Earlier this month, in a conversation on ESPN’s The Jump, journalist Nick DePaula told fellow panelists that Beyoncé had been in talks with several brands after news broke of her athleisure brand Ivy Park signing a deal with Adidas. In the clip shared by the show’s host, Rachel Nichols, DePaula said he had been told that Beyoncé had “stepped back” from any potential partnership with Reebok because the team lacked diversity.
According to DePaula, Beyonce told Reebok, “Nobody in this room reflects my background, not my skin color, and where I’m from and what I want to do. And so, she kind of took a step back and left, and it did not come to terms.” Reebok has denied these claims, but regardless, it does remind us that representation matters. It’s important to customers and it is good for business.
This year, a California law came into effect that requires all locally headquartered publicly traded companies to have at least one woman director by 2020. Over in Europe, several countries require that women comprise at least 40% of boards at publicly listed companies. And who can forget Justin Trudeau’s comment “Because it’s 2016!” in reference to his historic gender-equal cabinet.
According to a publication from Harvard Business Review, “Evidence that board diversity benefits firms, however, has been mixed. A 2015 meta-analysis of 140 research studies of the relationship between female board representation and performance found a positive relationship with accounting returns, but no significant relationship with market performance. Other research has found no relationship to performance at all.”
This may explain why, despite many executive leaders believing in the benefits of diversity, defining what diversity is, and developing practices to promote diversity in the boardroom is still not clear. There is no formula. If your board appears diverse but everyone shares the same views, it’s only socially diverse. If your board looks the same and everyone has a different perspective, it’s professionally diverse, but might not mirror the representation in society that reflects who your customers are and what they value. You need both social and professional diversity.
In a survey from Deloitte about diversity and its benefits in the boardroom, The Mixtocracy Model is introduced. The thinking goes like this, “The term meritocracy describes organizational advancement based upon merit—talents and accomplishments—and aims to combat the nepotism and cronyism that traditionally permeated many businesses. However, too often meritocracy results in mirrortocracy in which all directors bring similar perspectives and approaches to governance, risk management, and other board responsibilities.”
95% of those surveyed agree that their boards need to seek out more candidates with diverse skills and perspectives, but only 16% cite lack of diversity as a top problem they are dealing with. Many boards still rely on traditional candidate criteria and those without executive experience are seen as unqualified. And by prioritizing candidates who have experience as board members, well that pool of prospects is largely white and male.
The opportunity here is to recognize that while boards will always have traditional members where deep expertise is crucial to guiding the business, there is also room for non-traditional members. The report finds, “Many existing recruiting methods do too little to achieve true diversity. The prevalence of those criteria and methods can repeatedly send boards back to the same talent pool, even in the case of women and minority candidates. For example, Deloitte’s 2016 Board Diversity Census shows that female and black directors are far more likely than white male directors to hold multiple Fortune 500 board seats.”
The benefits of brands having a socially and professionally diverse board cannot be clearer: Improve innovation, manage disruption, increase performance while representing what the world (and often your customer) looks like.
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