Leading by example

The case for diversity in corporate leadership has never been stronger and steady advances towards diverse representation are becoming increasingly noticeable.

However, the pace of such progress lags too far behind the challenges that businesses and society face – a clear indicator that there remains much to be done.

“In a world that is changing at a faster rate than ever before, a variety of sensors are essential to enable businesses to effectively interpret different signals, both mitigating risk and seizing opportunity.” FTSE 100, CEO

In most countries, women occupy fewer than 20 per cent of executive roles; and ethnic minorities, even fewer. Boards fare marginally better. Increasingly clear is that simply hiring diverse employees is not enough to create business value. To fully capitalise on the opportunities that diversity presents, leaders must work to create an inclusive culture that allows employees at every level to contribute their unique perspectives and maximise their potential.

“We live in a world of exponential change, so it is absolutely critical that organisations have diverse points of view. And yet, despite the speed at which the world is moving, progress toward gender parity is incredibly slow.” FTSE 100 executive director

Research by Russell Reynolds Associates reveals that an organisation’s most senior leaders – CEOs, chairs and board members – play pivotal roles in creating inclusive cultures, irrespective of their own diversity. In our inaugural Diversity and Inclusion (D&I) Pulse Survey, we polled more than 2,100 executives on their employer’s diversity and inclusion efforts and individual perceptions and experiences within the workplace. One of the most striking findings was that when senior leadership (namely, the board and executive committee) champions D&I, key human capital outcomes improve. This conclusion was matched by the 57 interviews with senior leaders in 18 countries across the world, who consistently emphasised the role that the chair and CEO can play in driving D&I.

Yet, how chairs and CEOs deliver tangible results is often less clear. From our research, we drew three sets of key lessons about how board chairs and CEOs can help foster profound change in creating inclusive cultures and driving diversity (See The Three Sets of Key Lessons graphic, above).

Change starts with the chair

Every member of a board can affect D&I efforts. Generally, however, board chairs have the most direct opportunities, given their responsibility for managing board composition, running meetings and setting the board agenda. When the chair uses these functions to create an inclusive board environment, it becomes a model for the CEO and the rest of the organisation to follow.

The obvious – and often uncomfortable – starting point is to take stock of how visibly diverse a board is.

One of the themes we consistently heard from board members was how difficult it is to credibly defend a commitment to diversity when the board itself is homogeneous. For better or worse, the composition of the board sends a strong signal about what the company values.To be effective, the group must attain a critical mass of diverse viewpoints rather than simply including a symbolic woman or other minority representative.

To build diverse boards you need to:

• Be willing to take a chance on board candidates with non-traditional backgrounds, including those with no previous board experience. Make a commitment to mentoring and developing new non-executive directors when they join the board
• Create alliances with outside groups that draw a diverse membership
• Consider innovative measures; e.g. a shadow board internship to offer high-potential talent early boardroom exposure

Just hitting certain numbers isn’t enough. To maximise the value of a diverse boardroom, a chair must also create an environment that encourages participation from all members.

“Chairs who are able to truly get the best out of all the voices in the room tend to be genuinely curious about different points of view and experiences. They identify which voices are not being heard and actively create an environment in which everyone can meaningfully participate in the conversation.” FTSE 100 chair

To create an inclusive boardroom, an effective chair needs to:

• Remove all possible bias via training or practices/processes
• Be careful of the way language can unintentionally reinforce minority status; e.g. referring to female board members as ‘the ladies’
• Regulate the environment carefully, with zero tolerance for those who create hostile board environments
• Seize opportunities for feedback from board members through consistent evaluations and assessments that help uncover unhealthy behaviour
• Facilitate open debate in a safe environment, particularly on ‘uncomfortable’ topics

“Every board needs diverse non-executives who think differently and are prepared to challenge. The important thing is creating a culture where that works constructively.” FTSE 100, chair

The chair and board can have a direct impact on the success of D&I within the organisation by setting the tone that this is a topic prioritised by the board.

While tone is hard to abstract, it is a powerful tool that can serve a crucial role in advancing D&I practices within the organisation. It is through the behaviours and priorities that the board chooses that directors have an ability to create and enact change.

“If the diversity and inclusion topic is not on the chair’s agenda, then it is not a surprise when the organisation fails to deliver.” FTSE 100 deputy chairman

The chair and board can affect the success of D&I within the organisation by:

• Keeping D&I on the board agenda and advocating broader communication
• Asking the right questions that prompt executives to find practical solutions
• Probing the data, going deep into different functions, geographies and levels
• Ensuring a pipeline of succession candidates for the top roles through regular discussions and encouragement of career advancement plans for promising candidates

A partnership between the chair and CEO is essential

The chair and CEO should embed D&I into the organisation’s strategy. This will empower the business to prioritise the topic in day-to-day operations.

