A new report on diversity at the top and throughout organisations shows how far there is to go and what the benefits are.
A Financial Reporting Council report on diversity in FTSE 350 firms published last week and conducted with the London Business School, highlights the need for better data on the range of barriers faced by particular groups when it comes to making it to the boardroom. While the number of women in boardrooms has increased in recent years, it says, for instance, that this could be at the expense of other forms of diversity, such as socio-economic status. Are women from more privileged backgrounds replacing men from lower socioeconomic backgrounds in effect?
François Ortalo-Magné Dean of the London Business School says: “Socioeconomic diversity has been understudied – there is so little data to support analysis. The report demonstrates relevance of the topic and ought to prompt more measurements and conversations.”
It is important that we view diversity in all its, well, diversity. There are so many barriers that hold people back and gender is just the beginning. But in focusing on socioeconomic status we must not lose sight of gender – as, it has to be said, has often happened in the past. Similarly, in looking at bias against ethnic minorities we must not lose sight of bias against people with LGBTQ+ or disability status.
The report makes it clear that diversity of experience drives diversity of thought and that what matters is how those different diverse views interact. As Dr Randall S. Peterson, Academic Director, London Business School Leadership Institute and Osman Anwar, Director, SQW, say: “Diversity takes many forms. The findings of the report remind us what is at stake: diversity is not just a numbers game with regards to who is on the board, how board members interact really matters.”
The report states that employers need to appreciate there is no single diversity code to crack, but that companies need to be aware of all the possible barriers and be open to learning and improving. It says: “Our data shows that success in one category is no guarantee of success in another because the barriers for one are not the same as the barriers for the next.”
Greater data on diversity, board dynamics and social inclusion is vital as well as an appreciation of the benefits for thought diversity and the need for inclusive leadership. It’s not just about fairness, though. It makes business sense, although the benefits can take time to filter through. The report says more diverse boards “appear consistently to have the ability to consider a greater range of solutions and provide access to broader social capital and resources”.
Already, the benefits of having more women on boards are clear, it states: significantly greater decentralisation in how they operate; increased likelihood of reaching consensus before important decisions are taken; more diverse recruitment practices to senior positions; and a reduced overconfidence about the board’s problem-solving skills.
We are only at the start. Having more nuanced data and greater awareness of barriers will drive progress, but one form of action on diversity should not replace another. We have to look at them all.