Kathryn Beck, Partner at SBM Legal and President of the New Zealand Law Society, discusses the importance of diversity on boards and why it’s good for business. A frequent criticism is that diversity undermines merit-based appointment systems, which is not correct and, frankly, makes a lot of assumptions about “merit”, she writes.
Kathryn will present on this topic at the Directors and Officers: Obligations, Duties and Good Governance Conference on Thursday, 21 March in Auckland.
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Diversity is not just about gender. And it’s not just about gender and ethnicity. Those are just two types of demographic diversity. In its broadest sense, diversity is about so much more, such as experiential and cognitive diversity[1] – in other words, our affinities, our abilities, our life experiences, our backgrounds, our approaches to solving problems. Of course, gender and ethnicity are important, and we do need to start somewhere. But embracing diversity in all its forms will truly unleash the benefits of diversity on boards.
It is a continual surprise to me that not everyone gets that. So, while some might read this with impatience, yes, apparently we do have to keep talking about the business case. While the focus was on demographic diversity, research by McKinsey found that the long-term financial success of firms is enhanced when boards better reflect their customers and the communities that they serve and they are not alone. Other reputable agencies such as Catalyst have also found that boards with greater diversity perform better.
A frequent argument against a focus on diversity is that it undermines merit-based appointment systems. That is not correct and, frankly, makes a lot of assumptions about “merit”. We need to think broadly about about our boards need, where are the gaps, not just in skills but in experience in its wider sense?
We need to take a thoughtful and open-minded approach, and be willing to respectfully challenge unconscious bias. If we do this, we can move towards a truly meritocratic society where everyone has an equal chance to succeed based on their individual merits and efforts, regardless of gender, ethnicity or any of the other types of diversity.
So in a practical sense, how can boards achieve better diversity? The Institute of Directors has identified five key steps for getting on board with diversity:
1. Create an inclusive culture – take active steps to make a diverse mix of people work; an effective board champions debate, thoughtful challenge and dissent
2. Recognise and address unconscious bias – increase objectivity by reducing biased decision-making
3. Review board composition – get the right mix of people – does your board reflect the organisation or community you serve?
4. Identify and appoint diverse talent – cast a wide net to find the best people, avoid the traditional route of ‘who do we know’ or shoulder tapping
5. Set targets and measure progress – what gets measured, gets done; go beyond compliance and measure what matters.
Just focusing on board diversity isn’t enough. You won’t get the benefits of diversity without inclusion – ensuring that diverse viewpoints and approaches are actively welcomed at the board table is key. Enabling multiple perspectives lets creativity flow and prevents groupthink. In this rapidly changing economic environment, having a diverse board that can think on its feet and tackle the same issues from new and different angles is great for business.
Kathryn Beck is a partner at SBM Legal and President of the New Zealand Law Society. She has a BCom (Labour Relations) and LLB from the University of Auckland and has over twenty years of practical legal experience. Kathryn was previously a partner at Haigh Lyon, a firm with a strong tradition in employment law. Kathryn led the employment law team and was also Head of Litigation. Having acted for both major employers and also leading unions, Kathryn is able to bring a unique insight and objectivity to the issues confronting our clients. She has acted in many leading cases and is a key adviser and facilitator in a number of ongoing, high level union-employer relationships. In addition to employment law, Kathryn’s practice area has developed to include health and education law. Her expertise is acknowledged by prestigious international legal publications Who’s Who Legal, Chambers Asia Pacific and Asia Pacific Legal 500. Kathryn is also experienced in alternative dispute resolution and acts as a mediator, facilitator and has conducted independent investigations for several large companies, charitable institutions, Trust Boards and a government department. She has also acted as Chairperson and member of disciplinary committees in matters of student discipline for a large tertiary institution. Kathryn has also had a leading role in the evolving legal framework – currently as President of the New Zealand Law Society and previously as a Vice President of NZLS, a Convener of the NZLS Employment Law Committee, a submitter for the Law Society to Select Committees on legislative change, educational road shows for the Law Society, and as a regular invited speaker at ADLS, NZLS and private conferences. Contact Kathryn at kathryn@sbmlegal.co.nz or connect via LinkedIn
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