Recent WSJ Article About Diversity on Corporate Boards is Completely "Off Color"
In our opinion this article misses the mark and is somewhat disheartening and sets back diversity even more than the recent SEC rulings (see The SEC Announces Diversity in the Corporate Board Room, from 12/31/09). The recent Wall Street Journal Article “Why Diversity Can Backfire On Company Boards” WSJ.com - Why Diversity Can Backfire On Company Boards completely misses the mark of what makes boards most effective for the members, organization and its shareholders.
I have blogged about diversity many times and even though ABA is a minority owned firm and it would be easy to play that card it is a complete contradiction to ABA’s core principles that in order to achieve maximum board effectiveness you need “the right board members, on the right boards for the right STRATEGIC reasons”. The right strategic board members are not defined by race or gender.
This article is flawed from the start. We believe that diversity CAN BE good; however, diversity by itself is not a prerequisite to having a great corporate board, a great board experience or a great organization. This article states the complete opposite in the second paragraph: “By contrast, diversity leads to more innovation, more outside the box thinking and better governance”.
As a minority person that works with many boards I have not witnessed one particular race or one gender as better strategic thinkers, innovators or shareholder stewards. At ABA our experience shows that subject matter experts (SME’s) are best at being innovators in their areas of expertise. It would be hard for any board member to think strategically about how to move a company forward in an industry if they do not understand it. Strategic thinking is a leadership skill set that many will claim to possess, however, our experience is strategic thinking is not handed out like titles on business cards.
The authors further contradict themselves and make this point by stating, “Sounds great. And it is, in theory. Unfortunately, few boards that pursue diversity ever see the wished-for returns. Many report no significant change in their performance, while others bog down in conflict and gridlock.”
From this statement you could logically conclude they added the wrong subject matter experts and more than likely those boards or companies didn’t know what expertise they needed other than a common approach to filling a seat simply based on some diversity standard rather than qualifications and experience.
Where the article becomes a bit condescending to me was in its description of “Where Diversity Goes Awry”. The authors explain all of the potential issues with adding diverse candidates to an existing board culture. They talk about the other board members initial impressions, stereotyping, pigeonholing, cultural differences and communication styles. They state “Our research sheds light on some of the hurdles that diverse boards face, and on solutions for maximizing the benefits such boards offer.”
This commentary suggests that this is present in every board room that has diversity. They talk about this as if these are new issues to many minorities who have gotten to the level in their careers where they have had to many times overcome these issues in many other business and personal settings throughout their lives. This discussion is presented to be new. ABA works with many boards and board leaders and we are often asked to come in and evaluate current board members. In our evaluations we focus on the value the board member is bringing to the organization from their subject matter expertise. This is our clients and their shareholders primary concerns as well and racial or gender demographics play no part in our analysis or their expectations. The subject of diversity never comes up unless it is in the context of a part of the business strategy or overall go-to-market plans. Our evaluation process does not have a “box” to check for demographic profile nor do our clients require it. As a board member it is your primary responsibility to add value to the organization and its stakeholders. Taking a board position to check a box will not utilize you for your talents and expertise.
The authors then discuss how to avoid conflicts with diverse boards. We agree with many of these points however, not for the same reasons. An example of this position is stated as, “Don’t give in to get along…Diverse boards must not be afraid of conflict, as long as it is constructive and civil. Boards that have difficulty discussing their differences, or reconciling them, make it easy for the CEO either to dismiss that they are saying or to listen exclusively to their supporters on the board.”
This statement is correct when applied to ALL boards whether diverse or not. It is not conflict, it is collaboration that a board should focus on and it is never personal it is all about the organization and its shareholders. Differences in opinion are critical for collaboration that leads to making ideas great. To be able to provide input for collaboration, you do have to have some expertise. Qualified board leaders that ABA works with are brought in for the expertise and would never go along to get along, instead they make their expertise known to the group. They understand that is why they are there and that is what a leader does regardless of race or gender.
You may have heard the term “male, pale and stale” when it comes to boards. When it comes to boards we believe that the problem with this statement from a shareholder perspective is not the male and pale part but what is really critical is the stale part. If a board has become stale what value is it providing to the shareholders and the organization itself? Simply changing the gender or race does not change the most critical component – VALUE!
It could be particularly beneficial to me as a minority to jump on the diverse corporate board bandwagon. I wish the authors would disclose which race and/or gender had developed the critical board skill sets to make a board more innovative and strategic thinking. I hope it is Hispanic males as that would definitely mean that I was qualified to be on any public board regardless of my expertise.
Bob Arciniaga
Managing Partner
Advisory Board Architects
