Diversity continues to sit at the forefront of the issues facing C-suite executives.
As the general population grows more diverse, so do consumer preferences. Leaders should examine ways to more agilely shift to match demographic trends and gain better diversity of thought, background and experience throughout their organizations, but especially in the boardroom.
A commitment to diversity — whether cognitive diversity or in its more traditional form — can engage employees and help organizations better engage with their customers, clients or communities.
An inclusive culture
Diversity is often becoming a greater priority for younger employees and consumers. The Millennial Influence Report, a study published by the Billie Jean King Leadership Initiative in collaboration with Deloitte, revealed that surveyed millennials believe programs aimed at diversity and inclusion should focus on improved business opportunities and outcomes as a result of the acceptance of cognitive diversity.
Individualism, collaboration, teamwork and innovation are especially valued. The number of respondents who are actively engaged when they believe their organization fosters an inclusive culture jumps 23 percentage point compared to when they feel it doesn’t.
Building an inclusive culture at the top is critical. This is especially crucial in Los Angeles, where minority populations have constituted the vast majority for decades.
The county’s demographics could put L.A. businesses in a unique position to become a national trendsetter for creating boardrooms that more closely reflect the population.
A diverse boardroom that reflects the gender, racial and cultural makeup of an organization and its community at large can create an atmosphere where different perspectives and opinions can flourish. Boardroom diversity has been shown to improve financial results; according to Catalyst’s Bottom Line report, companies with the highest percentage of female representation on boards outperform others by 53 percent surrounding return on equity.
And according to a 2015 report from the Journal of Management, companies with greater racial diversity enjoyed higher sales than those with less diversity. These results are even more pronounced when the communities around them are more diverse.
Given this, it is disappointing to see the slow pace of change, as captured in “Missing Pieces: The 2016 Board Diversity Census of Women and Minorities on Fortune 500 Boards,” a report published by Deloitte and the Alliance for Board Diversity. While the representation of women on boards has increased, the percentage of minority men and women has only increased by 1.6 percent in the last six years.
Possibly a sign of leading from the front, the Fortune 100 companies outpace Fortune 500 companies in diversity. Currently, 64 percent of Fortune 100 boards have greater than 30 percent board diversity, compared to just under 50 percent of Fortune 500 companies in the census.
Finding an effective diversity strategy
The burden can fall on organizations to find an effective strategy to change the dynamic of their boardroom and capitalize on the potential fiscal and social benefits a diverse boardroom can deliver. Leaders who are strong mentors and sponsors might attract a diverse talent pool, which in turn may help change an organization’s board makeup over time.
Leaders who enjoy close working relationships with people from a wide range of backgrounds and who offer an environment receptive to cognitive diversity can not only broaden their own thinking, but their succession options as well.
Finally, organizations can promote boardroom diversity by recognizing and overcoming unconscious bias. Highly inclusive leaders are often mindful of personal and organizational blind spots and self-regulate in order to mitigate against unconscious bias.
It’s helpful to have leadership consider their personal biases, including through feedback, and ensure that they make decisions that are fair and merit-based.
Employees and consumers are already making it clear with their choices that diversity is an important factor in where they work or conduct business. Organizations that promote and practice policies that improve diversity in all its forms will be primed to succeed. And those changes start at the top.