Diversity in Organisations and Risk Management Capability – Part 3

“This is where the decision to hire, fire, promote, demote, purchase, sell and award is taken without considering whether that particular decision is supporting and linked to the mission of the company”.

High liquidity enables a company to pursue more opportunities such as investments in expansion and growth including takeovers and mergers and acquisitions. Of course, this must be undertaken with an informed consideration of risk and reward.

Though productive and value creating as it is, diversity is in many companies more often than not, an object of attack and fierce battle. Overt as well open warfare normally rages in a company against a precious business sustainability enabler. This is a destructive attitude propelled by a feeling of insecurity by some individuals in a company, in particular, those traversing the corridors of power accompanied by loyal blind followers who are at times moved and imbued by material gain. These are individuals who act against their own conscience.

It is not uncommon to see the hiring of conformists, without regard to business ethical considerations, especially regarding distributive justice. This attitude does not stop solely with an offering of employment and promotion and remuneration but is also vivid in the awarding of tenders and contracts for service. This mindset has been a root cause of woe, misery, and misfortune to shareholders and other stakeholders because of its propensity to destroy value. This is where the decision to hire, fire, promote, demote, purchase, sell, and award is taken without considering whether that particular decision is supporting and linked to the mission of the company.

Behind all this is an earnest desire and ambition to preserve and hedge the prevailing state of affairs, to ensure a secure and solid cover up mainly collective decisions to cover up rule circumventing and control system override. In such circumstances, fraud for the company and against the company is easily perpetrated. Such teams tend to numb the brain and deaden the moral sensibility because with such an arrangement, individuals in a company sit in the zone of comfort as no one is around to challenge the state of things. Company failures have a deep root in such conspiracies and alliances.

The other practice that goes hand in hand in the war against diversity is the preference of inferior labour force and systematic elimination of competent, independent, and free minded personnel through institutional political manoeuvers and manipulations deeply masterminded and guided by short-termism in order to keep “yes men” and “yes women” in the company. These are the people very skilled in dancing to any beat of the drama. This is a reason goal displacement is a very common thing in companies of such a calibre that impedes the ability to travel smoothly towards the land of promise.

Driven by fear of diversity, some executives and senior managers would go all the way to shooting at random and firing arms at personnel who are unarmed, indeed defenceless, free and clear minded employees who are now “bad boys and girls”. This is outright hatred of both diversity and industrial democracy.

Monopolies of thinking and ideologies are dangerous and very inimical to long term stakeholder value generation and preservation. Monopoly of thoughts limit, counter and refute good corporate governance because the latter attaches fairness and transparency. Majority of company boards and management teams have encased themselves in prejudice be it national, ideological, intellectual, and even moral and ethical.

“It is imperative in the circumstances, that risk management is driven from the top of the company and this requires a diversity of ideas, skills, and background”.

Evidently, it is extremely difficult to drive a risk management agenda in a company where war is being waged against diversity. This is so because collaboration within the organisation creates a united front and a diverse resource to help the board and the management deal with risk. This war is a source of risks in itself which requires assessment and a decision on the treatment options. Managing both local and global complexity should be one of the central priority concerns of the board of the company. The concern is not the presence of this complexity but the pace at which it is growing and changing so fast akin to the metamorphosis. This calls for diversity of thoughts and ability to conceptualize situations and unpack complexities. This is the art of thinking independently together.

Every company navigates through turbulence whose point of trigger is the speed of change of markets, physical environment, distributions and geography, complexity of risks, of business models, of technology dependence, and a wave of transparency where company plans or otherwise are influenced by social media, traditional media, and pervading investigation processes.

Every company now lives in a glass bubble. It is imperative in the circumstances that risk management is driven from the top of the company and this requires diversity of ideas, skills, and background. These are summed up as a varied combination of conceptual skills, managerial skills, and interpersonal skills as a matter of both principle and prudence in risk management practice. Human and cultural factors ought to be taken into consideration in the whole risk management process.

This stems from the fact that a company is a microcosm. Diverse eyes, thoughts, and viewpoints provide an unbiased and well thought and symmetrical opinion and guide to a course of action in times of such dramatic changes facing companies. Every company that desires to deal with managing risks associated with dependencies and correlations in order to create value by way of taking informed options, must embrace and nurture diversity.

Diversity means a company gets different perspectives of thinking, different experiences, different challenging styles, challenging the orthodox, in order to add value to each business deliberation and decision.

As human beings, we never look at the world and reality from a neutral position. We see it, always and only through filters that impact how we interpret and understand the world around us. That filter is called a worldview, and it is so important that directors, management, and other employees are taught about this crucial organisational behavior influencer without exception to the amount of corporate management experience. Worldview is the essence of diversity and is central to making a company benefit from the power of synergy if properly harnessed.

We do not spend all day analysing or testing whether every single belief we hold is true or not. We have jobs, families, and responsibilities that usually preclude full time philosophising. At one point in our reflective lives, we settle on a core number of principles that we hold as true. These principles are broad in scope and usually tough on issues of origins, meaning, morality and destiny. Together, these will form our worldview. This worldview then becomes a lens through which we see the world and process, incorporate, or test new information as it comes to us.

In a corporate life setting, the worldview among board members and management teams isreconciled through rigorous, candid, and constructive debates underpinned by the freedom of speech and a culture of tolerance which is capable of bringing about a productive and value-creating consensus. The ability to balance worldviews is the story behind every successful company and is a bulwark against bullying and puts in check highly opinionated personalities. Many companies struggle if the board is dominated by a worldview of a few strong characters who fail to moderate their egos. The same can happen in a relationship between the Chief Executive and the management team and even downward the corporate ladder. These are situations where some individuals are branded as “not belonging” or opponents.

Worldviews are influenced and shaped by professional and educational background, religion and belief pattern, racial, ethnic and national orientations, demographic groups, and gender. Fighting against diversity is akin to throwing valuable resources away into a stream of running water. Many companies have suffered because of polarized and extreme viewpoints held by dominant individuals who could not be dehorned.

When imbalanced opinions are left to reign, groupthink and partnerships in wrongdoing take root because those who would act as conscience to the board are made to be afraid. One notable corporate error which results from this is overtrading and excessive risk taking.

by Amani Mbuja Tuntufye ERMCP, CERG
Part 4