Optimum Talks Blog

Board diversity: Why what you see is what you get

Do you really want the best person for the job? Perhaps subconsciously what you want is the person who makes you feel the best about yourself, someone who reflects well on you; a person who reinforces what success looks like, sounds like and most importantly, manages like. And since you are successful and you are in the hiring seat, this person will look a lot like you… Welcome to the Status Quo.

According to a recent article in Canadian Business, there continues to be too many corporate boards with diversity issues. Several studies (see below) have shown that board diversity has a direct impact on profitability, so it is puzzling as to why this remains an issue. In a capitalist economy, don’t corporations exist for the pure purpose of making money? isn’t their primary goal to be more profitable? Or perhaps the better question to ask is what these boards and their members have to lose by embracing diversity.

• Catalyst:
  Companies with more women board directors experience higher financial performance, according to latest Catalyst bottom line report.
• McKinsey:
  Why diversity matters.
• Ernst & Young:
  New research from The Peterson Institute for International Economics and EY reveals significant correlation between women in corporate leadership and profitability.

No matter how flat corporations become, they’re still hierarchical. Hierarchies allow some people to engage in assigning relative values to others based on perceived status and power. When you derive your self-worth from your corporate status, then you’ve made the ‘ideal candidate’ for similar roles very narrow.

In cases where board members are blind to how their power and influence place limitations on hiring and consequently profit-making abilities, corrective action in recruitment practices might be the key. According to Stefanie Johnson, David Hekman and Elsa Chan if there’s only one woman in your candidate pool, there’s statistically no chance she’ll be hired! Apparently when “one thing is not like the others” it signals that you’re different from the norm, that you’re different from the tribe. Instead, the board needs a new norm, one in which a different candidate cannot be discriminated against so easily.

So, what do the boards of companies in which you hold shares look like, sound like, and manage like? Is there room for more diversity and consequently more profit? What do you think?