Colette Sexton, news correspondent at The Sunday Business Post, on why your leadership team should not mirror your views.
Having a diverse board is good for business, for both profits and perceptions. But unfortunately, many leaders of Irish businesses, either consciously or unconsciously, still surround themselves with like-minded echo chambers.
The culture of “it’s not what you know, it’s who you know” is rife in the business world here. As a result, half of all male directors were recruited after being directly approached by a member of the board; compared to just 19 per cent of women, according to research carried out by the Institute of Directors in Ireland last year. Over two-thirds (67 per cent) knew three or more people on the board of the company they joined.
This situation is not improving, and in some respects it actually appears to be getting worse. More female respondents (22 per cent) in 2017 said they believed that they are losing out on board appointments because of their gender, compared to 16 per cent in 2015 saying gender had been a factor in their not being appointed to a board.
An overwhelming majority of respondents (81 per cent) agreed that board diversity leads to enhanced board effectiveness and enhanced company performance, but it appears these thoughts are not being followed by action. Some 65 per cent of directors said they had less than 30 per cent female representation on boards and 28 per cent reported less than 10 per cent female membership.
This lack of female representation is bad for business, bad for women and bad for men. Companies that have cultures that help women advance, including having senior female leaders, also benefit men, according to research released by Accenture this week.
Accenture’s Getting To Equal study found that in organisations with a culture of equality, women are four times more likely to advance in their careers and men are twice as likely, while 95 per cent of people are satisfied with their career path. As well as that, Irish women are far more likely to be on the fast track in organisations where there is at least one female senior leader (24 per cent compared to 3 per cent where there is no female senior leader).
There are some organisations and leaders out there who are actively trying to improve diversity in Irish businesses. One of these is the 30% Club Ireland, which was set up here three years ago and aims to achieve better gender balance at all levels in leading Irish businesses. It is a collaborative business-led effort with a target of securing 30% female representation in senior management by 2020. The 30% Club believes that gender balance in leadership contributes to better governance and increased corporate performance for both companies and their shareholders.
It is not alone in that belief. Dozens of research studies from reputable sources including Grant Thornton, Credit Suisse, KPMG, Citigroup, have proven that diversity is good for business. Diversity, in terms of gender, socio-economic backgrounds and minorities, leads to healthy debate which means better decisions are made. It is reflective of the real world and can improve the reputation and brand perception. And of course, it increases profits.
It is International Women’s Day – what better opportunity to take a look at your leadership team. Does it feel like you're looking in the mirror?