boards become more diverse? Until we definitively answer that question, we can expect continued lip service to the issue of board diversity. After all, we humans only change when we have strong incentive to do so. Why should board chairs and CEOs disturb the comfortable composition of their boards, especially if those boards are performing as well as expected. For anything substantial to change with board composition, we need to confirm that more diversity produces better board performance. That means evidence of causality, not just correlation. There have been a number of studies that show that higher performing boards tend to have more diverse membership. That is correlation. We need to do the work to demonstrate that boards perform better because of greater diversity.Here are a few thoughts on how to improve our efforts to increase diversity on boards.

1. Back to basics. Remember the purpose of the enterprise. Hint: it is not to make a profit. It is to fulfill an existing marketplace demand. Profit is your reward for meeting that demand in a way that satisfies customers.
2. Why have a board. Remember that a board of directors is not designed to be one level up from company management. It is instead one level down from the key stakeholders (customers, shareholders, employees, community). The board, on behalf of stakeholders, serves to make sure management stays focused on its mission.
3. The current system. As long as CEOs serve as Chairmen, they have outsized influence on who joins a board. They are likely to perpetuate kind (select from the usual suspects). Diversity efforts may, in fact, dilute a CEO’s power. As one CEO put it, “we have a system that is not producing a good outcome. We can and we must change it.”
4. Get what you need. Rather than focus on race or gender as the criterion for membership, think about which perspectives are needed to enhance decision making. That approach will necessarily take you beyond the usual suspects (recycled board candidates).
5. Avoid government mandates. Mandates, like Germany’s requirement for female board members, or Goldman-Sachs requirement of minority participation are not useful. Diversity for diversity sake is not a constructive plan.

Of course, every business enterprise should include a statement in support of diversity in their governance guidelines. The key is not what they believe; it is what they can execute. I say, “don’t declare it, just do it!”

About the Author: James O. Rodgers, Ph.D., FIMC is an engineer, business strategist, and scholar who is considered the #1 thought leader for diversity management as a business strategy and competency. He is known as The Diversity Coach and has advised senior leaders in over 300 companies. He is also a spiritual teacher and non-profit leader.