Improving diversity of boardrooms through focus and best practice

24 January 2017 Consultancy.uk

A more diverse board, aside from meeting key social goals, creates a host of benefits to companies, from a better representation of key stakeholder groups to improved financial returns. In a new study from McKinsey & Company, the consultancy firm explores what the top 25 performers in terms of board representation have done to boost their performance.

Board diversity remains a thorny issue for companies. Competing interests, implicit biases, tradition and lack of available candidates, continues to confound efforts to improve the situation for women and people of more diverse backgrounds more widely.

In a new article from McKinsey & Company, titled ‘How to Accelerate Gender Diversity on Boards’ the strategy consultancy firm explores what 25 of the top performers, listed on the S&P 500, are doing right when it comes to improving the lot of women to their boards.

The benefits of a more diverse board are multifaceted. McKinsey notes a number of key benefits, including a reduction in structural inequality by increasing the number of role models at the top of business, better representing customer bases, and improving the decision quality of boards through a more diverse cognitive background – reducing group think barriers. Research from Grant Thornton also shows that financial returns from improved female diversity for the S&P 500 could add up to $567 billion to companies’ revenues.

Improving diversity on top 25 boards

According to the firm’s analysis of the wider US, women currently hold around 19% of board positions, compared to more than 30% in European countries such as France, Norway, and Sweden – where there are clear legislative targets.

The consultancy firm also sought to identify in how far the S&P 500 top performers in terms of board diversity have fared since 2005. The analysis shows that, as it stands, women occupy more than 33% of board seats among the top 50 companies – considerably outperforming the average.

For the top three performers, Accenture, Alaska Airlines and Alliant Energy, in the top 25, the number of women on boards in 2016 surpassed 50%, while across all boards in the top 25 female representation was up 24 percentage points since 2005.

Improving diversity conditions

To better understand what the top 25 companies are doing right when it comes to boosting their level of female board representation, the consultancy firm ran interviews with CEOs and board chairs from a number of the companies, as well as some European businesses that have made similar progress. The research, which focused on identifying best practices, challenges faced and benefits from changes, found that top performers paid particular attention to three key areas: changing their mind-set, expanding their criteria, and maintaining an active pipeline.

One of the key moves towards increased diversity is executive leadership uptake – in terms of purpose and intention – as well as urgency in transforming wider business practices to focus strategically on increased inclusion. Steps taken including setting targets for the number of women on boards, as well as ensuring candidate lists are inherently more diverse.

In addition, successful firms in the area of board diversity, opened up to a broader pool of potential candidates – taking risks with the introduction of non-C-suite candidates, as well as not limiting executive searches to candidates with prior board experience – by, for instance, tapping expertise from non-business sectors, such as academia, law, and civil society. Key is to set non-negotiable criteria around necessary skills, and then expanding softer criteria to encompass more women, or diverse, candidates.

One of the most important tools noted by the consulting firm is an improvement to the number of diverse professionals in the pipeline. This may mean improving the wider promotion pipeline through policies that positively affect the retention of people of diverse backgrounds, changing policies related to promotion and hiring as well as creating leadership programme focused on different groups with diverse backgrounds. When looking for outside board members, cultivating potential candidates over a number of years may be key if the candidate is not immediately available, as well as focusing more on sending out feelers for potential candidates that bear fruit in future years.

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Why leaders must balance technical expertise with soft skills

17 April 2019 Consultancy.uk

Soft skills matter in the workplace just as much as technical expertise, writes Samantha Caine, Managing Director of Business Linked Teams.

For too long technical expertise has been seen as the marker of a strong candidate for development into a sales or leadership position. Sales and leadership candidates are tasked with demonstrating a diverse and wide-ranging set of technical skills, yet their aptitude in these technical skills or ‘hard skills’ cannot signify great leadership potential. This is why a healthy balance of soft skills and technical ability is required. 

So what exactly is the difference between technical skills and soft skills? In engineering, it’s crucial to demonstrate knowledge of physics as well as a strong grasp on mathematical equations. Yet, in any industry, it’s important for leaders to be able to interact with other people effectively with soft skills like communication, empathy and adaptability. 

Business Linked Team’s 2018 study into internal leadership development revealed that 69% of large organisations are prioritising the identification and development of future leaders from within the workforce. As more and more organisations begin to invest in sales or leadership development within their existing workforces, more focus needs to be placed on ensuring the right soft skills are in place. 

With those soft skills in place throughout the workforce, the business will benefit from a wider pool of potential leaders developing under their noses, and it should be the same where sales candidates are concerned. 

It’s not just about easier access to ideal candidates for these positions without the rigmarole of recruiting from outside of the organisation. The leadership development study also found that 89% of HR decision makers say succession planning has become a top priority. Those currently serving in leadership positions can’t lead forever and the same goes for those generating sales for the business.

Why leaders must balance technical expertise with soft skills

From people leaving for new opportunities or retirement, to people simply stepping aside to focus on other areas of the business, successful leaders and salespeople require experienced and capable successors that will be ready and able to confidently step into their shoes and pick up the mantle without the business experiencing any lapse in performance.

Soft skills make stronger candidates

When it comes to the soft skills required, a strong leader must be able to manage through clear communication and effective time management, coaching and goal setting. They must be able to demonstrate empathy and empower their teams to be successful, productive and fully engaged. And beyond simply giving direction, they must also be able to take direction from those above them and cascade the business strategy down through their teams. 

A strong sales candidate must possess the ability to communicate value to the customer, negotiate well and protect margin or the ability to increase the scope of a particular sales opportunity. 

With the relevant soft skills in place, the business will benefit from increased productivity, greater agility against changing market conditions and greater transparency. In turn, this will provide visibility on issues and inefficiencies while removing opportunity for miscommunication. All of this can transform the culture of a department, improving employee satisfaction and reducing staff turnover. 

Ultimately, developing leadership or sales candidates will require the business to strike the right balance between technical skills and soft skills, and this requires an effective and sustained learning journey.

A balanced learning journey

Facilitating and supporting the development of leadership and sales is best achieved by establishing training groups. By cultivating training groups, businesses are creating talent pools that will inspire and support each other on the learning journey. However, personal goals and learning objectives must be defined for each individual based on their own existing skillsets and the skills that each individual needs to develop. 

With the emergence of e-learning, businesses recognise the value of online-based learning activities, yet many make the mistake of opting for one-size-fits-all solutions which are solely focused on self-study. A development solution will only deliver true return on investment if it combines e-learning activities with group learning activities that provide opportunity for shared experiences and support.

A blended learning solution that combines self-study and face-to-face group learning activities will aid strong development of the talent pool through shared experiences. Through these shared experiences, those undergoing the training will organically develop a support network that supports the development of the group as much as it supports the development of each individual. 

The blended learning approach is supported by one of the seven principles of human learning that socially supported interactions aid the individual development of expertise, metacognitive skills, and formation of the learner’s sense of self. The strongest opportunities for development can be unlocked by blending workshops with online activities such as virtual sessions, peer coaching, self-study, online games and business simulations. But it’s crucial to provide a blend of one-to-one and group sessions too.

Beyond delivering a better learning outcome for the employee, the blended learning approach allows organisations to adapt their training quickly and easily to shifting business demands in an ever-changing landscape.