There was some fanfare in UK boardrooms over the summer when the government announced that FTSE 100 firms had hit the target set for them in February.
Women now hold a quarter of board directorships in FTSE 100 companies. In Europe, at time of writing, it is still unclear whether the European Commission plans to introduce a mandatory gender quota of 40% for every company listed on an EU stock exchange.
However, countries including France, Italy and Norway have already seen the proportion of women directors rise following the introduction of national quotas, while others have them on the way. From next year, German companies will have to fill 30% of their non-executive seats with women, for instance.
Despite this progress, there are still question marks about just how equal women’s opportunities are—particularly when it comes to executive leadership roles.
The UK may have reached 25% for women board directors overall, for instance, but that figure disguises the fact that women hold less than 10% of executive directorships. And a paper published by the Centre for Economic Policy Research earlier this year suggests that Norway’s boardroom quota had “very little discernible impact on women in business beyond its direct effect on the newly appointed board members”.
From gender to diversity
But boards have another question to ask themselves: Is appointing more women doing enough to bring real diversity to their discussions? Chances are they will be asked that question officially, and soon, says executive search consultant Margaret Kett of executive search specialists Tyzack.
She sees the focus moving from gender—which is relatively straightforward to define and thus measure, and which may be one reason why it is a popular benchmark of diversity—to ethnicity, which is considerably more complex.
Companies are not currently doing well on ethnicity—nor on class or education, come to that, says Melanie Eusebe, the founder of the Black British Business Awards and a board member at Shine Media and the Creative Industries Foundation.
“The gender agenda is progressing, although not as quickly as I would like; but in the areas of race, class, background and education [companies] aren’t doing well at all,” she says.
The reasons why are tied up in money and habit. Overcoming ingrained assumptions about what a director looks like in order to build a diverse boards means changing long-established systems, which takes money.
“And it may not be an organisational priority to change the board composition,” says Eusebe, pointing out that the number of women on UK boards only showed real growth when companies were placed under considerable official pressure.
Quotas are not enough
Simply adding more categories to boardroom targets, or quotas, won’t necessarily fix things, says Kett. “Boards increasingly have more women and ethnic minority members, yet what if they all think the same way?” she says.
“While the more traditional aspects of diversity will bring depth, there has always been a strong case for teams consisting of individuals who think differently from each other…the highest-performing teams consist of individuals with different styles and ways of thinking.”
Miriam Lahage, chief merchant at Navabi and a non-executive director at Simudyne, which is listed in the UK and Luxembourg, shares Kett’s view.
“Boards have an awareness of diversity and recognise that it is something that we need to do, but I don’t think that we have really embraced it,” she says.
“Diversity is not just about gender—it is about diversity of thought.” And that can be hard to find in a group of people with similar educational, social and cultural backgrounds, even if the group includes both men and women.
One option here is psychometric profiling, which can be used to assess personality type, rather than relying on markers such as age, gender and ethnicity. This carries the added advantage of being able to spot gaps that might not be addressed through traditional splits of diversity; for instance, it could identify the need for a “digital native” to join the team.
Such tools are increasingly being used at board level, says Tom Marsden, the chief executive of people analytics company Saberr, but not in a particularly focused way.
“It is a ‘nice to have’ that people do, then ruminate on for a day or two…but I am not sure that it changes anything. We hear a lot about people who are tested but the results are ignored because something else trumps it.”
It is also worth noting that challenges concerning diversity aren’t simply about the make-up of a board; there are also significant practical challenges in getting a genuinely diverse group to work together effectively.
“It can be challenging because [teamwork] is easier if we all…share the same reference points,” says Lahage. “There needs to be real recognition that diversity means there will be natural tension within the composition of the board.
“The best approach is when people around the table have a shared vision for the business but enough diversity of thought that they explore multiple possible approaches at every juncture…One needs to recognise that diversity still needs to fit the cultural values of the company, because you need a level of trust to hear each other properly and make good decisions.”
Marsden adds: “The highest predictor of positive team dynamics is values alignment. You can have people who think extremely differently, but if their values are aligned they can debate at great length while having constructive disagreement, which is what boards are all about.”
Hull Business School’s Tom Hoyland, a lecturer in organisational behaviour, agrees. “Having different perspectives is a good thing but it is very difficult to bring those ideas together,” he says. “Diversity is something you have to plan for. You need people in a team to understand what their differences are and what they mean…it is about getting a fine balance between trust that allows people to be critical, and relationships that are chummy and clubby.”
Carly Chynoweth is Board Agenda’s correspondent on board career and diversity issues, and is a regular writer for The Sunday Times on executive appointments.