Global Ethics Summit day two session: The board factor
With the Global Ethics Summit winding down in New York, one of the event’s final sessions focused on board diversity.
“There’s become a compelling case for board diversity,” Veta Richardson, president and CEO, Association of Corporate Counsel, noted. “Particularly as research has showed that more diverse boards outperform their global peers.”
She then noted the passage of a law in Germany yesterday that calls for businesses to alter board composition to be 30 percent women.
Georgia Nelson, board member, CH2M Hill Companies Ltd., remarked that board diversity has a very practical function. “You have a robust group of people around the room, you have a robust decision-making,” she added. Nelson took this thought further, noting that diverse boards can foster innovation.
“While I like having people [on the board] that think like I do…that’s not an effective way of getting things done,” Simon M. Lorne, board member, Teledyne Technologies, Inc., remarked to laughter.
Melvin T. Stith, board member with AFLAC, noted that the board also should act as as the face of an organization, introducing young associates to senior leaders as mentors and inspiring opportunity within the organization.
“Your life experience brought you to this place,” he noted. “The practice is [to be] an ally.”
“When people look at your annual report, what do you want people to see as representative of your organization?” Lorne added.
Nelson noted that global businesses may encounter cultures where women, for example, may not be accepted in business roles. In her work, she has travelled to other countries to speak with business leaders and workers to offer reassurance that diversity in business leadership is not only possible, but practical. The challenge, the panelists shared, is that while incorporating diversity is possible, it takes time to “right the ship.”
Richardson offered that organizations should begin by “simply asking the right questions and casting the talent net widely.” The panelists roundly agreed and challenged that this also means organizations must be clear when working with executive search firms that diversity is a crucial component. Stith went further, adding that diversity is also crucial in business management and leadership, as well.
“The biggest barrier to diversity is that boards are comfortable with themselves, and the fact that vacancies are hard to come by,” Lorne said.
“You need some turn on a board for people to get those seats,” Stith replied, adding that board policies, such as age-limit requirements, are often the best mechanism.
The discussion returned to the new law in Germany, and the rising tide in Europe to enact statutory quotas. But while Germany’s current law and many similar proposals are primarily geared toward improving gender diversity on boards, the panelists agreed that a “wait and see” approach was best to gauge the effectiveness of these policies.