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Inclusion 4.0 – Is your company’s Board of Directors on the right path?

By January 16, 2019 No Comments

There has been much talk and articles written about the workforce of the future. How to attract innovative thinkers, creative problem solvers, building teams that will not only disrupt the way the organization performs but also bring about a new wave of operational excellence. The business case for the inclusion of women on company boards and Exco teams is that Women, in many sectors, are the main customers and represent 50 % of the knowledge base in society. Mono-cultural, regressive companies act as a barrier to future inclusion because they do not represent their employees, business partners or customers.

 

Shareholder activism has seen an increase in the development of best practices that have emphasized the demand for independent board members. Customers and employees have joined this activist trend, demanding greater accountability on the composition and behavior of company boards. A recent example of this being the CEO of Imperial Holdings who was alleged to have made sexist and racial comments about a female employee; resigning his position due to the matter being widely publicized and attracting public debate.

 

A diverse and inclusive culture enables corporations to attract strong talent across geographies, strategies and disciplines. Perhaps it is in how we view inclusivity that is the catalyst to how business can define its gender policies. Focus has largely been in entry-level recruitment however at leadership level, inclusion needs to be representative of voice, gender, age, sexual orientation, religion, generation, socio-economic status and education. Ever since the publication of the widely cited McKinsey report on Why Diversity Matters (2015), the consulting firm reports that of the 346 companies cited in that research, there has been a marginal increase in gender representation on the executive teams with an average increase of 2 percentage points to 14% and cultural and ethnic diversity by 1 percentage point, to 13%. The diversity and inclusion (D&I) transformation seems to be going at a snail’s pace.

 

Studies continue to show that quotas have no discernable effect on women at lower levels of the corporate hierarchy. Companies struggle to promote more women in order to fill the upper echelons faster to shrink the wage gap. Fortune 500 corporations are increasingly appointing Chief Diversity and Inclusion Officers, to enable company-wide transformation. These officers have executive responsibility and authority to effectively drive the (D&I) policy as set out by the Board of Directors. It remains to be seen whether this portfolio has the kind of impact envisaged by leadership or serves as a “Golden Skirt”. A term coined to describe the instances where a few women get multiple board appointments, usually for their perceived political clout.

 

In South Africa and abroad, companies have been legislated to have a certain percentage of female board members. Over a year ago, the Johannesburg Stock Exchange (JSE) required that as of January 2017, all companies listed on the exchange have a board-level gender policy. It further required companies to report on such a policy to their stakeholders. Research conducted by the 30 % Club Southern Africa chapter, reveals that out of 265 companies analyzed, 49 companies did not make mention of the gender policy at board level in their 2017 Annual Report. The study found that 83 opportunities exist for women to be appointed to the boards of those specific companies. Doing so would result in a 36% increase of women on the board of those companies researched.

 

The Norwegian Government was the one of the first to lead the way, in 2008, with an act stipulating a minimum of 40 percent representation of both sexes on the Boards of public companies (PLCs). It has been 10 years since this legislation has been in effect and interesting trends have emerged. Women are generally getting independent director positions and the traditional old boys’ network on corporate boards are replaced by “Golden Skirts” and “Gold sacks”. “Gold sacks” are men who sit on multiple boards and are either themselves investors or investor representatives.

 

When it comes to measuring the success of diversity and inclusion initiatives, the metric used seems to be outdated with a focus solely on representation, which ignores a combination of traits and ostracize white men. Inclusion cannot take place without diversity; however, in order to fully leverage the value everyone brings to the team, inclusion must be the priority. It does not help to have a diverse team however certain members feel entitled to decision making, strategic direction and the women on the team are sandbagged. Behaviour of executive teams must be such that it is representative of level of power and opinion, that is currently in society.

 

Digitization is the driver for the need in new mind-sets, skill sets and tool sets. Data and analytics can be leveraged to transform how an organization designs solutions for diverse representation. By using actionable insights that will enable a breakthrough in inclusive decision making: tapping into the collective expertise of your organization in finding new solutions and creating new ideas for improving D&I policy.

 

As mentioned in an article posted by Ethical Boardroom, institutional investors believe that by 2022, the ethnic composition of company boards will be an important consideration when determining investment strategy. The diversity of the company board will be a key factor in determining an investment case.

 

It is companies that are making active strides in their diversity and inclusion policies and implementation at Board and EXCO level that will be able to future-proof against governance or brand backlash. It is a choice many companies are yet to make, but a choice that will be a key differentiator of Future companies.

 

 

Naomi Molefe is the Senior Manager in the Digital Practice at Evolve South Africa.

 

 

Naomi Molefe

Naomi Molefe

Experienced Senior Practice Manager with a demonstrated history of working in the Higher Education industry. Skilled in Graduate Recruitment, Management, Succession Planning, Social Media, and Training. Strong arts and design professional with a Master of Science (M.Sc.) focused in Strategic Management and Planning from UCD Michael Smurfit Graduate Business School. My Passion lies in Research and Data and how we can use it to bring forth change and see the things we may have missed in the past. Human Behaviour is at the core of why I do what I do.

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