Realising your board’s diversity of thought - Inclusion

Introduction

A recent study of New Zealand boards revealed substantial differences in relation to their diversity of thought. They varied widely not just in their potential for diverse thinking but also in the extent to which their culture supports the realisation of their diversity of thought.

Following on from those findings, the chairs from four boards with high-performing cultures in that study were interviewed to learn about the practices boards can use to develop a culture that enables diversity of thought.

As these boards demonstrated their positive cultural performance through the DOT Scorecard® – an insider’s 360-style evaluation – the selection of interviewees has an objective basis, in contrast to the more typical selection method of relying on a board’s profile and external perception of its performance.

For this reason, these interviews present a unique opportunity to gain insights into boards where diversity of thought is measurably at work. The interviews have been collated into five articles:

1. Inclusion: Building an inclusive board culture (see below)
2. Psychological safety: Ensuring all of your board members can make an authentic contribution 
3. Independence: Achieving independent thought and expression 
4. Effectiveness: Undertaking productive board decision-making
5. Recruitment: Bringing on new board members to support your board’s diversity of thought

Chairs we interviewed

Abby Foote CFInstD

“Having clarity of vision and the shared values helps you to navigate the different views and see them within a context that is constructive, rather than oppositional.” 

Abby is chair Z Energy, independent director Freightways, and independent director Sandford. She has previously been a director TVNZ, director Museum of NZ Te Papa Tongarewa, director Livestock Improvement Corporation, director Local Government Funding Agency, director BNZ Life Insurance, director Diligent Corporation, and director Transpower.

Frazer Barton

“I’ve heard it eloquently described that ‘you need a culture of convincing and cajoling, rather than commanding and controlling’.” 

Frazer is currently South Island vice president NZ Law Society, council member, chair of Appeals Board, chair of Health & Safety and Ethics Compliance Committee University of Otago, and a partner at Anderson Lloyd. He was previously chair of Anderson Lloyd Partnership, and served as chair of Presbyterian Support Otago.

Janine Smith CFInstD MNZM

“With an inclusive culture you also need the respect of everyone around the board table, to ensure that they do actually listen.” 

Janine is chair REANNZ, and executive director and principal of The Boardroom Practice. Previously she was chair AsureQuality, director Steel and Tube, director Kensington Swann, director The Warehouse Group, deputy chair Kordia, BNZ, deputy chair Airways, executive director Arnott’s NZ.

Ngaio Merrick CMInstD

“It's the chair’s role to bring voices into the room; it's the chair’s role to include people without putting them on the spot. It's also the chair’s role to ask people to play devil's advocate if we agree – in fact, especially if we agree quickly.” 

Ngaio is chair KiwiNet, director Reefton Distilling Company, co-founder Nuance Connected Capital, Portfolio and Investment Manager Lewis Holdings. She was previously director Everedge Global, and director Precision Engineering.  

Part 1. Inclusion: building an inclusive board culture

For diversity of thought to be realised, all board members need to be appropriately included in decision-making. To achieve this, board members must have space to contribute to the conversation and be willing to speak up, and others must be prepared to listen.

Recognising levels of involvement differ between decision types

Although board members are collectively accountable for the board’s resolutions and actions, it is not realistic, or desirable, for every board member to be equally involved in every decision. Some decisions will be based on the application of an established best practice. Others will draw more on the skills of specific board members such that they may rely more on the recommendations of those with the relevant expertise. However, boards will also face some complex challenges and opportunities where there are fewer constraints on options, there is no definitive ‘best’ solution and factors are at play that you don’t know you don’t know (‘unknown unknowns’). These are the decisions that should include all board members, especially those who may hold a different viewpoint.

It is helpful if board members take time to classify different types of decisions and decide how each type of decision will be made. An established framework such as Cynefin provides a common language and consistent logical approach to support this. Once decisions have been classified, it is easier for boards to be clear on the level of involvement each board member should have in each decision.

To achieve inclusion in decision-making, the board meaningfully brings particular board members into the process when their contribution may add value. Individual board members should feel that they are readily able and duty-bound to contribute.

Setting clear expectations for participation

As chair, Janine sets clear expectations and ground rules for board members’ contributions. This goes a long way towards ensuring their thinking is both independent and readily shared. 

