Creating a culture of belonging for every board member

In today's rapidly evolving business landscape, it is more imperative than ever that companies have diverse board representation. Companies with diverse boards perform better over the long run thanks to the diversity of thought that comes from the various backgrounds, ethnicities, races and genders. Having access to such diversity on boards means that boards are better equipped to remain agile and make better decisions in response to emerging risks, steering away from group think.

According to McKinsey and Company, companies with more gender diverse boards are 27 percent more likely to financially outperform those without gender diverse boards. However, achieving diversity is just the starting point; realising the full potential of a diverse board comes from creating an inclusive environment where everyone feels empowered to contribute. Inclusion ensures that all voices are heard and valued, allowing diverse perspectives to drive innovation and effective decision-making. 

Fostering an inclusive environment on boards

Diligent's latest Board Diversity Gaps report found that women hold only 30 percent of board seats in the ASX and 90 percent of board positions are held by executives from Anglo-Saxon countries such as the U.K., Australia, the U.S. It is clearly still a challenge for women or people of colour to secure a board position in Australia, but even when they do, they are still speaking to a room of largely white, male colleagues. Boards that fail to foster a culture of inclusivity can create an environment where some individuals, especially minorised and racialised ones, feel prevented from expressing themselves freely due to fear of judgment.  

To promote equal participation and ensure that all board members have a fair opportunity to contribute, boards should consider delegating leadership and responsibilities across various committees to different individuals. By having different individuals lead different committees, it creates more opportunities to ensure that all board members feel empowered to share diverse perspectives and expertise and have equal opportunity to influence decisions.

The board chairperson or lead director can play a critical role in fostering an inclusive and collaborative board environment. By intentionally and proactively inviting board members to contribute and weigh in on various topics, they can significantly enhance the board's effectiveness and ensure that diverse perspectives are heard and considered. These micro-affirmations help to build a positive and inclusive board culture.

DEI is not a set-and-forget activity

Since Diversity, Equity, and Inclusion (DEI) gained prominence five years ago, its importance on board agendas has waned. In part, this can be attributed to recent changes in laws and regulations around climate disclosures and cyber as well as a tumultuous market and economy, which has increased the priority level around those risks.  

However, instead of allowing DEI to slide off the board agenda, boards should look to integrate DEI into the wider ESG strategy. By doing so, boards can also enhance their reputation and appeal to a broader range of stakeholders. Investors, customers, and employees increasingly value companies that demonstrate a genuine commitment to diversity and inclusion. 

Transparency is crucial in this process. Boards must openly communicate their DEI goals, strategies, and progress to employees, customers, and other stakeholders. This transparency not only fosters trust and demonstrates the organisation's commitment to genuine and sustained DEI efforts, but it also attracts and retains top talent who are aligned with these values. By being accountable and providing regular updates, boards can ensure that DEI remains a visible and integral part of the company's culture and operations, thereby reinforcing its importance and driving positive outcomes across the organisation.

Enhancing boardroom influence
While the onus is on organisations to attract and retain diversity on their boards and ensure a culture of inclusion, there are some strategies that women and people of colour can adopt that will significantly enhance their influence on boards. New board members or seasoned veterans who are looking to expand their presence, visibility and influence should select a few topics to own in the boardroom. Instead of trying to speak about everything on the agenda, they should pick one or two topics they can add value to and guide the discussion on.

Board members can also take proactive steps to connect with each other outside of formal board meetings, fostering stronger relationships and increasing overall engagement and coordination within the board. These informal interactions can pave the way for more collaborative and productive board meetings, as members are more likely to feel comfortable sharing their ideas and working together.  

Additionally, proactively scheduling executive sessions that include only board members can provide a safe space for open dialogue, allowing members to address sensitive issues, build trust, and strengthen their likelihood to influence decision.

By prioritising these connections and dedicated discussions, boards can cultivate a more cohesive and effective governance team. 

Above all else, women and people of colour on boards should remain confident that their leadership skills and subject matter expertise are critically important to boardroom discussions and decisions and should not shy away from speaking up. 

Ultimately, the commitment to DEI needs to come from the organisations and women and people of colour on boards should remain confident that their leadership skills and subject matter expertise are critically important to boardroom discussions and decisions, and should not shy away from speaking up. When every board member on a diverse board feels empowered, it not only strengthens board dynamics but also enhances the organisation's reputation and appeal to a wider range of stakeholders. By keeping DEI at the forefront of their agendas, boards can build a more inclusive and innovative future, benefiting both the organisation and the broader community.