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Board Diversity Impacts ROI

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It’s hardFoliage as Shapes - IMG_0052 s.c to find an organization today that’s not focused on, or at least giving lip service to, diversity. But have you ever considered the cost to your organization of not having a diverse leadership team? When Catalyst first came out with their study about the ROI for investors of companies with more diverse boards, many were surprised. But the numbers were clear: Return on Equity, Return on Sales and Return on Invested Capital were all significantly higher (53%, 42% and 66% respectively) for companies with more women on their boards.

The same is true for nonprofit boards.  Boards lacking diversity can make poor financial decisions, such as investing the bulk of their endowment with an investment manager  “everyone knows.” Boards lacking diversity can miss big opportunities to reach new communities and new donors. They can miss out on creating new partnerships.

So how can you create a more diverse board?

First, let’s define diversity. When I meet with boards on this topic, everyone’s first instinct is to think ethnicity and gender. These are important. But just as vital to decision-making are having people of diverse ages, life experiences, socio-economic backgrounds, family structures, and more.

Range of Ages. The most common lack of diversity I see on boards is related to age. And the most common form of ageism I see is against younger people (which on boards tends to mean under- 35). Yet the views of the 18-35 set, and their facility with the internet and social media tools, makes them especially valuable on boards.

Varied Life Experiences. Another area where boards often lack diversity is in life experiences. That’s because so many people are recruited to boards by friends, business associates or college/grad school classmates. So if you have one corporate lawyer on your board, you’re likely to have two or more. That’s not to say anything against lawyers, but there is also diversity among types of legal expertise and it could benefit your board to have more than one kind. Life experiences also include living overseas, blended families, military families, LGBT, and religious background.

Personal Attributes. A third area for boards to focus on when attaining diversity is a mix of personal styles and personality attributes. Even if you’re board is every color of the rainbow, if every person on it is a forceful leader, you’re going to have trouble filling your committees. By the same token, if everyone is a quiet, behind-the-scenes type of operator, you’ll have trouble finding committee chairs every year. You need a mix of several personality types to make a board fully functional.

Varied Connections. Finally, board diversity requires diverse community connections. One of the most overlooked areas for recruiting board members is among the clergy. Rabbis, priests, and ministers tend to know a lot of people in their communities, as well as other organizations that are making a difference there. That makes them great “connectors” to have on your board, irrespective of whether your organization has a religious mission. Other great connectors are people who volunteer in communities in which your organization wants to reach. And also don’t overlook individuals who serve on national boards, where they make contacts all across the country.

Tapping diverse talents always leads to a stronger board. And a stronger board helps you avoid costly mistakes and deliver on your bottom line: the mission.

Amy DeLouise is a video producer/director and consultant who works primarily with nonprofits and their leadership teams.

Adidas Shoots its own Brand in the Foot

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A shoe featuring orange shackles reminiscent of those word by slaves? It’s hard to imagine the design team at Adidas missed the implications of its newest sneaker just announced on Facebook (and just as quickly removed).   But then again maybe not. Being a German-based company with an all-white (male and middle-aged) executive team with an all white (middle-aged) supervisory board, perhaps they overlooked the way many Americans–and not just African Americans–would view the shoe design.  And hey, I’m white and middle aged too. But I know that age diversity, international diversity, as well as ethnic diversity is often an Achilles heel (I know, I know, I couldn’t help myself) of organizations in all shapes and sizes. We live in a multi-national, multi-cultural world. It’s essential to have people in every department–especially public-facing ones like marketing brands–who bring different life experiences to the table.

Brands must always be creative, bringing new products and services to market. Maybe this is just a small mistep (woops, did it again!) for a company in a highly competitive market segment. But perhaps this experience can remind Adidas–and all of us–that our institutions ultimately reflect our people and our values.

Invite Dissent: Promote Business and Nonprofit Change

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To much fanfare and hand-wringing, Virginia’s governor has just declared April to be Confederate History Month. One of the great battles of our Civil War has been on my mind, since I just returned from a family trip to Gettysburg. We’d been several times before, but this time we had a private guide who truly brought the scale and devastation of those terrible three days to life. We walked the battle lines of the Wheat field and saw where men fell in lines at the Peach Orchard.  We imagined the cannon firing into the town, scattering frightened civilians.  We climbed Little Round Top and peered over the edge, imagining a sea of Confederate soldiers charging. And we saw the deadly conclusion in Pickett’s Charge.  And as we moved back and forth from Confederate to Union perspectives, I was reminded of my own divided history:   A Yankee through and through, having been raised in New York and Maryland, I have plenty of Confederates in the family, with ancestors who fought and died at Antietum, and southern  relatives–including a Confederate historian–who remain skeptical about northern ways.

