How to improve D&I on board and leadership level?

The GUBERNA National Member Forum on June 6th will be focusing on the ‘S’ of ESG. At GUBERNA we have evidently dedicated considerable focus to Governance, and since several years, we help companies with the Environmental component, but we spent less attention to the Social aspect. Nevertheless, the S forms the cornerstone of sustainable investing, assessing a company’s relationships with its employees, suppliers, customers and the communities in which it operates. More concrete, the S encompasses a company’s performance in terms of labor practices, community and stakeholder engagement, supply chain management, and diversity and inclusion. We want to draw attention to the latter in the lead-up to our event. 

We could state that there is an academic consensus on the fact that diversity is a key ingredient for better quality of governance decision-making. Furthermore, a large body of academic literature finds a positive relation between increasing inclusivity on Boards and Executive Committees and organizational effectiveness. We observe that inclusive and diverse boards and management teams perform better. Collaboration, innovation, improved decision-making, and better stakeholder engagement are all fostered by a diverse composition.  

We must also keep in mind that diversity is important, but not sufficient. To enhance team performance, it often comes down to inclusion. Nonetheless, in Belgian practice we see that diversity and inclusive leadership are maybe still undervalued in the Boardroom. Some organisations definitely have a ‘diversity problem’. 

This brings us to Wout Van Impe, partner & Team Director MU Belgium, for a conversation about both technical and strategic issues on how to enhance the diversity and inclusivity of board and leadership teams. 

Maybe one of the best ways to solve that problem is another way of recruiting?  

Yes, but so far the Executive Search profession and their clients as a whole have only addressed the tip of this particular iceberg. That’s why we at MU took a deep dive in this matter to help to solve the diversity problem.  

Increasing success in the workplace, as gauged by both performance metrics and length of employment, hinges on the adoption of a methodical, evidence-based, and ethically sound decision-making process by leaders. By ensuring that selection decisions are grounded in a thorough alignment of an individual's competencies with the demands of the role and the broader organizational objectives, recruitment processes naturally encompass a diverse pool of qualified candidates. Embracing inclusivity in both recruitment practices and leadership fosters an environment where individual distinctions contribute to organizational excellence and yield heightened diversity, ultimately bolstering overall outcomes.

 

“Inclusive recruitment to Boards and Executive Committees is an essential ingredient to solving the Diversity Problem."

1

What do you mean exactly by “embracing inclusivity in recruitment practices”?  

“Inclusive Recruitment” refers to the measures, processes and practices that ensure that relevant candidates are included in the recruitment without any bias or discrimination. This should result in maximising the diversity of successful appointments. 

“Inclusive recruitment” thus requires the systematic inclusion of candidates from within and outside existing connections, solely based on criteria relevant for job performance.  

And what about inclusive leadership? 

Inclusive leadership refers to the practice of building an environment where everyone feels welcome and valued. It refers to the ability to manage and lead a heterogeneous group of people efficiently, where members are free to contribute fully while respecting their uniqueness in an empathetic, bias-free way. They should all have their say at the table.  

Inclusive leadership is linked to compassion, kindness and curiosity, and valuing diversity and different opinions. But this is a never-ending journey, not a destination. 

 

“Inclusive recruitment and inclusive leadership solve the diversity problem and lead to optimised results from Boards, teams and organisations."

 

What does the intensifying call for greater diversity on board and leadership teams mean for Executive Search professionals and Selection Committees?   

They surely need to increase their focus on inclusive recruitment methodologies to secure more diverse plausible candidates. First of all they must also diversify their networks and their capabilities to meet this demand. 

Mind you that their conventional leadership and board selection method has in large part caused the ‘diversity’ problem. Because search professionals and board members relied too much on their personal network and their ‘rolodex’ with all the CVs of their known contacts.  

When the hiring process is not inclusive, and when ineffective steps are taken to manage the risks associated with cognitive bias, stereotyping and generic leadership beliefs, it can be no surprise that their selection decisions continue to reflect several errors. These systemic and random errors contribute the most to ‘the diversity in leadership problem’. 

Does the leadership and board selection profession need to change their approach?  

Yes, they need to react. Analyses now shine a very uncomfortable light on the impact of their outdated ways of recruiting. An abundance of data indicates that capable diverse and plausible candidates continue to be systematically excluded from the boardroom and from executive leadership teams. The failure to include individual differences in teams leads to lost opportunities to collaborate and worsens the decision making process. 

