The ongoing mission to normalise DE&I in the boardroom
The need for diversity, equity and inclusion (DE&I) in the boardroom is not a new discussion. For over two decades, research has sought to demonstrate the business benefits of valuing gender, ethnic and social diversity in recruitment and selection processes.
The Financial Reporting Council (FRC)’s guidance on DE&I in the boardroom states that “diversity in board composition is an important driver of a board’s effectiveness, creating a breadth of perspective among directors and breaking down a tendency towards ‘group think’”.
Nonetheless, DE&I progress is slowing in certain industries where board diversity is seen as part of a criteria list that simply needs ‘ticking off’. But, in reality, as more partners, clients and customers pay attention to DE&I as part of businesses’ environmental, social and governance concerns, it’s more critical than ever that companies ensure that recruitment processes and boardroom cultures are meeting set, and measurable, DE&I targets.
While acknowledging that the biggest challenges of big businesses today exist in the boardroom, IBM’s Global Services and Alliances Lead, Sheri R Hinish, is hopeful that goal-driven DE&I actions will continue to make change.
“Making diversity, equity, and inclusion real in organisations is challenging because there’s no shortage of programmes and initiatives, but it hasn’t equalled more progress. Why? Equity and equality are terms that are often used interchangeably, but they are not the same thing. In a diverse workplace where differences exist, people need support in different ways. Equity requires an organisation to acknowledge that everyone has different needs, experiences, and opportunities, and respond accordingly.”
Tackling the gender imbalance in the boardroom
Although the UN’s Sustainable Development Goal 5 – to ‘achieve gender equality and empower all women and girls’ – is being addressed across many industries, a lot more needs to be done to secure DE&I progress in the corporate world.
According to Catalyst, a global nonprofit that helps build workplaces for women, 2020 saw more than one-third (38.5%) of global boards seat at least three women, up from 36.2% in 2019. Of these boards, 75% included at least 22% of women – a reverse from statistics in 2014 where 75% of boards represented less than 25% of women.
However, Catalyst warns that women are still underrepresented in leadership positions. Deloitte’s seventh edition of Women in the Boardroom: A Global Perspective suggested that, while the percentage of women in the boardroom is increasing, it’s at a very modest rate. In fact, if the 2.3% rate increase continues as it is, gender parity can be expected around 2045 – an “unacceptably slow” outcome for Deloitte.
Punit Renjen, Deloitte Global CEO, is encouraged by the rising percentage of women in the boardroom, but remains cautious at lagging progress in areas like Asia and the Middle East.
“Advancement toward gender parity is not yet where it needs to be. I have seen many studies that correlate female board representation with greater innovation, thus enhancing financial performance in innovation-intensive industries. All of this together ultimately results in stronger financial performance,” said Renjen.
“At Deloitte, we have been lucky. We have many talented female leaders who are both qualified and willing to serve on the boards of our global businesses and member firms. In fact, several of our member firms have exceeded a 50% ratio in terms of board gender parity – which is great. But what makes those numbers meaningful is that we are doing the work behind the scenes to transform our culture.”
Ethnic diversity is key to solving global sustainability issues
Fostering an inclusive culture depends on giving prominent, leadership roles to previously marginalised ethnic groups. Whereas many businesses take a reactive approach to DE&I in order to meet the baseline of ethnic minority quotas, it’s beyond time that a proactive, diversity-focused method was implemented across all public and private businesses to ensure full inclusivity.
According to Dream Corps’ Chief Programs Officer, Michelle Romero, an ‘all-hands-on-deck approach’ is needed to solve the world’s biggest sustainability challenges: “This means tapping into the deep talent pools and genius that exist in Black and Brown communities. It means partnering with Black innovators and entrepreneurs.”
As one of the world’s largest information technology companies, IBM leads the way in improving ethnic diversity in the supply chain. By building alliances with Historically Black Colleges and Universities (HBCUs), IBM creates opportunities for marginalised groups in the sustainability and technology sectors.
Discussing the success of public supply chain organisations in DE&I representation, Hinish added: “Access and conduits into the workplace remain an opportunity. If you’re looking for a recipe, diversity is the first step, but you must create equitable spaces to get the employee experience right. Trust, fostering belonging, and embracing the very thing that makes us human – our differences and emotional connection – through purpose and values. This is the future of work across global supply chains.”
Why DE&I needs to start at the top
When board appointments are made, decision-makers usually gravitate towards people already in their network. This means there’s an assumption that C-suite executives have the most appropriate experience, expertise and skills to perform the role of a board member. However, C-level leaders are often white males, resulting in an ongoing cycle of non-diverse, non-inclusive boardrooms.
“We are living in a time of significant disruption and change – socially, economically, and technologically. Board members have an important role to play in guiding transformation, challenging the basic assumptions of organisations, and helping to foster a positive and dynamic culture of exploration and experimentation,” said Renjen.
“As the world and the workplace become more diverse, everyone has a role to play in building organisational cultures that facilitate high performance and trust. But it has to start at the top.”
Finding solutions to the world’s current sustainability issues demands that DE&I becomes a normal part of day-to-day work, including collaboration with colleagues, partners and the community. It’s not just for senior leadership and HR to sort out; building an inclusive culture based on diversity is everyone’s responsibility, both in and out of the boardroom.