The question of board diversity is one that tends to come up often in discussions surrounding governance and the appointment of board members but the conversation often stalls around the topic of gender diversity. However, did you know that there are intact 7 strands of diversity and each of the could impact on your board appointment.
In an article that appeared last year in The Australian, statistics revealed that you have a much better chance of being successful applying for a board seat if you are white, male, over 60 and already sit on multiple boards.
The Statistics, According to ACSI
ACSI’s latest annual survey of the composition of top ASX boards, revealed the following:
- The average director of an ASX 100 company is male.
- The average age of non-executive directors is 63.8.
- The average non-executive director of an ASX 100 company receives a fee of $200,000+ per year.
- The Chair of an average ASX 100 company receives a fee of $450,000+ per year.
- Banking & Finance is one of the main sources of company directors.
- The trend is for directors to sit on more than one board: 105 directors account for a third of all ASX 100 board seats.
Board Diversity is a Much Broader Question than Just Gender
Board Diversity has been proven to increase the performance of boards and the organisations they represent. As such, it is one of those phrases that occupies the minds of Chairs but often stalls around:
- What does board diversity in reality mean?
- What are the risks involved in board diversity?
- What should the gender balance on a board be?
Whilst there is currently a strong push for gender diversity on boards, this is just one of the 7 strands of diversity – and one more that is peculiar to board appointments – that exist.
- Sectoral Experience, i.e. Public-, Private- or NfP Experience (Peculiar to board appointments)
I outline these points only to point out that diversity is broad. As such, there is a strong chance that you will bring some diversity to a board appointment conversation. It may take some thinking, but when thinking about what drives chairs to make an appointment, you need to be able to articulate how your ‘diverse’ background can contribute, while still adhering to the cultural fit of the company.
What I am trying to get at here is that you are diverse – perhaps not in a traditional sense, but you bring diverse opinions and approaches based on your history or experience or in any of the other 7 strands. As such, with diverse boards being proven to deliver better outcomes for organisations, you have the opportunity to frame any diversity you bring as a good thing and one that is of value to the board.
Over the next few weeks I will be publishing various articles in regards to diversity and how you can use the argument regarding board diversity in your favour.
Today, I would only like to focus on the issue of multiple directorships and how it influences diversity on boards.
With Multiple Directorships, is There Hope for Diversity on Boards?
According to ACSI chief executive Louise Davidson, the research showed there was a trend for directors to sit on multiple boards.
Multiple directorships abound, with 105 people accounting for a third of all ASX 100 board seats. This highlights the challenge of expanding the director gene pool. ACSI’s review of new appointments shows that half of all directors appointed to ASX 100 companies already sit on another ASX 100 board.
As the figures show, the gene pool for NEDs is very small, a sure-fire enemy of board diversity. With multiple directorships we run the risk of seeing the same faces from that very small gene pool on most boards. In order for us to see more diversity on boards, this needs to change. So you should not think that, if you are not already serving on an ASX 100 board, that you shouldn’t strive to gain one of those much sought after seats – quite the contrary!
Multiple Directorships Doesn’t Have to be a Problem
The fact that the gene pool for directorships is quite small, doesn’t mean that all is lost for the aspiring director looking to be appointed to his/her first board role. It only means that you may have to fight harder than the other candidate who is already sitting on a few boards to get shortlisted.
According to a study by Russel Reynolds Associates you can use the question of diversity on boards to your advantage. And it’s not only gender diversity that matters; you can point out all of your diverse attributes that will make you a more desirable candidate than anyone with multiple directorships, thus expanding that gene pool. As their study puts it:
Diversity of perspective does matter. Having a broad range of collective attributes, rather than overlapping or redundant qualities, helps the board significantly in fulfilling its responsibilities of providing good corporate governance and strategic oversight. Boards that can collectively draw upon a broad assortment of competencies, priorities and insights are an invaluable resource for CEOs and senior management teams working in complex business environments with wide-ranging, multiple constituencies. Diversity of perspective leads to more innovation, better risk management, and stronger connections with customers, employees and business partners. While tremendous progress has been made, there is significant work yet to be done.
The key is to not only focus on your board experience. In fact, if you have no board experience at all, make your case as to what attributes you bring to the table that will enhance the overall profile of the board. Look at where your attributes differ from those of other board members and highlight those qualities and attributes.
Highlight Your Contribution to Board Diversity
I usually highlight previous board experience on the board ready CVs and Cover Letters that I write for my clients. So I know the value of multiple directorships when it comes to being appointed to a board.
However, my experience also taught me that, if you know how to go about it, you can be appointed to a board without any previous board experience whatsoever.
Highlighting your contribution without having experience with multiple directorships, you need to have a solid look at yourself as well as the board you are applying to – doing proper research will help you a lot in this regard. You need to ask yourself the following questions:
- What attributes are they asking for in their advertisement?
- What experience is historically needed to fill this position?
- What attributes do I have that will benefit the board and the company?
- What attributes do I have/what can I do that sets me apart from other applicants?
Once you have outlined the answers to these questions for yourself, make sure that you highlight these points of difference that you have in your CV as well as your Cover Letter.
But don’t stop there. When you prepare for your interview, prepare a short presentation you can make to the Appointment Committee (or the person doing the interview) that outlines your points of difference from other applicants for the position. If the question about diversity doesn’t come up during the interview, bring it up when they ask you if there is anything else you would like to bring to the board’s attention.
You don’t have to hide the fact that you don’t have multiple directorships. If you are well prepared for the application process and make a case for your contribution to board diversity, you will dare them not to appoint you.
MD, Board Direction