How to make board diversity work for HK
Juliet Bourke suggests four ways companies in Hong Kong can put in practice the stock exchange's smart, ambitious call for board diversity
Impressive - that's the first word that springs to mind when reading the Hong Kong stock exchange's consultation paper on board diversity. Then comes "thoughtful" and "smart". Why? The topic of board diversity is not new, and indeed one could say that the HKEx proposal is a little overdue. But it appears to have adopted a more patient approach: watching, analysing and then cherry-picking - and this will reap much bigger rewards for Chinese businesses.
Far from playing follow the leader, which would have meant introducing gender quotas as Norway did in 2005, or even "measurable [gender] objectives" as introduced by Australia in 2010, with only a passing reference to diversity of skills, HKEx has firmly focused on "diversity of perspectives". This focus represents the most advanced thinking about the value of diversity, particularly for boards which provide the crucible of strategic thinking and need to avoid the bias of groupthink.
But here's the rub. While this may be the smartest approach, it is also the most challenging. To some degree, it is easier to focus on gender diversity; all a board has to do is "find" the right woman for the job when the next vacancy arises. A focus on diversity of thinking takes a board right back to basics and asks, "Do we really have the right people in the room to ensure we will generate robust ideas?", "How did we all get here anyway?" and "How does visible diversity relate to diversity of thinking?"
To answer these questions, there's no doubt that Hong Kong boards, just like the HKEx, will now spend time reviewing the effectiveness of the global company initiatives to promote diversity of thinking, and will cherry-pick the best of the best. To accelerate this journey, here are a few ideas.
Step one: reframe the conversation about the nature of diversity. Diverse thinking is driven by an individual's background, experience and professional training - and a boardroom of people who all look and act the same triggers the question for board members (and shareholders): do they all think the same way, too? From this angle, visible differences such as age and race may provide a simple indicator for different experiences and, diversity of perspective.
Step two: communicate the value of diversity in terms of high performance. Through this, boards will build a sense of urgency and engagement. Until now, diversity has been communicated as something nice to do, but in this new world, diversity of thinking is the essence of success.
Step three: build leaders' capability and accountability. This is all about understanding our unconscious biases, and creating an inclusive environment. There's little value in creating a diverse board if only some people get to contribute.
Step 4: fuel the pipeline. This is about re-evaluating the processes and practices to ensure a diverse talent pool is selected, developed and rewarded - so they can be ready to join the board.
The stock exchange is leading businesses down an exciting path of transformation. But change takes time. Smart businesses will jump on board quickly, get ahead of the pack and reap the rewards.
Juliet Bourke is national leader for diversity and inclusion in human capital at Deloitte Australia. This article is part of a series on women and gender issues, developed in collaboration with The Women's Foundation