Towards True Board Diversity

For a long time now I have not weighed in on the boardroom diversity debate. I think I have a pragmatic view of this issue, and most people I speak to about it tend to hold similar perspectives. I hope that this post can be read with an open mind, a balanced perspective, and I invite constructive conversations around it if you wish to put forth your, equally valid, views.

Gender ‘diversity’ on boards and in senior management has been the topic du jour for some time now. There is a plethora of articles, opinion pieces, and research that backs up the case for greater representation of women in leadership positions. And so there should be. The gender equality debate has achieved many positive outcomes and continues to do so.

However, I feel like we do ourselves a huge disservice by only focusing the diversity conversation heavily on this gender or that gender. We are missing an opportunity to make further inroads into true board diversity by broadening the conversation beyond gender balance. True diversity cannot – and should not – stop at gender alone.

We are all more than just ‘men’ and ‘women’, particularly now with the definition of gender becoming more dynamic. Of course this shouldn’t come as a revelation. Australia’s anti discrimination laws – the first being the Racial Discrimination Act in 1975 – point to a slew of attributes that can be used to define (and discriminate) – race, skin colour, religion, political opinion, national extraction, social origin, age, medical record, criminal record, marital status, impairment, disability, nationality, sexual preference, and trade union activity, just to name a few.

Case in Point

To illustrate my point, I will use Greater Adelaide as an example. Using 2021 census data**, there are approximately 1,387,000 people living in this geographic area, with 51% female and 49% male (Census data differentiates between male and female only), and 1.7% of the population is Aboriginal and/or Torres Strait Islander.

37.4% of the population have parents who were born overseas, 22.7% live in a household where a non-English language is used, and 27.6% of people were born outside of Australia.

Of those who have attained a non-school qualification, more women than men hold a postgraduate qualification (51.7% vs 48.3%).

Long-term health conditions (such as cancer, asthma, and diabetes) impact 20% of the population.

Although 39.8% of the population identified as Christian, 44.6% follow no religion. The other primary religions were Islam (2.7%) and Hinduism (2.6%).

The median age is 39, with the largest age bracket being 35-39 years. However, 26 year olds make up the largest age cohort (in 2023, these folk would now be ~28 years old).

Looking Australia wide, 18% have disability (divided across sensory, physical, and psychosocial disability types).^ Approximately 3–4% of the population identify as gay, lesbian or bisexual.^^

I could keep going. As you can see, we are all made up of a wide range of non-gendered characteristics.

Why should diversity matter?

A study cited in the Strategic Management Journal demonstrated that both gender and ethnically diverse boards are more likely to:

  • Create an environment in which the diversity that female directors bring is welcomed and viewed favourably.
  • Have nominations that are based on candidates’ qualifications.
  • Result in a more ethnically diverse female body that mirrors the ethnic diversity of firms’ stakeholders.
  • Accentuate the positive impact of female directors on accounting performance.
  • Have shareholders who believe that ethnically diverse boards are more attentive to diverse needs and better protect their interests, and hence view favorably boards’ gender diversity.

Research by McKinsey demonstrated that more diverse companies were better able to secure top talent employees, improve their customer focus, increase employee satisfaction, and improve decision making, leading to an ongoing cycle of increasing returns. McKinsey suggests that even “diversity in age, sexual orientation, and experience (such as a global mind-set and cultural fluency) are likely to bring some level of competitive advantage for [diverse] companies.”

What this means for boards

In my “sophisticated” straw poll of my fellow board directors, the majority agreed that the board should represent and reflect the stakeholders and/or customers that the organisation currently services, or wishes to serve in the future. Often this is not just a ‘men’ or ‘women’ demographic.

For example, if your business has a strategic goal of expanding into China, you may want to consider having someone from China, or someone who has a deep and rich understanding of or experience in Chinese culture, on your board. Or, more simply and closer to home, how can you better serve your existing, diverse customer base?

Diversity should not start and stop in the boardroom though. McKinsey’s study demonstrated that “companies in the top quartile for racial and ethnic diversity are 35 percent more likely to have financial returns above their respective national industry medians, [and] companies in the top quartile for gender diversity are 15 percent more likely to have financial returns above their respective national industry medians.” McKinsey concluded “… diversity is probably a competitive differentiator that shifts market share toward more diverse companies over time.”

Having proactive recruitment policies, utilising creative recruiting strategies, and being open to working and having staff work in different ways (e.g. remote workers) opens up the organisation to a deeper talent pool (also known as, a diverse workforce).

What this means for future leadership development (a cause close to our hearts)

Programs with the objective of developing our future leaders would benefit from involving a diverse range of individuals. This diverse learning environment provides a realistic context for participants to grow, develop, and understand how to work with people from different cultures, genders, ages, life situations, and backgrounds.

Organisations have the opportunity to take advantage of the benefits that a diverse board and leadership team delivers. The higher returns that diversity is expected to bring – as demonstrated in the McKinsey study – show that businesses are better off to invest and facilitate true diversity in their organisations sooner rather than later.

 

True diversity in the boardroom and organisation is a cause we should all be championing. It can produce tangible benefits to the board, staff, and organisation. I encourage your board to introduce methods to increase its diversity and across the organisation.

 

References:
** Australian Bureau of Statistics, Greater Adelaide, 2021 Census All persons QuickStats
Australian Bureau of Statistics, Greater Adelaide, 2021 Census Community Profile (excel spreadsheet)
^ Australian Government, Australian Institute of Health and Welfare, People with Disability in Australia (last updated July 2022)
^^ Rainbow Health Victoria, Research Matters: How Many People are LGBTIQ? (released in 2020)
This is an update to an article originally published in 2017. Here is some demographic data from original article.
Using Adelaide city as an example. Using 2011 Census data*, there are approximately 19,600 people living in the city of Adelaide; with 51.7% being male and 48.3% being female. When considering ethnicity, 27.4% identify as having English ancestry, 18.7% Australian, 16.6% Chinese, 5.9% German, and 3.8% Indian to name a few. Furthermore, 32% of people in the City of Adelaide, came from countries where English was not their first language.
Roman Catholic was reported as the main religion (15.3% of population), with 5.6% following Buddhism, 3.2% Islam, and Greek Orthodox and Hinduism each followed by 2% of the population. Surprisingly, the number of people reporting as being “non religious” experienced the greatest change, increasing from 26.1% in 2006 to 34.1% in 2011.
In the greater Adelaide area, 55.3% of people are aged over 35 years. 3.2% of the population in the City of Adelaide reported needing help in their day-to-day lives due to disability.
When considering education level, nearly half (46.3%) of the greater Adelaide area holds no formal qualification, and 18.2% have attained a bachelor or higher degree.
*All statistical data retrieved from id.com.au on 21 June 2015.

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