Diversity – broader than you think

This is fine, but there is a practical issue which seems to still be posing difficult questions
across the Boards of companies everywhere – the presence of diversity (or, often, the lack of
it).

When they first think of diversity, most people think ‘equal opportunity’ and an insufficient
number of women on Boards. True that this remains a challenging issue which many
companies are grappling with, but diversity is so much more than that.

True diversity is about involving people who represent a genuine cross-section of age,
experience, background, skills, experience and, where suitable, race and culture.

For example, a Singapore-based business which focuses on just the local market will have
different diversity requirements to the Singapore-headquartered multinational that operates in
a variety of diverse countries and industries (there’s that word ‘diverse’ again).

Unfortunately, efforts to build diversity on Boards is often met with “what’s the point?”, “it’s too
hard”, or “we’ve been doing things like this for years and we are successful, so why change a
winning team?”.

The short answer to the last question – like any sportsperson would tell you – is that no
matter how many victories you have, the next loss could be just around the corner. Diversity
on Boards gives you the best chance of not suffering – or at least, significantly minimizing –
that loss.

So why all the fuss? Isn’t diversity just the latest buzz word which will pass in time? Well, no.

The business world continues to become ever more challenging – increased competition,
technology advances, greater regulation and so on – and no Board, anywhere, constructed of
similar-thinking individuals who have been together for years and years, could possibly cover
everything they need to to keep the business growing and compliant.

Just as challenging is the way in which the duties of care and good faith have been built upon
by authorities by increasing the burden of knowledge on all directors. When considering their
liability if something goes wrong, directors are deemed to know so much more than they used
to. Diversity is a great way to help insulate a Board from potentially nasty (personal and
corporate) liability surprises by ensuring that everyone has the correct information.

For example, a lack of diversity is commonly found on Boards which are described by others
as “having too much grey hair”, or where there is a lack of director tenure. In these situations,
incumbent directors often have little propensity for change.

At the end of the day, every Board member is responsible for their decisions – even on
matters on which they have little or no expertise. A diversified Board will help significantly
mitigate the risk of bad decisions by ensuring that at least one Board member can keep all
the others apprised of relevant matters based on their expertise – finance, law, industry,
sales, marketing, operations and so on.

Which brings me to one aspect of diversity which even progressive Boards still overlook…an
understanding of technology, the impact it has on the business and the impact it should have.
Cyber risk is an obvious one here. But what about making sure strategic decisions and risk
assessments are taken whilst ensuing the business maximizes its technological advantage
(including tasking internal committees with appropriate terms of reference)?

It was concerning to me, as I sat in a directors’ briefing a few weeks ago, how unprepared
many of the 80-plus people in the room were for technology and all it can bring (both benefits
and risk). A senior director there said, “This technology thing, we haven’t really looked at it as
a Board, but maybe we will one day”. Diversity on his Board would have ensured a far
different – and far better – response from him.

As we all know, the culture of a company stems from its Board. The approach to diversity is
no different. After all, a diverse Board will often lead to more informed decisions and, flowing
from this, a diverse workforce will give that company its best chance to stay at the cutting
edge of its success.