A new report out today from The Chartered Governance Institute UK & Ireland and the Centre for Synchronous Leadership has revealed that an attachment to power is causing British boards and executive committees to exclude more diverse candidates based on flawed selection processes and criteria. The report finds that the recruitment process is distorted by the assumption that those who do not resemble existing board and committee members are less ‘impressive’, which suggests that the word ‘impressive’ needs to be redefined. The report concludes that meaningful progress in terms of improving boardroom diversity can only be achieved if boards and executive committee members are willing to address ‘compulsive homogeneity’ and prioritise purpose over power.

This report highlights that:

• Pre-COVID-19, one fifth of boards were unlikely to treat diversity of skills and experience as a priority and 44% of boards did not prioritise diversity of lived experience. 52% of boards never or rarely treated racial or ethnic diversity as a priority, 55% ignored age diversity, 65% never or rarely treated LGBTQ+ diversity as a priority and 73% did not treat disability diversity as a priority.
• 37% of the most insular boards, the ‘Bubble Bound’, failed to prioritise diversity of skills and expertise prior to COVID-19, and 39% now report that the current mix of skills and expertise is not aligned with organisational needs. 62% of the Bubble Bound did not prioritise diversity of lived experience, and 66% now report that they do not have sufficient demographic diversity for relevant perspectives to be represented in decision making.
• This is in stark contrast with ‘Mindful Movers’, those organisations which ensure that the composition of their board is fit for purpose. 92% of this group prioritised diversity of skills and experience pre-COVID, and now 96% report that the current mix is aligned with organisational needs. Similarly, 71% prioritised diversity of lived experience, and now 71% report that they have sufficient demographic diversity for relevant perspectives to be represented in decision making.
• The Bubble Bound are most likely to overlook contributions from individuals with a less dominant status. 36% of Bubble Bound organisations regularly capture or act on ideas of staff at all levels compared to 73% of Mindful Movers.
• Mindful Movers’ emphasis on empowering employees extends to marginalised groups. They are the most likely segment to have structural mechanisms in place to reduce the social distance of these groups to the boardroom. Over half have a dedicated D&I function, two-thirds have employee networks and one third have employee network sponsors sitting on either their board or executive committee. 82% of this segment already had employee wellbeing on their agenda prior to COVID, compared to just 48% of the Bubble Bound.
• Board assessment has a key role to play in helping boards to challenge the status quo. Three-quarters of the Bubble Bound report that board members are not externally assessed with sufficient frequency or depth. Two-fifths say that giving or receiving feedback is a rare occurrence. By contrast 73% of Mindful Movers are externally assessed with sufficient frequency or depth.

Justine Lutterodt, Managing Director at Centre for Synchronous Leadership and author of the report says:

“There is a difference between strategic diversity and compulsive homogeneity. Too often we attempt to make progress on the former, which is about optimising the mix of expertise and lived experience, without first tackling the latter. This report demonstrates the importance of establishing a healthy flow of power – by addressing barriers to board refreshment, creating effective mechanisms for accountability, and consciously cultivating a pipeline – if we are serious about genuinely moving the dial.

“Compulsive homogeneity has become even more of a business risk in the current environment, where the success of boards and executive committees is increasingly determined by their skill of leading in the midst of difference. Businesses that are only sensitive to the needs of those who have traditionally held positions of power will lose their legitimacy to lead a broader set of stakeholders and find themselves ill-equipped to stay on purpose in an increasingly complex and polarised world.”

Peter Swabey, Policy and Research Director at the Institute concludes:

“Issues with boardroom diversity have been clear for some time. Research that we carried out with the London Business School Leadership Institute and Elisabeth Marx Associates in 2019 showed that British boardrooms have an over-reliance on Oxbridge and Harvard graduates and those candidates with a background in finance. We have also been stressing issues with the board pipeline in the FTSE 350 Boardroom Bellwether that we run in association with the Financial Times for years. Failure to reassess the status quo or refresh the board has a negative impact on good governance. Unless boards show a genuine willingness to capture the diversity of the society in which their organisations operate, they will continue to miss the opportunities that having greater insight and a wider mindset can offer.”

The research is the final instalment in a three-part series looking at how exclusion occurs in a boardroom setting. This report into board composition follows part one, which covers the boardroom agenda and part two, which considers how decisions in the boardroom are made and the types of conversations that are or are not occurring as part of group dynamics.

www.cgi.org.uk/mindful_exclusion