The boardroom is the last place where CEOs want to rock the boat. But good governance shouldn’t be comfortable. If too many heads bob in agreement, you might want to take a closer look at who is seated at the table.
Collegiality among leaders is a good thing. It can fast track important projects. On the other hand, a shortage of debate could be a symptom of tunnel vision. A narrow view might cause you to leave options unexplored, miss hidden opportunities, and even accelerate the wrong initiatives.
A board that is a rubber stamp drains the organization’s time and resources. The board’s job is to provide wisdom, guidance, and above all, stewardship. They should be visionaries who chart the direction, evaluate options, and are prepared to challenge ideas they feel are not in the association’s best interests.
Until about 15 years ago, many professions were dominated by a single segment of people. It’s not surprising that there was a tendency to pick leaders who looked and thought alike to represent the group. Today we live in a variegated world. We’ve learned that our differences are strengths that can be used to spark innovation and expand perspectives.
Associations have been slow to respond to the reality of their members’ changing demographics. In fairness, some of the reluctance is probably due to entrenched processes for electing or appointing directors. Bylaws changes can be complex and time consuming.
Move DEI Forward
In 2020, the deaths of Breonna Taylor, George Floyd, and Ahmaud Arbery brought racial inequity into sharp focus, prompting businesses across industry to draft formal diversity statements. Some associations put power behind those words by quickly adopting strategies to expand gender, racial, cultural, demographic, and age distribution within their memberships as well as their leadership.
A focus on diversity, through the lens of equity and inclusion, was long overdue. There are plenty of statistics that demonstrate that what is good for society is also good for business. These are a few of the metrics that Bard, Google’s new AI search bot, found for me:
- From McKinsey—companies in the top quartile for racial/ethnic and gender diversity were respectively 36% and 25% more likely to have superior financial returns.
- From the Peterson Institute for International Economics—increasing the share of women in senior management positions by just 10% could boost annual corporate profits by $1.2 trillion globally.
- From the Center for Talent Innovation—companies with more diverse boards of directors are more likely to outperform their peers on financial metrics such as return on equity and return on sales.
- From the National Bureau of Economic Research—companies with more diverse workforces are more likely to innovate and bring new products to market.
When I asked Bard to find statistics related to associations and diversity, he came up blank. But, anecdotally, most associations seem to agree that diversity of background is a high priority, if not for the bottom line, certainly from a cultural standpoint. They are striving to make their leaders look more like their members and better represent the overall demographics of a changing nation.
Seek a Portfolio of Ideas
A good mix of demographic and cultural backgrounds adds vitality and equity to board deliberations; however, it doesn’t necessarily guarantee a variety of thinking, problem-solving skills, or professional experience.
A board can look like the rainbow, but if they are all dentists, their vision will be more monotone. While the group’s knowledge may be deep, it is probably not broad enough to offer a unique understanding or prescient ideas on digital initiatives, finance, marketing, or a range of other activities. That circumscribed perspective was adequate to compete in a simpler marketplace. A bigger portfolio of ideas is needed to evaluate the complex challenges in a post-pandemic world characterized by volatility and change.
Cognitive diversity, or a range of opinions, problem-solving styles, and experience, is an important quality that associations need to consider in a leadership group. Selecting representatives from outside the profession, who can fill gaps in expertise or insight, strengthens the board’s ability to govern effectively.
Value Unique Voices
When my business partner, Kevin Ordonez, and I were interviewing leaders for our Association 4.0 books, the need for unique voices in the boardroom was a recurrent topic.
Joanna Pineda, Founder, CEO and Chief Troublemaker at Matrix Group International, Inc. explained the value of adding fresh perspectives like this.
“I had an interesting conversation with a client about association boards. He was considering the benefits of expanding representation to include expertise from outside the profession. Specifically, he suggested giving experienced association executives a seat at the table.
“If you don’t have leaders with a range of professional backgrounds, there will not be a lot of new thinking. The average pharmacist, librarian or dentist has limited experience with the challenges that are involved in running an association. It’s a good idea to include people from outside your organization’s playing field who can introduce a different point of view and push the group forward.”
Adele Cehrs, Founder and CEO of Convincing Company, had this take on the need for outsider voices. “Board members are recruited because they are leaders in the moment. Expecting them to be innovators is a contradiction. It’s tough to think beyond current success. People who are still striving to get to the top will be the most future oriented. The board does not have the inspiration to move beyond their comfort zone. The executive director, who depends on the board’s endorsement to keep his or her job, creates yet another roadblock. The situation becomes an infinite loop. That’s one of the reasons why the structure needs to include outsiders.”
Gary Shapiro, President and CEO of the Consumer Technology Association, described how that organization’s board has grown to represent a variety of business experiences.
“It’s as diverse as you can get,” Shapiro says. “There are 10 different categories that we want represented on our board. Two categories relate to diversity. One category is diversity in the traditional sense, such as age, gender, race, and geographic location. The second is the business category, which includes company size, traditional industries, and new areas.”
CTA’s board members put aside personal and company interests to represent the group. That is a culture not easily replicated. “The board must focus on the good of the industry,” Shapiro notes. “They must focus on big-picture questions. They must put away their company’s interest and, at times, major public policy differences.”
Gary makes an important point about cognitive diversity. In a PwC 2019 survey of 700 directors, 43% of the respondents found it difficult to voice a dissenting view in their boardroom. Promoting an open forum where ideas are shared freely may require a change in culture. Directors will need to make knowledge and successful decision-making a priority over agreement and personal advantage.
When the board is committed to embracing diversity in all its forms, these are some strategies you can use to expand the group’s reach:
- Evaluate where there are gaps in demographics or expertise. A board matrix is a good tool for making this assessment. The matrix outlines the board’s current characteristics and strengths, pinpoints weaknesses, and identifies skills that will be needed in the future. This document can also be the basis for a discussion on priorities and provide an opportunity for cultural change.
- Share the matrix with the selection committee and ensure that they understand the need for diversity and the qualifications that the board is seeking.
- Search for candidates outside the usual parameters to fill the gaps in expertise. Gather bios and resumes to familiarize the selection committee with candidates’ backgrounds and experience. If possible, interview applicants to discover their interests and motivations.
Diversity isn’t easy. Although a tapestry of experience and opinions stimulates innovation, debate, and objectivity, these qualities ask people to stretch, to give serious consideration to uncomfortable ideas. This tolerance requires empathy that goes beyond race, gender, or age to the core of unique opinions and individual tenets. But the willingness to taste ideas that are hard to swallow rewards with a more thoughtful assessment of every challenge.