“There is an expectation that everyone participates. I don't have directors that don't speak. Even if they're not experts, I expect them to have a view on a topic, because that helps us to make sure that we make better decisions. Having only one or two people speak doesn't really help that decision-making process which is our role as a board.” 

 A culture of engagement across all board members supports diligence and respect too, as Janine explains.

“They know what my expectation is and if they don't speak out or I think they need to have a point of view, I'll always ask. It would be fair to say that my directors don't come to the boardroom without having read the board papers – it is pretty obvious if ever they haven't done so. With an inclusive culture you also need the respect of everyone around the board table, to ensure that they do actually listen.” 

Frazer strongly supports encouraging ‘outliers’ who challenge the board and present different ideas. But he is mindful that board members also need to be receptive and listen to both the outliers and those with more widely held views. They should then be prepared to absorb all they have heard, to pick out the best bits and ultimately to modify their own positions if that is appropriate. There is no place for too much ego in the boardroom. 

“I've found that makes governance hard work at times. On the one hand, you don't want a whole lot of ‘yes’ people – we want the vibrancy of dialogue and debate. But on the other hand it should be done in a courteous way, where people are actually listening and you actually hone the decision, so it's been refined as a result of the input from everyone, and everyone's prepared to listen and modify their positions.

“Unfortunately, I've had experiences where you've got the person who wants to rule with an iron rod and it's all just tokenism or lip service to have a board in place. I’ve heard it eloquently described that ‘you need a culture of convincing and cajoling, rather than commanding and controlling’.” 

Techniques to encourage inclusivity and different perspectives

Abby supports getting the fundamentals right. One of these fundamentals is to properly acknowledge and appreciate contributions from board members, especially when someone shares a position that differs from others.

“A board member with a different view needs to feel that there's a real willingness for the group to explore why their view is different to others, or where it differs and what's on their mind.”

Ngaio also sees the chair as having a critical role in ensuring every board member shares their views.  

“It's the chair’s role to bring voices into the room; it's the chair’s role to include people without putting them on the spot. It's also the chair’s role to ask people to play devil's advocate if we agree – in fact, especially if we agree quickly.”

One technique Ngaio uses is to look for any signs that inclusivity is missing. 

“For me it's when no one challenges an assumption. I don't take silence as assent. That's probably the biggest mistake that chairs can make – they take no response as meaning that everyone agrees. In fact, it really only suggests that the chair agrees! If we make decisions based on assumptions and we haven't challenged those assumptions, then I'm not sure that decisions are robust enough, so quite regularly we go back and ask people to give a different perspective.” 

Another of Ngaio’s techniques is to actively seek to hear everybody in the room: “I haven’t heard from you. Are you thinking with us or are you thinking something different? Can we hear from you?”  

And if a member’s contribution then shows they are thinking differently, the chair should make an inclusive response: “That’s a new perspective, thanks for that. How does everybody else see that?” 

In addition, it’s important to ensure that the board’s thinking has been adequately challenged: “You've agreed with everything just said. Any chance you could play devil's advocate – look at it from a different perspective for me?”  

Ngaio also credits Ruth Richardson (a former New Zealand Minister of Finance) with the easy ability to request another perspective from the group when she felt a decision was inadequately scrutinised. Her role as chair was akin to being the conductor of an orchestra: “Bring in the drums, come on, let’s have a devil’s advocate view.”

Actions for your board

• Discuss how the board will take different approaches to making different types of decisions
• Ensure each board member understands and agrees with how they will be included in different decisions (everyone should be included when facing complexity)
• Do not assume silence around your boardroom table means agreement
• Encourage contributions from ‘outliers’ who might present a different view or challenge your board’s thinking
• If your board agrees too readily on an important complex matter, take time to challenge your assumptions.

Download Realising your board's diversity of thought series as a PDF.

About the author

Lloyd Mander CMInstD leads DOT Scorecard, a consultancy that works with boards, executive teams and other teams to understand potential for wide-ranging diversity of thought and develop the decision-making culture that is required to realise diverse thinking.

He represents the Canterbury Branch on the IoD’s National Council and has held governance roles associated with the health, housing, transport, and entrepreneurship. Lloyd was previously a co-founder and the Managing Director of a regional healthcare provider.