Diversity and inclusion post-Covid: no better time to transform the boardroom?

There was plenty to seize the focus of leaders over the past two years. We hardly need to spell that out. Speculation about the future and nature of work and leadership has not been in short supply either, made all the more pressing by the pandemic and its after-shocks.

One of the issues that leaders cannot avoid is where we go next on the pledges, promises and programs for creating a more equal workplace – from bottom to top.  Is the energy there to push on, or will diversity and inclusion slip down the board’s agenda as the focus shifts to the other challenges of the future?

Not just a moral case

Now is a good time to remind ourselves that beyond the moral case for diversity and inclusion lie some very sold arguments. Backed by data.

If you want to draw the top talent, inclusive workplaces have a quantifiable advantage. Research from McKinsey in 2020 found that 39% of all respondents say they have turned down or decided not to pursue a job because of a perceived lack of inclusion.

If we are talking to Next-Gen talent, they are significantly more likely to choose an inclusive workplace or to quit a workplace that isn’t inclusive.

If you are looking for higher rates of collaboration, innovation and engagement, inclusivity is the proven route. Quite simple, people perform better when they feel like part of the team.

According to a 2019 report by Gartner, the prediction is pretty unequivocal. “Through 2022, 75% of organizations with frontline decision-making teams reflecting a diverse and inclusive culture will exceed their financial targets.”

When it comes to decision-making, research from decision-making platform Cloverpop finds that inclusive decision-making delivers results 60% above average.

Smarter teams, better decisions

“Diverse teams are simply smarter, making more fact-based decisions and driving people to resist entrenched ways of thinking. This is extremely important in a world of false news and misinformation.”, says Christine Kuhl, Partner at Odgers Berndtson Germany.

There is also an important benefit with regard to how well diverse, inclusive teams develop products and services. According to CMS Wire, if your customer experience team truly reflects your customer base , then it is better positioned to empathize with those customers and meet their needs.

Finally, and this is surely the one business outcome that resonates the loudest. Diverse and inclusive companies are more likely to outperform others in their industries, measured both by revenue and market share, according to McKinsey.

Global research by Bersin determined a further dimension to that: inclusive companies are more likely to be change-ready, surely an essential quality for post-pandemic success.

Rewards for meeting the challenge

The rewards are clear then, but the challenge is still a formidable one for many German organizations. Especially in the management suite. This is the clear conclusion of the 2021 Odgers Berndtson Inclusion & Diversity study, reporting on 541 people at board and C-level level, as well as 19 supervisory board members of leading German companies.

While diversity is increasingly becoming a reality in corporate practice at the lower and middle levels, the survey paints a rather less diverse picture of the management floors of German companies. 

The typical DAX board member is male, in his mid-50s, of German origin and married.

Diversity is seen more as an end in itself rather than as a goal that can be brought closer through concrete measures. As important as the topic has become, candidates for the board, who lack any understanding of diversity, still have a good chance of being appointed. When selecting candidates, for most companies, professional qualifications remain the  deciding factor.

For women specifically, those who have a family are still considered to be less flexible and are therefore less frequently considered when being elected to the board or management teams.

What’s stopping movement?

The survey reveals that the  path to more diversity in the upper echelons of companies is still opaque.  It remains unclear what is preventing diversity. Is it unconscious prejudice in management?  A lack of suitable candidates? Or inflexible board members?

So far there have been hardly any strategic measures to change the situation in the management floors. At best, leadership assessments and coaching – especially for women – is advocated. In order to bring more diversity into top management, people usually trust in their own strengths.

If targeted measures are taken at all, these usually relate to the reduction of (unconscious) prejudices. Finally, it’s very rare to find a company seeking support from external consultants or organizations who specialize in the topic.

Will the pandemic change the prevailing boardroom game on diversity?

Well, three quarters of the supervisory board members we surveyed assume that the pandemic will not have any impact on the diversity of board members.

In Great Britain and Ireland, on the other hand, the influence of the pandemic on the topic is rated higher, with a third of those questioned assuming that diversity will increase as a result of the pandemic.

Action plans begin with data plus listening

Based on what the survey has revealed, our Diversity and Inclusion specialists recommend that a company’s first move should be to identify what the problem is that’s impeding inclusivity and diversity. Securing sufficient data from as many staff as possible is integral to any successful analysis.

“The more voices of different kinds, the better. Be really clear why you’re doing this as an organization, how committed you are to inclusion and diversity, and thus why you need some help from those you approach for their views.”, states Jürgen van Zwoll, Partner at Odgers Berndtson Germany.

Whilst the number crunching of the data you gather is a valuable tool, and will offer valuable insights with good analysis,  data shouldn’t be your only illumination. People’s voices are crucial to establishing a full picture. Consider a mix of focus groups so people feel they can speak openly.

When it comes to turning data into action, it pays to identify no more than eight KPIs, with a mix of leading and lagging benchmarks. Concentrating on as few annual KPIs as possible is more likely to drive energy towards achieving your goals.

Unmistakable message from the top

As with any cultural signal, the composition of a Board speaks loudly to the rest of the organization, and well beyond. It is a high-profile advert that the organization is ‘walking the walk’ at the very highest level.

At Odgers Berndtson, our Inclusion and Diversity Consultants can help you and your Board on your journey to reap the full rewards of a diversity, at every level, including the C-suite.

Speak to us about how our experience and approach can help your organization.