Thought diversity in the boardroom isn’t an underhand Orwellian construct, nor is it simply a numbers game.

Does diversity of thought at board level make a difference? Why does it matter? Surely it’s all about the profits, right?

Wrong.

It remains statistically true that a white, fifty-something heterosexual male has a better chance of being appointed or promoted to a board-level position than a black, thirty-something gay female, regardless of ability to do the job.

So why is it important to have a board made up of people of different genders, ethnicities and nationalities, religions, ages, sexualities and disabilities, and not just, as we have done for years, rely on male, pale and stale to run the show?

Is It All About The Money?

Well, yes and no. There are plenty of studies that suggest that diverse leadership teams return higher profits, including one from the Boston Consulting Group (BCG) that said ‘increasing diversity leads to more and better innovation and improved financial performance. Companies with above-average diversity on their leadership teams report a greater payoff from innovation and higher EBIT margins.’

And that’s great. There’s no business in the world that doesn’t benefit from more money, but the effectiveness of diversity in a boardroom isn’t just about how much cash the higher-ups can put in their pockets. It’s far more nuanced than that.

Creating a diverse and inclusive culture in the boardroom is worth as much to a business today as robust cybersecurity, inclusive recruitment, and a solid environmental, social and governance policy.

Why Is Diversity of Thought Important?

Perhaps it’s worth making the distinction between diversity and diversity of thought. Having a diverse board – people of different ages, genders, races, religions and nationalities – is great, but if they all think the same way, it defeats the object. The key is ensuring that ‘groupthink’ (another Orwellian concept) is minimised, or in a perfect world, eradicated entirely.

Today, shareholders and stakeholders make it abundantly clear that they expect diversity in the boardroom to keep pace with the rapidly shifting dynamics of steering a business through the twenty-first century. Perhaps for the first time, businesses are being held to account.

But most importantly, a balanced board will be more representative of the needs and requirements of an increasingly diverse customer base. The lifeblood of every business.

Diversity of thought is the key. A room of all-white, all-male and all-straight will, broadly speaking, think the same way. Plan A will have to work because there won’t be a Plan B.

Mix it up and suddenly you’ve got people from all sorts of backgrounds with different personalities and life experiences capable of offering a range of creative perspectives, opinions, strategies and solutions to whatever issue needs to be addressed.

The BCG report validates this way of operating, saying ‘In a fast-changing business environment, such responsiveness leaves companies better positioned to adapt.’

The Diversity of Skills

Gone are the days when boardrooms were full of lawyers and accountants. While the briefcase brigade remain important, there are other, different, skills required in the modern boardroom. While each board member – technical, culture, information, people, digital, marketing, outreach – brings with them a particular skillset, they also come with a diversity of thought based on their own lives and experiences, rather than people who have spent their careers pouring over contracts and balance sheets.

But diversity for diversity sake has no value. Box-ticking is a waste of time. As a business, you must be able to demonstrate the value of diversity in your boardroom. Why does critical and strategic thinking benefit your business? Why is an egalitarian culture where voices are heard, contrasting insights are evaluated and differences of opinion are discussed rather than shouted down by the loudest voice, better than the same group of old men making the same decisions because they can’t think of anything else?

The Way Forward

It’s unlikely that where equality and diversity is concerned, we, as a society, are ever going to get to a place where we can finally say, ‘we did it, what’s next?’ Today’s boardrooms acknowledge the need for both diversity of people and diversity of thought but while the intent is there, the action is somewhat lacking.

Yet, the benefits are evident for all to see. A healthier P&L sheet yes, but arguably more importantly these days is how businesses are viewed from the outside. Diversity of thought in the boardroom filters down to the coal face which in turn enhances corporate reputation and reflects the diversity of society, strengthening the social contract between a business and its customers.

Let’s leave the last word to Jay A. Conger, holder of the Henry R. Kravis Chair in Leadership Studies at Claremont McKenna College in California, and Edward E. Lawler III, Distinguished Professor of Business at the University of Southern California, Marshall School of Business. They sum up board diversity very succinctly in a 2001 article titled Building a High Performance Board: How to Choose the Right Members.

The best boards are composed of individuals with different skills, knowledge, information, power, and time to contribute. Given the diversity of expertise, information, and availability that is needed to understand and govern today’s complex businesses, it is unrealistic to expect an individual director to be knowledgeable and informed about all phases of business.

It is also unrealistic to expect individual directors to be available at all times and to influence all decisions. Thus, in staffing most boards, it is best to think of individuals contributing different pieces to the total picture that it takes to create an effective board.’