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The impact of diversity on dynamics and performance - Coggle Diagram
The impact of diversity on dynamics and performance
The common business case for diversity
Diversity broadly affects six dimensions
A diverse organisation has a reduction in the cost of integrating new workers who, due to globalisation, are themselves taken more increasingly from a diverse population
A diverse leadership group often has the benefit of increasing the reputation of its company which leads to that company becoming more of an attractive proposition for talented individuals to join. This enables organisations perceived as being diverse to recruit the best talent, particuarly in the type of diverse talent for which they have a reputtion
Broader diversity enables a better customer strategy due to the increased representation of that customer group within leadership conversations and decision making
A common benefit of diversity within an organisation or team is that the team will become innovative and creative due to multiple perspectives being considered. This is an increasingly key team competency, especially considering the advances in digital technology
A diverse group membership will increase the impact on problem-solving abilities and enhance decision-making.
A final benefit is the ability of a board to be seen as flexible, agile and resilient. That is, its ability to 'horizon scan' and quickly pivot to adapt to external environmental conditions is seen to be enhanced through increasing its diversity
Gender diversity
The Davis Reports
The Davis Reports commission by the UK government to look at the issue of women on FTSE 350 boards
Initiated in 2010, by 2015 the representation of women on boards had increased to 32.1% hitting its original target of at least 25%
While 100% of FTSE 100 companies have at least one female director, only 48% have at least 33% female board compositions there is still some way to go if the gender balance on boards is to reflect the gender balance in the population
It should also be noted that of the total number of female board-level appointments, 75% are NED roles rather than executives within a day-to-day influence within the organisation
A McKinsey study of 366 companies from the US, UK and Brazil revealed a significant correlation between gender diversity and financial performance. Those companies that were in the first quartile of gender diversity outperformed those in the bottom quartile by 15%
Gender diversity enables organisations to access the widest talent pool as in Europe and the US, women account for approximately six out of every 10 university graduates
The most recent research illuminating this comes from researchers who have looked at the concept of 'collective intelligence', researchers looked for a single component to measure team perofrmance. It was found that teams with higher collective intelligence, that is, those that outperformed others consistently over time had 3 key components
They had more women, the more women they had the higher performing they were
They had higher average individual empathy scores - women are more likely to have empathy for others' views and therefore enhance the quality of dialogue in the boardomroom
Teams that were higher performing were those who were more likely to have high levels of turn-taking
Race and ethnic diversity
The Parker Review
Launched in 2016 had a goal for every FTSE 100 firm to have at least one BAME board director by 2021 and every FTSE 250 company by 2024
As of March 2020, only 9.8% of board members in the FTSE 100 were directors of colour
49 of the FTSE 100 companies had no directors of colour and only 7 have more than 10% of their board members with BAME origins
The key business benefits of ethnic diversity are very similar to those of gender diversity. The internal benefits are cited to be a more inclusive leadership and enhanced corporate culture whereas the external benefits include brand enhancement, attracting and retaining the best talent, and de-risking the supply chain
In terms of the specific relationship between ethnic diversity and performance, the McKinsey 'Diversity matters' report provides a headline figure that the first quartile of organisations that are ethnically diverse perform 35% better in terms of their financials compared to those in the fourth quartile
Age diversity
Recent research which took an evidence-based approach asked 'What is the evidence for generational or age differences in work-related outcomes?. Some of the conclusions were as follows
There are no difference in work ethics between Baby Boomers and Get X and Get Y
There are only small differences across generations regarding job attitudes
Evidence of generational differences in work values is at best mixed
The relationship between age and a large number of job attitudes is weak
Older workers contribute considerably to non-core performance domains i.e. other than task performance
Older workers are less motivated by training and development opportunities than their younger counterparts
Most health-related stereotypes about older workers are not supported by evidence
Older and more tenured employees tend to display higher coping strategies against stressors and lower performance declines
Country culture diversity
With the increased opportunities provided by globalisation and the greater movement of populations around the world, cultural diversity on boards is becoming a necessity for those boards who either have or aspire to have some form of an international stakeholder presence.
A variety of research has shown that highly culturally diverse teams suffer what is known as 'process losses' through task conflict and decreased social integration
What this means is that multicultural teams often tend to work less well because of differing opinions about how to get things done and differences in how comfortable cultural cliques can feel when working togehter
Culturally diverse teams show process gains through increased satisfaction and enhanced creativity - they perform better due to the high levels of innovation and increased enjoyment from the stimulus that their differences often bring
Other surface diversity
The latest version of the code also refers to the requirement for board membership to attend to diversity of social background
Some of the characteristics of social background include: disability; religion; socio-economic status; sexual orientation and neurodiversity
Deep diversity
The final aspect of diversity requiring consideration is that of 'cognitive and personal strengths' also referred to as 'cognitive diversity'
Learning styles
Honey and Mumford
categorisation of four different learning styles
Activists: people who learn best through experience
Reflectors: people who learn best through reflection
Theorists: people who learn best though theory
Pragmatists: people who learn best through hands on trial and error
When teams approach tasks, it is perhaps useful to have a good spread of these types of learning styles. it would also be important for all members to understand that there is a need for this spread
Personality types
Being aware of the personality types on a board may be incredibly helpful in understanding a board's communication preferences and also blind spots
Team role types
Belbin Team Roles
Plant
Creative problem solver
Often too preoccupied
Coordinator
Mature chair role
Can be seen as manipulative
Monitor-evaluator
Sober and strategic
Lacking drive to inspire
Implementor
Turns ideas into practical action
Inflexible and slow to respond
Completer-finisher
Highly conscientious
Inclined to worry and reluctant to delegate
Resource investigator
Extroverted networker
Often overoptimistic
Shaper
Challenging and driven
Can offend people's feelings
Team worker
Diplomatic and listening
Sometimes indecisive in the crunch
Specialist
Single minded and highly skilled
Often overly technical
It is proposed that a necessary requirement for boardroom effectiveness is that a board should have a balance of these nine roles