Over the last few years, questions of diversity have grabbed headlines, bringing crucial questions to the top of society. The #MeToo movement sprang to the fore in the wake of the widespread sexual-abuse allegations against Harvey Weinstein. The Black Lives Matter movement continues to shine a light on racism and institutionalised prejudice around the world following the death of George Floyd. And a fresh debate about the rights of transgender people and women has raged on social media after controversial comments by JK Rowling.
It’s important to recognise that these aren’t just issues happening ‘out there’ in the world, they’re serious questions within organisations that Boards have a responsibility to answer. It is, of course, a moral duty. But it’s also a regulatory one, with the Financial Reporting Council (FRC), the body that oversees the UK Corporate Governance Code, highlighting the Board’s responsibilities in 2018. And those organisations that get inclusion and diversity right will outperform their competitors – they’ll better attract, engage and retain the best talent, and unlock innovation.
Having advised Boards in energy, financial services, retail and the third sector on these issues, we know directors can make a real difference to inclusion and diversity when they own their accountabilities, set a clear course of action and demonstrate a different way of leading:
The Board has a regulatory responsibility for the organisation’s purpose, values and behaviours. And diversity and inclusion are integral to that. So, the Board needs to demonstrate it takes the issue seriously by making action on inclusion and diversity core to its role and expectations of executive leadership.
One important way of doing this is to appoint a Board-level inclusivity champion. In our work with clients, we’ve seen how active whistleblowing champions focus the attention of the Board and the organisation. Similarly, having an inclusivity champion will drive action on specific issues facing the organisation by creating a clear line of responsibility all the way to the Board. These champions will focus attention, ask the difficult question and ensure inclusion and diversity doesn’t become a ‘tick box’ conversation.
One of the most significant (albeit belated) changes we’ve seen in Boards in recent years has been the increase in the number of women appointed as Non-Executive Directors. Key to this progress has been Dame Helena Morrissey’s founding of the 30% Club in 2010, which aims to have a minimum of 30 per cent female representation on FTSE 100 Boards. Having similarly ambitious targets for other forms of diversity will show clear intent and focus minds on setting a direction to achieve the goal. That’s why the Confederation of British Industry (CBI) launched its Change the Race Ratio campaign to coincide with Black History Month 2020. The campaign calls for organisations to sign up to a set of commitments designed to increase the ethnic and racial diversity of Boards.
A recent study by the FRC noted that the most diverse companies ‘set measurable objectives and are more knowledgeable about which initiatives are successful... some go so far as to target specific aims, for example to support social mobility, carers or former members of the Armed Forces, as part of an agenda of inclusion.’ In other words, the exemplars are the ones with a clear direction.
Boards are under pressure to show results and often want to prove they’re acting on inclusion and diversity. Just look at the plethora of Board-level press releases from organisations all stating their support for Black Lives Matter and seeking to demonstrate the steps they’re taking. But a more effective way to deliver change is for the Board to embrace what Ed Schein, Professor Emeritus of Work and Organization Studies at MIT’s Sloan School, calls Humble Inquiry – the art of gently asking, rather than telling. Instead of looking at more presentations on what’s happening, the Board should go out into the organisation and hold meaningful dialogues to hear the actual stories and experiences of employees. This will make people feel they have a voice and, importantly, give the Board insight into their organisation.
The power and symbolism of such ‘meaningful listening sessions’ are impactful. Humble Inquiry doesn’t just find better ways to act on inclusion and diversity, it can also enhance inclusivity itself. According to a 2020 study in Israel, asking questions and deeply listening can help the speaker feel safer and less defensive. Being listened to can be cathartic for those who have been the victims of bias, and it can be truly impactful for the listener.
Our world is changing faster than ever. COVID-19 has accelerated some fundamental shifts in societal values and perceptions. Boards can’t ignore the importance of inclusion and diversity to their customers, their people and their shareholders. The time has come for them to actively take accountability, challenge their organisations, and role model an inclusive and empowering leadership. The question is whether they’re up for the challenge.