If proof is needed of how diversity can boost a business, consider what happened seventy years ago when Earl Tupper launched his plastic Wonder Bowl, the very first Tupperware product. A pioneer of modern lifestyle design, the new bowl was widely praised for its light weight and affordable cost.
Yet department stores battled to sell it because housewives — as homemakers were then known — preferred to cling to their old glass jars and ceramic containers, distrustful of the Wonder Bowl’s unfamiliar seal. Their doubts quickly melted, however, after Brownie Wise, a former Miami secretary and advice columnist, began recruiting women to sell Tupperware products at “Poly-T parties” in their homes. By the early 1950s, Wonder Bowl sales were booming, and Tupper had recruited Wise as his company’s first female sales chief.
Tapping into the talents that women offer is now just one dimension of an accelerating drive to promote diversity, equity, and inclusion in the workplace, including the boardroom. For several decades after Brownie Wise joined Tupperware, boards had little appreciation of the full scope or value of these concepts, apart from the benefits of more women in the workforce. However, awareness has grown that diversity takes many forms, including gender and gender identity, race and ethnicity, sexual orientation, socio-economic status, disability, age, religious and spiritual beliefs, and lived experiences.
Corporate leaders began to give serious attention to diversity in the 1980s, but it is only in the last few years that we have begun talking about equity in the workplace, in other words, an acknowledgment that some people start with less advantage and privilege than others, making it much harder for them to succeed.
The benefits that flow from a culture of diversity, equity, and inclusion are significant, and well documented by research. Diversity creates a virtuous circle. For starters, it is a rich and valuable source of information, and it drives a more inclusive and equitable culture, leading to more productive discussions, better decisions, and, in the end, improved outcomes. It enhances the ability to attract and retain the best talent.
Beyond the confines of the company, diversity sends a powerful message to customers and suppliers, boosting the brand and inspiring loyalty and trust.
But most boards have yet to appreciate the scope of diversity and the advantages it brings. Business leaders are still inclined, for instance, to overlook the wisdom, not to mention the marketing and branding opportunities, that emanate from the 1.3 billion people on the planet with disabilities.
“There’s still a mindset among business leaders that disability is an issue for governments, or a medical issue,” says Caroline Casey, founder of The Valuable 500, a group of companies and leaders committed to disability inclusion. “It isn’t understood in a way that business can see the value, insight, innovation, and opportunity this global market represents.”
Catalyst, a non-profit, has found that companies with the highest representation of women on their top management teams experience stronger financial performance, including a 35 percent higher return on equity, than those with the lowest representation of women.
Similarly, Coqual, formerly the Center for Talent Innovation, has estimated that organizations highly rated for diversity, equity, and inclusion are more likely to succeed in new markets and to improve their market share. A study by the online decision-making platform Cloverpop has found that diverse teams (based on age, gender, and geography) are up to 87 percent more likely to make the right decisions.
What’s more, when teams follow an inclusive process, they typically make decisions twice as fast at half the number of meetings.
No board can afford to close its eyes to these benefits, and pressure is mounting on those that do. A 2021 EY survey found that almost half of all investors believe diversity of board, management, and workforce should be a strategic priority. The reason for this growing awareness is simple: board members are responsible for ensuring that the corporation meets its potential. That applies not only to the present but also to the future, underlining the need for investment in education and other measures of well-being in local communities.
Without a clear commitment to diversity, equity and inclusion, boards are failing to take full advantage of the human assets — whether workers, consumers, or suppliers — that a company has at its disposal. The pervasive influence of online platforms such as Twitter and Glassdoor means there is no place to hide from disgruntled employees. In other words, if your company continues to turn its back on diversity, equity, and inclusion, don’t be surprised if employee discontent erupts on social media, and perhaps even leads to legal action.
Diversity, equity and inclusion start in the boardroom, and the essential first step is to ensure that the makeup of the board itself reflects diverse and complementary perspectives. As noted above, diverse boards lead to more productive discussions and challenge silo thinking. They also enable boards to better understand the needs of stakeholders, support innovation, and manage complex issues.
Paul Druckman, chair of the World Benchmarking Alliance, notes that the point of diversity is not only about a variety of physical attributes but also, and more importantly, about a rich mixture of ideas and experiences. “It can’t just be people who have done similar sorts of things in other companies, even if they’re different genders from different companies,” Druckman says. “It needs to be people from outside of the comfort zone.”
Thus, a board member specializing in artificial intelligence or blockchain or cyber risk would look at a business quite differently than would a financial or legal expert. Combining these backgrounds and skills can create a formidable competitive advantage. The same applies to first-time board members.
Most companies look for directors with board experience, yet I hear more and more often from asset managers that they would prefer novices who ask seemingly “naïve” but vital questions that veterans may not have thought of.
Peter Dey, chair of Paradigm Capital and former chair of the Ontario Securities Commission, adds: “You don’t want people who all think the same way. In reaching a decision, you want people who end up together with a consensus. But that consensus should reflect a compromise of a range of views and a range of experience. If you can’t bring the board together, then that’s a problem. That’s where leadership and compromise are important.”
At its core, the push for diversity, equity, and inclusion is about changing the corporate culture. Julie Gebauer, global head of human capital and benefits at consultancy Willis Towers Watson, explains the challenge for boards: “Creating an inclusive culture takes time, a roadmap, committed leadership, and steady attention. And finally, accountability. The acceptance and embrace of difference must be woven into the fabric of the organization, reinforced by leaders, managers, and peers, and supported by programs and policies.”
“An inclusive culture not only implements programs that support diversity, like flexible work arrangements, sponsorship programs, and inclusion networks, but also has managers who know how to use them.
“In an inclusive culture, managers find ways to ensure that people of all backgrounds can contribute. They ensure that differences are understood and embraced. While data metrics, targets, and culture are all essential ingredients, they must be accompanied by leadership accountability for making progress toward diversity goals, and for creating an environment where everyone can succeed.”
According to Gebauer, the most effective leaders make their commitment to an inclusive and diverse culture evident in three ways. First, the language they use must be modern and conscious of pronoun choices. Second, their decisions must reflect that commitment—for example, not only filling leadership slots with a mix of candidates but also ensuring that initiatives and opportunities are offered beyond traditional groups. Third, leaders must uphold the standards they espouse by ensuring that only appropriate behaviours are rewarded.
As Gebauer puts it, competent boards set total reward programs that meet the needs and expectations of a diverse talent population, like paid parental leave and fertility services and voluntary benefits that support flexibility and choice. They ensure talent programs and policies — like recruiting and promotion processes — are free of unconscious bias, and they debunk the myths that have excused inaction in the past.
Shifting the corporate culture towards diversity, equity, and inclusion takes time — often a long time. The process needs to encompass both the obvious, such as bringing more women, minority groups, and people with disabilities onto the board and senior management, as well as more nuanced initiatives, such as making sure that job descriptions do not contain unconscious biases.
Taken from Stewards of the Future: A Guide for Competent Boards, available on Amazon and in all good bookstores.Back To News & Views