May 19, 2021
Executive leadership can have a profound impact on the culture of a company and the organizational tools it has to improve performance. Over time, the composition and maintenance of a board often says a lot about how a company sees itself in the mirror.
And sometimes, the board is no longer even looking.
Boardroom diversity has become a growing priority in the United States, in some cases due to legal requirements and in others because there is a recognition that sameness can produce blind spots or even stagnation.
Michael Kelly Associates has increasingly engaged clients who wish to undertake boardroom diversity assessments and initiate their executive search for the right people to infuse new perspectives into their leadership trust.
This is a trickier process than some may be willing to admit. Beyond the uncomfortable philosophical questions diversity and inclusion may bring to the table, there is the simple reality that good, intelligent, capable people come from all backgrounds and age groups, men and women, and it's vitally important to keep this truth front of mind.
How and whether board diversity will bring benefit to a company is influenced greatly by the structure and habits of the board itself, as the Harvard Business Review found in a series of interviews with board directors around the U.S.
Diversity is most likely to help companies that have a more egalitarian and collegial structure than those that operate hierarchically. If top executives don't value regular input from across the board, it's going to be difficult for anyone to gain traction and exert a positive influence, regardless of their background. This is where any executive search can be self-limiting, whether diversity is a priority or not.
When our firm approaches diversity assessments, we look carefully at how the board functions, how it’s steered and where its vision may be blurry in order to understand the company's needs. This is what makes the difference between diversity as a form of "tokenism" — which is undesirable for everyone — and diversity as a path to augment a board's cultural identity.
In building a great board, the emphasis should always be placed on superb skills and expertise. When board leaders have an unconscious bias about where to find these attributes, they often default to what seems familiar. Maybe it's a person they know well, professionally or socially, or someone whose industry reputation is well-established, but not assessed in terms of how well the skills translate to the direction of the board's best interests.
Consider the possibility of a company establishing a manufacturing foothold overseas. Maybe one candidate has had success elsewhere in the world, but not in the location where the company is building a presence. In these cases, seeking a board member who can seamlessly foster relationships in the target market is an obvious advantage for companies willing to look beyond their familiar circle.
As another example, consider a company whose customer demographics are not well-aligned with the composition of the board. Bringing in a person who has fresh insights into the customer base and can spearhead new relationships is a critical advantage.
A successful board diversity assessment is one that examines how diversity can optimize business and leverage the soft skills of a candidate's life experience, relationships and professionalism. There is no sacrifice to be made in qualifications. The company only stands to gain from embracing the institutional knowledge that comes with diversity.
The most important step a board can take is shedding the notion that making a "diversity hire" is merely fulfilling a modern expectation. This is a harmful and superficial point of view, one that misses the incredible potential that diversity represents when searching for real world expertise.
At Michael Kelly Associates, our assessments always look first at what a board fundamentally needs to thrive. Which areas may be lacking? Where could performance improve? What kind of leadership talent is missing? Often, using the lens of diversity reveals that the answer to these questions lies in a homogenous board that doesn't invite enough input to know what's holding it back.
Board diversity will only be valuable to a company that sees it as more than a box to check. Those who understand that these changes in the executive space are long overdue will recognize that diversity is an expansive framework for the board of the 21st century.
It's the difference between avoiding a mirror and looking out of a window.