The Search for True Diversity on Boards
There is a pressing need in Canada to ensure that organizations don’t rely too heavily on a limited pool of business expertise to guide our corporate entities.
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For the last 10 years, I have worked closely with Junior Achievement of Canada to help manage the nomination process for executive induction into the Canadian Business Hall of Fame (CBHF). Along the way, my role evolved from managing to challenging, and ultimately to changing the process to make the Canadian Business Hall of Fame more inclusive and therefore, something all Canadians could be proud of.
Canada’s top business leaders are incredibly accomplished and certainly worthy of celebration and recognition. Without exception, all the nominees are truly inspirational to the many young Junior Achievement students that the CBHF supports. However, it became obvious over time that, due to the nominating criteria that had been established, the process was limited to considering a very traditional type of leader, aligned to a very traditional view of excellence. As such, our process was excluding many impressive and accomplished leaders who didn’t fit the mold.
To be more specific, over that time and by using proven executive search approaches I coached the nominating committee to envision and ultimately embrace a different definition of leadership excellence, thereby broadening the search criteria. At the same time, I led our team to identify and bring forward nominations that not only exemplified corporate business excellence as classically defined but extended well beyond that traditional definition to be more inclusive and representative or a wide array of highly accomplished business leaders across the country.
Recently, a client said to me that what we at LHH Knightsbridge had been able to do in support of modernizing the CBHF is really a “model” for corporate board recruitment, that how we had helped the client to consider non-traditional candidates and then led the search efforts to deliver on this expanded profile was precisely what Corporate Canada needed to do to achieve its diversity goals for Boards of Directors and executive suites alike.
It was a eureka moment for me.
For longer than I have been supporting the CBHF, I have assisted companies of different sizes, and types to find directors outside their regular networks to serve on their boards. There is a pressing need in Canada, as there is in most countries, to ensure that organizations don’t rely too heavily on a limited pool of business expertise to guide our corporate entities.
Government, investors, and increasingly, customers certainly expect greater diversity at the very top of Canada’s corporate community. In January 2020, the federal government amended legislation to require publicly traded companies to provide shareholders with updates on policies and practices related to the pursuit of greater diversity on boards and in senior management. This does not simply refer to gender diversity; these amendments made Canada the first jurisdiction in the world to adopt disclosure requirements related to the representation of indigenous people, people with disabilities, and other visible minorities.
A worthy goal like that does not come without its complexities. As is the case with almost all efforts to promote diversity, gaining Board/C-suite support for new and different success profiles for these roles is only half of the challenge. You also have to find people willing to step up, envision themselves in new ways, and take the risk of being a trailblazer.
Competing strategies for recruitment of board members
I typically tell people there are two basic approaches to filling a board opening: there is the ‘DIY’ strategy and the ‘Expert’ strategy.
Let’s start with the ‘DIY’ strategy – doing your own board search work. In this approach, board chairs and other opinion-leading directors scour their networks to find someone who has the right capabilities and time to sit on their board. This traditional approach at times ensures that boards are filled with like-minded individuals, people who see the world in the same way and are less likely to consider new perspectives or points of view about how a company should be operating. Additionally, these directors may not represent their customer community.
I’ve had a lot of people suggest to me that while this approach may not promote the goals of diversity, it’s certainly worked fine for many companies of all sizes. The results of this approach are predictable and comfortable. There is often greater harmony on boards that are staffed this way – but there is also a tendency towards groupthink and a risk of being blindsided by issues that can be missed if everyone has similar life and corporate experience to draw upon.
However, as we know, there is a growing body of evidence to show that greater diversity in board composition and the ranks of senior management is strongly related to how well the organization is viewed by the market and to profitability. McKinsey, (one of many highly regarded firms to have done so) has conducted deep research in this area, and in its 2019 diversity analysis found that companies with greater gender and ethnic diversity are significantly more likely to outperform companies that lag in diversity.
Additionally, social imperatives are driving a new-found urgency on the diversity challenges. Black Lives Matter and, more recently, the racist attacks on people of Asian descent in Canada and the United States have contributed significantly to this resolve.
This brings us to the ‘Expert’ strategy: retaining an executive search firm to help you with your board recruitment.
As we’ve shown with the CBHF example, a professionally managed executive search will uncover unconscious biases within the nominating committee, set and follow a rigorous process, and work hard to bring forward talent and expertise that would otherwise have flown under the radar of most boards that rely solely on their own limited networks.
A search firm will strategically access a broader pool of talent and can also be the difference in helping someone from an atypical business background see possibilities and opportunities they might have otherwise underestimated or missed altogether, or perhaps most importantly, and impactfully, accessing a group of people that may not normally be approached for a board or even consider being on a board.
I remember recruiting a woman who had deep experience serving on the boards of large financial institutions. I really thought she’d be the perfect candidate for a small publicly traded software company. However, she was very reluctant given that her background was in financial services, not software.
We had a number of conversations that enabled her to think differently about how she could contribute to a sector that was unfamiliar to her. Her background, thought processes, and openness to contributing differently had a significant impact on this software company with a specific emphasis on promoting women in tech. She joined the software company board and the overall experience has been hugely rewarding. In addition to bringing a thoughtful, new perspective to the board, she has also contributed significantly to support women in management within the company, making it a more attractive place to work in a very competitive sector.
That’s really the key to this diversity challenge. It’s helping organizations see beyond today’s needs and then matching the right companies with the right people who, in many cases, might never cross paths with each other.
Taking a DIY approach to this endeavour is very challenging. Finding a potential director outside the realm of usual suspects takes planning, broad knowledge/access across many different professions and industries, and an ability to convince reluctant superstars to consider unfamiliar, but ultimately rewarding, and high-impact challenges.