Embrace diversity because the ‘tipping point’ is close

A very different New Zealand is emerging with a super diverse younger demographic replacing a rapidly ageing Pākehā population, says Distinguished Professor Emeritus Paul Spoonley.

With the huge demographic changes beginning to occur as Pākehā age and exit the workforce, it important that directors understand the value of diversity, says Spoonley, one of New Zealand’s leading social scientists with an extensive background in research on social and demographic change.

Over the next two decades, almost 20 per cent of New Zealanders will be a member of an Asian community, about 20 per cent will self-identify as Māori and another 11 to 12 per cent will identify as Pasifika, says Spoonley. “When you look at the school age population or those entering the workforce, you can already see the rapidly changing diversity.

“We are getting to that tipping point where there’s rapid ageing, but it’s essentially the rapid ageing of Pākehā. And when we look at younger New Zealanders, they’re increasingly from minority, ethnic, immigrant and indigenous communities.

“It’s really whether businesses, and in this case directors, begin to fully understand these changes and then to respond. One of the big challenges will be to get diverse leadership, and therefore much more diversity in terms of directors and boards.”

Auckland is now ranked one of the most diverse cities in the world because of the growing proportion of it population who are from indigenous communities and ethnic or immigrant minority communities.

In 2023, a quarter of a million migrants arrived in the country, the highest of any OECD country (proportionate to population size), Spoonley says. New Zealand’s net gain was 127,000, which is equivalent to 2.4 per cent of the population. Australia and Canada have a notional target of one per cent.

Spoonley says that by the end of this decade almost a quarter of all people in New Zealand will be aged over 65. “That Baby Boomer generation [1945-64] is dominated by Pākehā. When you look at the under-15s or under-25s or under-35s, what’s interesting is the rapid growth of those who self-identify as Māori, one of the Pasifika groups or one of the many Asian communities.

“About 50 per cent of the new generation that will be leaving school and entering the workforce will be Māori, Pasifika or a member of the Asian community. New Zealand is going to be transformed. And so your suppliers, your customers and especially your workforce will be much more diverse than we’ve seen in the past.

“That’s the new demography of Aotearoa New Zealand, and that’s why directors need to take notice. If you are wanting to recruit and retain a workforce, your firm is going to have to understand the new demography and respond. And you will have to confront and respond to diversity in ways you’ve never had to before.”

Spoonley says their research shows organisations and sectors that understand the value of diversity and develop policies and practices are prospering.

“The boards, firms and sectors that are embracing diversity are beginning to show much better returns in terms of productivity and innovation, and a clear advantage in the market. Those who do not understand what is happening and are not really responding are failing to benefit from diversity recognition.”

He says he does not see many Pasifika on boards, despite the booming communities. Thirty-four years ago in 1990, more Pasifika were born in New Zealand in that year than in Pacific homelands, says Spoonley.

Following this, there was an expansion of leadership from these communities, particularly on the sports fields, he says, citing the likes of Tana Umaga and Beatrice Faumuina, “and I would have thought more than 30 years on, we would have seen that emerge in leadership in firms.

“I’m not seeing it, apart from one or two places. I also note the public sector has been better at recruiting and appointing people at senior levels than the private sector.”

As a diversity judge, Spoonley says he often challenges directors, CEOs and CFOs in how fast they think they could replace themselves with Pasifika, and what are they doing to make sure that occurs.

“You need to identify, train and provide the experience for potential candidates. That’s not a short game, it’s a long game. I just don’t see enough strategic thinking and then delivery. I will always ask what are your policies and your leadership around these issues. I think directors should set tone and provide an example.

“Given the student demography, if we don’t see Pasifika, but also Māori and Asian peoples represented at the most senior levels, then firms and sectors are going to struggle in this new demography. There’s a new economy that follows from this new demography and we need to make the best use of our talent in its entirety.

“We need to understand this because it’s going to either open up economic possibilities or close them down.” 

Distinguished Professor Emeritus Paul Spoonley will be a keynote speaker at the IoD event on 14 March in Auckland “Why cultural diversity is commercially robust - from a Pasifika governance perspective.”