High Performing Boards: The whole is greater than the sum of its parts

Gender inequality persists in our community. This includes women’s representation in senior leadership positions, such as boards. The case for change is as much about improving business performance as it is about gender equality. Put simply, boards perform better when they include the best people with a diverse range of perspectives and approaches.

Public scrutiny of the performance of boards is at an all-time high, which poses the question amidst these turbulent times, are boards set up for success?

It makes sense that, in order to make smart decisions, boards need smart people, and, historically, that has been the key criteria for selection for board membership – but is there more that’s needed? Recently, there has been an emerging focus on the board as a team and its collective intelligence.[1] To quote the famous Gestalt psychologist, Kurt Koffka, “the whole is greater than the sum of its parts”.

But what does that mean in practice?  In addition to individual capability, what must boards look for in terms of diversity and leadership to create high performance?  In terms of gender, will tokenism make the difference or do boards need gender parity? And what else?

Deloitte was commissioned by the Department of Communities, Child Safety and Disability Services, Officer for Women and Domestic Violence Reform to investigate these questions and in particular the value of gender parity on boards in Queensland, Australia. The commissioned work builds on the Government’s target to have 50/50 representation on Queensland boards by 2020.

Released in October 2016, the ‘Toward Gender Parity: Women on Boards Initiative’ Report draws together the research that was conducted, including a literature review, quantitative economic analysis and survey data. The key findings are, essentially, that there are positive economic impacts associated with achieving gender parity, and it is the presence of diversity and inclusion that will deliver these benefits.

What are the benefits? If Queensland Government Boards had gender parity (a shift of 39% to 50% women), it would generate an additional $87 million per annum in productivity, without an increase in the number of board members or their hours of work. This significant increase in productivity is a result of, firstly, increasing the number of women on boards and, secondly, ensuring that boards demonstrate inclusive behaviours.

 

Aim

The aim of the research was to:

  • Quantify the benefits of gender parity on boards for the Queensland economy
  • Identify the differences (if any) between the performance of boards with less than 20% women and those with 50/50
  • Identify the relationship between gender diversity and a culture of inclusion to board performance
  • Identify the barriers and enablers to gender parity on boards as well as effective remedial strategies

 

Method

In order to understand the current state of Queensland Government boards, and explore the challenges and opportunities for achieving gender parity, four key research methodologies were applied.

  1. Literature scan

A comprehensive literature scan was undertaken, including databases of peer reviewed journals, as well as from Government departments and relevant peak bodies.

  1. Stakeholder consultations

Stakeholder consultations were conducted with organisations and individuals identified with the assistance of the Officer for Women, including board recruiters.

  1. Survey

An online survey was conducted to understand the current state of board composition in Queensland, as well as the culture of the working environment on boards. In total, 149 board members responded across 48 boards (12% response rate). While this is a low response rate, the survey sample was checked for any potential sample bias and Deloitte Access Economics determined that the sample had similar characteristics as the targeted boards. There is a 7.5% margin of error in the results, at the 95% confidence interval, which is considered acceptable.

  1. Economic modelling

An economic modelling process was applied in the research in order to understand and quantify the benefits of gender parity. At a high level, the method applied followed a three step process reviewing assumptions, undertaking calculations and identifying outputs:

  • Assumptions
    • For example, Queensland’s Gross State Product = Gross Value Added per employee – Taxes
  • Calculation
    • For example, calculating the Gross Value Added per employee
  • Outputs
    • For example, Gross Value Added uplift per person.

 

Findings

The research made 4 key findings:

  1. Gender parity delivers real dollar value. Achieving board gender parity will increase productivity by AUS$87 million.
  1. High performance = men+women+commitment to diversity+ inclusion. High performing Queensland Government boards have men and women, they are committed to diversity and are highly inclusive.
  1. The target is in sight, but barriers remain. Board commitment needs to translate into concrete action.
  1. More game changers need to stand up and be counted. Courageous decision makers who step up and actively challenge the status quo will be the drivers of change in Queensland.

Finding 2 – in relation to high performance – ties into the idea of collective intelligence. Deloitte separated the high and low performing boards into two groups and then explored diversity and inclusion factors.

The results are compelling. In relation to gender parity, the 12 high performing boards were much more likely to include women (11/12 or 92%), with one-third having 50+women and another third with 25-50% women and one-quarter 25% women. Of the 7 low performing boards, nil had parity.

In relation to inclusion, high performing boards were much more likely to be committed to diversity and have an inclusive working environment (66%) – one in which board members are treated fairly and with respect, one in which there is a sense of value and belonging. In contrast, low performing boards were less likely to be committed to gender diversity, and inclusive (28%).

And yet individual board members on those gender similar boards felt highly included. While homogenous boards can feel effective – for example, a sense of ‘sameness’ can deepen connectivity between board members and expedite decision-making – this research shows they are missing the diversity that helps drive performance.

Having developed a strong economic rationale for gender parity, and identified the importance of diversity and inclusion to board performance, Deloitte identified the 7 critical elements of an effective diversity strategy (See table 1):

Table 1: Seven facets of change framework
Facet Description Current performance of Queensland Government boards surveyed
Vision and strategy The board/department/organisation has articulated why diversity and inclusion is important, and established a strategy for change 38% of survey respondents agreed their board has a documented strategy for progressing gender parity on their board
Governance There is appropriate oversight of the board’s diversity and inclusion strategy and progress towards its goals 34% of survey respondents agreed that there is an individual(s) on the board responsible for achieving gender parity on their board
Leadership The board members are committed to gender parity and an inclusive operating environment, demonstrate inclusive behaviours and are accountable for outcomes While 81% of survey respondents agreed that their board is committed to gender parity, only 43% have action plans aimed at building the commitment and inclusive capability of decision-makers to achieve gender parity
Systems and processes The board dedicates attention to ensuring that bias is eliminated from processes, including recruitment, and that board deliberations are inclusive 59% of survey respondents agreed that their board has processes and systems in place to support the achievement of gender parity on the board
Specific initiatives The board supports specific initiatives (e.g. sponsorship programs) until gender parity is attained 39% of survey respondents agreed that their board has specific initiatives to drive the achievement of gender parity on the board
Measurement The board regularly evaluates its performance on gender parity and an inclusive operating environment 28% of survey respondents agreed that their board has metrics for measuring progress on gender parity on their board and report these publicly
Branding  and communication The board communicates externally its commitment to gender parity and inclusion 80% or survey respondents agreed that their organisation is perceived to be inclusive of women, and 70% of survey respondents agreed that their industry is perceived to be inclusive of women

 

Implications

This report builds on previous work[2] about the connection between gender diversity by adding new insights about the quantum of diversity that makes a difference as well as the board culture which enables diverse talent to flourish.

There are three key recommendations for boards to consider in seeking to improve their performance:

  1. Boards should be aiming for gender balance – not tokenism
  1. Boards should focus on creating a working environment that is highly inclusive of diversity
  1. Boards should focus on creating a diverse and inclusive board; this requires courageous leaders who will step up and actively and visibly challenging the status quo.

Ask: Who is talking and how well do people converse with each other?

 

For more information, contact Joe Occhino, PhD (jocchino@deloitte.com.au).

To read the summary and full report of Toward Gender Parity: Women on Boards Initiative visit the website:

https://www.communities.qld.gov.au/communityservices/women/women-on-boards

[1] Bourke, J., (2016) Which two heads are better than one?  How diverse teams create breakthrough ideas and make smarter decisions. AICD.

[2] Bourke, J., (2016) Which two heads are better than one?  How diverse teams create breakthrough ideas and make smarter decisions. AICD.


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