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The next diversity frontier lies beyond boardrooms

Monday, November 7, 2016   (0 Comments)
Posted by: Kristen Persaud
Two job candidates sit a test. One scores 4 out of 10, the other 8 out of 10. It is clear the second candidate is the best person for the job. But are they the best person for the organisation?

What if the existing team members would also have answered the same 8 questions correctly? This is likely, as the existing team will probably have set the test in the first place. And what if the 4 out of 10 candidate answered the two questions all the others got wrong correctly?

In this situation, the candidate who adds more to the organisation might well be the first. They do so for one very simple reason: they bring diversity to the organisation — diversity of thought, experience or background.

These days it is difficult to find an organisation that does not say it favours diversity. Many organisations have diversity policies, initiatives and champions. Yet how many of those same organisations have recruitment and promotion procedures that would hire the first candidate over the second? We suspect few. This suggests that, if it is to fulfil its potential, the diversity agenda needs to be taken to the next frontier.

That is not to belittle progress to date, which has been considerable. There have been notable successes in measuring and promoting some important dimensions of diversity, including gender, ethnicity, age and sexual orientation.

On gender, there has been good, if steady, progress towards increasing the number of women on corporate boards. The new UK cabinet is also 30 per cent female.

Yet progress beyond gender, and beyond the boardroom, has been mixed. Most companies’ executive teams are still the domain of white, heterosexual, middle-class, middle-aged men.

There is also some risk of “diversity fatigue” setting in at a time when so much else is occupying businesses’ minds — from complex geopolitics to rapid technological change, from loss of trust in big business to rising inequality and populism.

Yet it is in precisely this environment of rising complexity, ambiguity and inequality that the returns of diversity are likely to be greatest.

The best safeguard against the complexities and ambiguities of politics and technology is diversity of thought and experience among decision makers. The best way of rebuilding trust among diverse and demanding customers is to have employees who are their mirror image. The best way to tackle inequalities of income and wealth is to first tackle inequalities of educational opportunity and social mobility.

Doing so is of course no easy task. It will require a root-and-branch and top-to-toe reform of each stage of the career life cycle — from education and training to recruitment and promotion to management to leadership.

Underpinning each is the need for better measurement of the harder to define aspects of diversity, such as cognitive and experiential diversity.

Great progress has been made by measuring and publishing data on gender and ethnicity. This holds a full-view mirror to an organisation’s make-up. Seeing an unappealing reflection can be a prompt for change.

Although the measurement task is harder for cognitive and experiential characteristics, doing so would enable unconscious biases to creating truly diverse teams to be identified and connected.

To then embed these characteristics, recruitment and promotion practices within organisations need to be re-engineered, with a far greater focus on “contextualising” — taking account of an individual’s educational and family circumstances, as well as their grades, when judging their potential.

Allied with that, organisational traits need to form the basis of decisions about everything from hiring to performance management to promotion. This would prevent organisations replicating themselves in their own image.

The need to recognise, reward and promote diversity along all its dimensions needs to be embedded enterprise wide. That needs to start at the top, with the performance contract of chief executives having an explicit diversity objective.

This is the next diversity frontier. As one of the countries’ leading sectors, the financial services industry ought to be playing a leading role in moving to that frontier. Yet at present it is one of the least diverse in the UK. In the asset management sector, just 7 per cent of fund managers of retail funds are women.

But change may be coming. Around 40 financial institutions have joined forces to create the Diversity Project, a collaborative industry effort to improve diversity across all its dimensions. The goal is to create a financial services industry that is a better reflection of its societal stakeholders.

The Diversity Project is not about denying people a distinct identity or culture. Nor is it about allowing women into a men’s club, LGBT people into a straight club or ethnic minorities into a white club.

It is about recognising and embedding in organisational practice the huge potential in diverse thought, experience and background to make sure we can tackle the pressing challenges facing society.