“This partnership can make a real difference in terms of progress, as it shows the rest of the organisation that diversity is something both the chair and CEO prioritise.” FTSE 100 CEO

“The chair and CEO need to drive these initiatives actively, not passively. This means D&I must be written into the organisation’s strategy. If diversity and inclusion are not in your mission statement, it already shows that the chair and CEO do not truly understand the importance.” FTSE 100 executive director

Articulating the ‘why’ for diversity needs to be multifaceted, clearly expressed and tailored to the business. While the business case for D&I is powerful, it is the combination of the economic case and committed leadership that changes behaviour. The chair and CEO need to articulate this message authentically and personally, explaining not only the importance of the general D&I agenda but also its unique importance to their business.

The chair and the CEO must make a shared commitment to role-model the behaviours they want the organisation to adopt – namely, purposeful, authentic and inclusive leadership.

If senior leaders are simply checking boxes to comply with external pressures, the company remains unlikely to achieve inclusivity and harness the benefits that diversity presents.

The board members and executives we spoke with described chairs and CEOs who successfully create inclusive environments as being uniquely dedicated to eliciting well-rounded dialogues. They are careful in their division of airtime throughout meetings and go further to hear from quieter group members. Leaders must model inclusive behaviours.

The CEO delivers results

Though the chair and CEO partner on tone-setting, it is the latter who ultimately delivers tangible results via building a diverse organisation, creating an inclusive ‘open to all’ culture and consistently reinforcing the strategic imperative of this topic. Accordingly, many CEOs are required to cultivate broader transformations that bring culture change (see the graphic below).

What gets measured gets done

While some organisations have shied away from counting employees according to their demographic category, respondents in our survey suggested that gathering data on the positions held by diverse talent can offer insight that assists the diversification of teams. It may be possible to investigate the underlying causes, thus enabling targets for improvement.

CEOs can take a data-driven approach to their D&I strategy by:

• Going deep into the numbers Although top-level data may suggest positive results, it does not necessarily mean that every area of the business is diverse. By delving into the data, the CEO may identify more specific issues and action a targeted approach
• Setting achievable and customised targets across regions In global organisations, the diversity within different geographies may vary, based on local cultural and historical nuances. CEOs must set achievable market-specific diversity targets
• Setting KPIs for senior leaders Within this agenda, KPIs help to hold leadership accountable for making progress
• Applying targets within the recruitment and promotion processes But this should not skew the hiring decision. Targets should not compromise the need to hire the best person for the job but should ensure that diverse candidates are well-represented within the process
• Making the numbers visible to The organisation should see the stats so that they are collectively held accountable

Inclusive policies and structures

Policies and structures that help to create inclusive working environments, such as mentoring and sponsorship, are critical to success. Naturally, it remains essential to understand what programmes will be most meaningful and effective within a particular organisation. Without such an understanding, policies designed to enhance inclusion may inadvertently segregate certain groups. For example, counterproductivity can be observed when flexible working arrangements are aimed solely at women.

“We must make sure that in the drive for greater inclusion in the workplace, we don’t disengage other groups.” Fortune 500 executive director, Asia

How CEOs can create structures and policies that help drive inclusive cultures

• Develop personalised mentoring and coaching programmes
• Support sponsorship programmes to connect high-potential talent with senior executives. In such programmes, sponsors publicly endorse next-generation executives, highlighting their successes and granting stretch opportunities
• Empower diverse talent to talk openly about their experiences and to help others understand how to become more inclusive. Create forums where employees can be open about the language or situations that make them uncomfortable, with an understanding that people often get language wrong or cause offense unintentionally. If people can talk freely about such topics, they are more likely to find common ground
• Encourage diverse talent to speak with their managers about the specific barriers they are facing in their careers and put action plans into place for overcoming these barriers

It’s important to coach and mentor inclusive leaders, with the recognition that diverse teams require different management skills and leadership styles than homogeneous ones do.

Increasingly, leaders are recognising that a bumpy transition period is an inherent part of moving towards diversity. Consequently, many leaders can benefit from coaching and mentoring.

“Diverse teams are not easy to lead because you have a lot of different kinds of voices and a lot of different kinds of viewpoints and so it takes time” DAX 30 NED

As the ultimate role model for inclusive leadership within an organisation, a CEO must not only learn how to manage this effectively but also be proactive in advocating that other leaders follow suit. CEOs and executives should expect some challenges as they embark on new D&I initiatives and look for new leadership strategies to work through them.

Creating an inclusive work environment and realising the full potential of a diverse workforce often runs a particularly laborious journey. While some organisations have made significant progress, there remains a need for acceleration of efforts and absolutely zero time for taking one’s foot off the gas. For all the challenges associated with corporate D&I efforts, the accrued benefits of successfully cultivated practices far outweigh the potential foreseen costs.

Diversity is vital for the future-proofing of businesses, creating organisational resilience to effectively mitigate risks and allows for capitalising upon opportunities. As we look forward to the next generation of senior leaders, an ability to create a culture and environment that promotes the actualisation of all forms of diversity is likely to serve as a unique and paramount differentiator of success.