When I am consulting to Indigenous organisations, one of the most talked about issues is how they can create diversity in their Boards in order to better reflect their members and their activities.
In fact, from the perspective of Director accountability and succession-planning, it is deserving of the spotlight. Board member renewal and the meeting of required skills matrices is a matter, not only for the Selection Committee but for the whole Board. When Board composition is at best-practice, so is the work of the Board.
So what factors should you consider when your Board thinks about Board diversity and composition?
I offer 10 factors to consider.
1 Is having knowledge of your sector or industry compulsory?
Many Indigenous Boards appoint Directors who work in the industry or in the community as if such knowledge is compulsory. In doing so they leave out people who may have something to offer outside of this experience.
I’m not arguing that knowing what happens “on the ground” in your corporation is not advantageous, it is, but it need not be a compulsory criterion if the appointee also brings other skills and experiences. There are also advantages to be had by appointing someone who can provide capabilities in say, dealing with government, understands supply chain management, legislative demands, and so on – or even someone with broad business skills who understand “the business of business.”
2 The ability to deal with competing interests
Most Indigenous corporations have to deal with competing demands of internal and external stakeholders. Most community-based Directors would face pressure under this competition for attention. How useful would it be to have a Director who has skills in managing, or even influencing these different interests and the opportunities and threats they put to the corporation?
3 What strategic thinking do you need?
Directors provide “hands-off” governance drawing the distinction between governance and management. Most Boards are cognisant of this nowadays and have moved to looking after strategy.
However, while it is fine to be able to look in from a helicopter view during a strategic planning exercise, what depth of strategic thinking does your corporation need?
Are you having to deal with large-scale change management? Are you having to think about the next phase of your development in what amounts to a change in your life-cycle? These are not off-the-shelf strategic initiatives and having someone with a depth of strategic experience is useful, if not necessary in cases like these.
4 Does your Board need more robust intellectual rigour?
Boards are expected to have intellectual rigour to deal with wide-ranging and complex issues. While “standard” intellectual debate about what to do when staff changes don’t produce the right results may be the norm, Indigenous Boards these days have to deal with complex issues about diminishing funding, competitive landscapes, political choices – they need to draw on a mixture of functional expertise as well as broad industry experience, different qualifications and specialisation, and understanding of demographics and “customer” satisfaction.
Having one or two people with this kind of experience to challenge Board discussions can only strengthen the Board.
5 As a result of intellectual rigour, how can we ensure robust decision-making?
Boards can get used to each other and begin to enter “group-think” where the group accepts certain assumptions and look for confirmation-bias when decisions are made. Perhaps they enter into a discussion about how “we always do this” and it is accepted.
In the context of your Board’s pressure points – whether it is in satisfying members’ demands or meeting stakeholder expectations or finding funding, what types of critical thinking, insight and balanced jus=dgement do you need and who can provide it?
6 Boards have to deal with finding balance
Directors on Boards often balance opposites – preferring short-term top long-term, investing for the future against providing benefits now. Who do you need to help you think about uncertainty and to provide choices clearly?
7 How is your workplace changing?
New workplace methods, information technology, changing political climates, uncertain economic landscapes – all these provide a workplace in your corporation that is different from just a few years ago.
Yet many Directors on Boards have probably been in place for many years. How useful would be new skillsets in the issues facing Boards today? Perhaps to deal with today’s workplace you need people who can cross silos and resolve tensions between business units?
8 Will generational mix add perspectives?
Consider the generational mix of your Board. Is it wide enough?
Will a wider generational mix add needed perspectives that you are missing out on now? Will it provide a new way of working and strategic thinking as it balances the generational thinking?
9 Will gender mix add perspectives?
As above, what is your gender mix? Will adding and balancing genders provide any needed changes to perspective and provide solutions that are not apparent with your current mix?
10 How do you support new Board members?
Providing a balanced mixture of new and old skills, or a balance of generations and gender will not, of itself, create a more effective Board, especially if the culture of the old Board is to sink or swim.
In order to boost effectiveness, you need to consider how you orientate and support the new Board member, particularly young, shy, first-time Directors. Your aim is to avoid false starts, bring them up to speed as quickly as possible, and maximise his or her contributions to your Board discussions and decisions.