 

“Prioritizing inclusion means making sure everyone in the organization feels welcome and valued, so they can freely share their ideas without facing unnecessary obstacles. 

How can we ensure the practice of “inclusive recruitment”?  

Leaders should promote diversity in recruitment by modifying the inclusion criteria, recognizing biases, and ensuring equal opportunities for the best candidates.  

But here it's crucial to distinguish promoting diversity from working with quota. Quota set a focus on representation, which may stereotype groups, and it may also lead to stigmatization and tokenism of marginalized groups. 

Recruitment and selection should thus never be based on diversity or representativeness solely, rather on inclusion of candidates with merits relevant to success in the target role.  

With “Merits relevant to success in the target role” you refer to specific criteria?  

When hiring the right candidate, we often find ourselves overwhelmed by a plethora of possible criteria. The sheer volume of considerations can cloud our judgment. So it is imperative to meticulously define the criteria that determine success linked to the context and expected results and streamline them to their core essentials.  

In the initial stages of selection, it is crucial to disregard any extraneous factors and concentrate solely on the predetermined criteria that are proven to lead to success. This focused approach guarantees a more inclusive pool of candidates, as it eliminates the influence of subjective and irrelevant considerations. It ensures a fair and effective selection process that maximizes outcomes from the outset. 

 

How would you describe your search method towards inclusive excellence for Boards and leadership teams? And does it have a scientific base?  

In the pursuit of fair and unbiased decision-making, organizations are increasingly turning to a method known as ‘stepwise selection’. Far more than just a practical approach, stepwise selection is firmly grounded in scientific research and is proving to be a powerful tool in mitigating biases, stereotypes, and subjectivity in decision-making processes. 

At its core, stepwise selection involves systematically narrowing down candidates or options based on objective criteria rather than subjective opinions or personal biases. This method prioritizes relevant factors that are directly related to the decision at hand, thereby fostering a more inclusive, fact-based selection process. 

‘Stepwise’? So what are the steps involved?  

I would discern these four: 

1. Focus on the essential criteria and success predictors 

Instead of drowning in an ocean of factors, we focus on the essential criteria that matter most for a function or mandate. What are the non-negotiables? And what guarantees success? By focusing on the inclusion criteria when defining the candidate search strategy diverse candidates will be included.  

By the way, inclusion criteria should never be based on diversity (gender, age, ethnicity) solely, or where a candidate was educated or if they are part of any network. Stepwise selection is about promoting an inclusive environment from the start.  

2. Use the predefined lens 

Imagine a pair of glasses with a single predefined lens. As we sift through candidates, we only must use this lens. It filters out distractions, biases, and irrelevant noise. Only the predefined criteria matter. Subjective judgments take a back seat. This deliberate approach ensures that everyone with the necessary competences — regardless of background, network or circumstance —has a fair shot. 

3. Make an inclusive list 

By adhering strictly to our predefined criteria, we then build an inclusive list, a diverse pool of candidates, each evaluated using the same criteria with no hidden agendas, or hidden biases.  

4. Do some gradual refinement 

Only once we have shortlisted the candidates, we can delve deeper. We enter the stage of gradual refinement for the nuances and the finer details. Only now additional criteria come into play to assess the initial selection. 

We learnt that research indicates that diversity is not enough to improve results and that real inclusion is the goal. Because inclusion will lead to valuable diversity and valuable diversity will lead to outperformance. Can you give us a final comment?  

Yes, certainly.  The first step is inclusive recruitment of leaders, board members and other employees.  

The second step is inclusive leadership of those diverse people recruited. 

Both inclusive recruitment and inclusive leadership are required to ensure a diverse AND high performing Board or executive committees.  

My three take aways would be: 

 

  • Do not select on demographics but on the right, transparent, limited, and relevant list of inclusive criteria, using predictive analysis and not stereotyping.   

  • Use transparent, factful criteria based on expected results and use a fair process to assess the needed competences.  

  • Hold your focus on what needs to be achieved and ask WHY some criteria are important or not in this regard.  For instance: Is this criterium a success predictor for short term and long-term results? 

Thank you for your valuable insights!