Hidden or Banished Differences May Slow  Success

There are many legacies of our divided history, but one is clear: Americans remain separated politically, socially, economically and even spiritually. So why should my readers care? Because we often hide our differences, or operate in communities of the like-minded, thus subverting the real benefits of diverse perspectives and ideas.

For example, how many boards do you serve on where the leadership is predominantly of one political persuasion? What would happen if these leaders didn’t all support the same candidates and agree on the same issues (even if your organization isn’t political in nature)? And what about in business–do the leaders in your company represent diverse views and personal histories? Do they come from varied economic backgrounds? Or did they all attend the same schools and join the same country clubs?  Does your organization push for cross-cultural literacy and encourage leadership development among people of varied cultural backgrounds?  Do you promote gender parity initiatives that mentor and support women through childbearing years, when many fall off the leadership ladder?

Find Your Perspective Gap

Many times firms and organizations feel they are doing plenty to promote diversity, but if they asked for feedback from the people most affected, they might learn a different truth. For instance, according to a recent Bain & Company study, when it comes to gender disparity in leadership, men and women view the workplace very differently. Men think women are treated equally, whereas women don’t see it that way. Why the gap? I’ll let you read the report to see what the Bain folks think, but I have witnessed the “perspective gap” taking many solid nonprofits and businesses off their path of success.

What do I mean by “perspective gap”? I mean asking your staff or board members how they feel about having a different opinion or background from the rest of the group.  Are they encouraged to have a different perspective? Or is it less complicated to remain silent? In his recent book about the amazing technological success of Israel, Startup Nation, Dan Senor attributes Israel’s success, among other reasons, to a culture of people being willing to challenge their superiors, and those superiors being willing to listen.  He gives examples of how this has promoted a faster route to innovation and change.

OK, Amy, where is this going and what does it have to do with Confederate History Month?

Invite Opposition

Here goes. My suggestion is to create your own version of a controversial celebratory month within your company or nonprofit organization.  Let’s call it Contrary Opinion Month.  Invite everyone to make a suggestion that appears to be contrary to company tradition, policy or social custom. If you are a law firm, encourage your newest young associates to speak up at your next committee meeting! If you are a nonprofit, don’t let a unanimous vote obscure hidden dissent in the ranks–bring it on and into the light! If you are a big business, find out what that guy in the mailroom thinks about your new [fill in the blank] policy!

I’m truly curious to hear what happens, so if you have a good story, please email me at amy[at]amydelouise[dot]com.

Building a More Diverse Board

diversity rules!

diversity rules!

It’s hard to find an organization today that’s not focused on, or at least giving lip service to, diversity. But have you ever considered the cost to your organization of not having a diverse board? A recent study of for-profit boards found that diverse boards return a better ROI for investors. [See Board Diversification Strategy: Realizing Competitive Advantage and Shareowner Value]. The same is true for nonprofit boards.  Boards lacking diversity can make poor financial decisions, such as investing the bulk of their endowment with an investment manager  “everyone knows.” Boards lacking diversity can miss big opportunities to reach new communities, or create new partnerships.

So how can you create a more diverse board?

First, let’s define diversity. When I meet with boards on this topic, everyone’s first instinct is to think ethnicity and gender. These are important. But just as vital to decision-making are having people of diverse ages, life experiences, socio-economic backgrounds, even neighborhoods.

1. Range of Ages. The most common lack of diversity I see on boards is related to age. And the most common form of ageism I see is against younger people (which on boards tends to mean under- 35). Yet the views of the 18-35 set, and their facility with the internet and social media tools, makes them especially valuable on boards.

2. Varied Life Experiences. Another area where boards often lack diversity is in life experiences. That’s because so many people are recruited to boards by friends, business associates or college/grad school classmates. So if you have one corporate lawyer on your board, you’re likely to have two or more. That’s not to say anything against lawyers, but there is also diversity among types of legal expertise and it could benefit your board to have more than one kind.

3. Personal Attributes. A third area for boards to focus on when attaining diversity is a mix of personal styles and personality attributes. If you’re board is every color of the rainbow, if every person on it is a forceful leader, you’re going to have trouble filling your committees. By the same token, if everyone is a quiet, behind-the-scenes type of operator, you’ll have trouble finding a chair every year. You need a mix of several personality types to make a board fully functional.

4. Varied Connections. Finally, board diversity requires diverse community connections. One of the most overlooked areas for recruiting board members is among the clergy. Rabbis, priests, and ministers tend to know a lot of people in their communities, as well as other organizations that are making a difference there. That makes them great “connectors” to have on your board, irrespective of whether your organization has a religious mission.

Tapping diverse talents always leads to a stronger board. And a stronger board helps you avoid costly mistakes and deliver on your bottom line: the mission.

c 2009 Amy DeLouise, Amy DeLouise’s Blog