Diversity in Organisations and Risk Management Capability – Part 2
“Boards that embrace gender and ethnic diversity benefit in their decision making by leveraging the array of skills, experience, and diverse views within such a team”.
Incorporating diversity principles across business functions and units is healthy and brings in business sense and shared meaning and common end. Diversity supports inclusion and should be practiced through all aspects of the company. This should be integrated into product development, communications, training and education, career and professional development, recruitment and retention, and overall leadership and management practices.
Cross-functional teams composed of men and women who are intergenerational and deeply and broadly diverse stimulate thinking, which leads to greater possibilities. This is coupled with instilling the company with competencies that foster teams and skills for leading diverse teams.
A diverse and inclusive workforce is critical for success. It is necessary to drive innovation, foster creativity, and guide business strategies. Multiple voices lead to new ideas, new services, and new products and encourage out-of-the-box thinking. At present time, any company geared for success cannot afford to look at diversity and indeed inclusion efforts as separate from its other business practices. This should be driven by a recognition that a diverse workforce can differentiate it from its competitors by attracting top talents and capturing new clients.
From a company’s board perspective, being a corporate collegium, it must refuse light from no quarter. Boards that embrace gender and ethnic diversity benefit in their decision making by leveraging the array of skills, experience, and diverse views within such a team.
When a board has a heterogeneous composition, for instance, directors from different nationalities, ethnic backgrounds, and inclusive of gender diversity, a board would have its members drawn from different positions. Gender diversity for instance, would expose the board to a line of questioning and challenges that an all-male board may not have considered. This is an added value.
The same can be extrapolated to other cases of board composition where for instance the board is all lawyers, accountants, engineers, and so on. Professional diversity in the boardroom would add more input, remove blind spots and enhance insight. With directors from diverse and varied backgrounds such as ethnicity, professional, trade, nationality, age, and gender, there is usually a difference in the thought process and a different angle from which they view and approach an issue and analyse a problem. Diversity can offer a different outlook and this difference in the point of view can awaken the board to new possibilities. It takes the entire board out of the comfort zone and it is for the better.
There are a number of common traits noted to make a company successful and they are all linked to the ability and willingness to appreciate and embrace diversity.
“Diversity in thinking comes from differences in styles of approach to decision making or problem solving, core disciplines and diversity in relation to ethnicity, gender, age, and background”.
A high quality company board with strong leadership, a broad range of skill sets, and very importantly a number of directors with domain experience of the company they are involved in provides a bulwark which provides a shield against the destruction of value. This entails directorship that is diverse and free to speak and express independent thoughts informed and guided by experience, skills and exposure. Running an open society is a prerequisite for success.
Diversity of the calibre so far noted empowers the board to scrutinize plans, proposals, and courses of actions as presented by the Chief Executive Officer and his team with steadfastness, faithfulness, and a conscience which is as true to duty and as it is sensitive as a needle to the pole. This state of affairs facilitates checks and balances in the manner the company runs and how decisions are conceived, deliberated upon, and made before they are subsequently implemented. Diversity in thinking comes from differences in styles of approach to decision making or problem solving, core disciplines, and diversity in relation to ethnicity, gender, age, and background.
As well as building a board with a good, broad skill set, this level of maturity and open society ought to be hinged on respect for each other’s view, even though at times views might differ. This is the capacity to think in diversity and deliver in unison.
Once the culture of harnessing the riches hidden in diversity is cascaded downwards the ranks of management chain, it fills the team below the board level with positive and sustainable results and enables the company to overcome the malignity of short-termism which in the majority of cases tends to eclipse the minds and the intellect of the company leaders from thinking and looking at issues with the precision of an eye of an eagle. In precise terms, this is the benefit of synergy. All this comes with a culture of tolerance and long-suffering. This culture is a show of maturity as it is also divine in character.
Diversity is a business and people issue, connected to sustainability and profitability of a company, the quality of relationships with clients, and solutions provided to them. It has a bearing on how a company relates with its people, clients, suppliers, and the community. A diverse team is more likely to be commercial.
Both the marketplace and the market space are demanding change and a company must be determined to exceed expectations. Fostering a collaborative environment is capable of providing support to diverse thinking so that highly talented people can achieve their full potential. A company that lives and nurtures this virtue enhances its reputation among its competition. A positive reputation increases customer and supplier confidence which is translated into both increased sales and of course, better liquidity metrics. This is value creation.
by Amani Mbuja Tuntufye ERMCP, CERG