In response to the increasing demand for diverse director candidates, Ascend, a nonprofit Pan-Asian organization for business leaders in North America, has partnered with The National Association of Corporate Directors (NACD), recognized authority on leading boardroom practices, to increate the number of diversity directors in boardrooms.
According to last week’s announcement, Ascend, through its Pan-Asian corporate board initiative, Pinnacle, will serve as a catalyst to increase the number of diversity directors in boardrooms by identifying highly qualified candidates for boards who have engaged NACD’s recruitment services.
Erin Essenmacher, Chief Programing Officer of the NACD talked to DIVERGE about why this is significant:
Why does diversity in the board rooms need to be a priority?
The role of the board, at its highest level, is ultimately to help ensure optimal performance that creates value for shareholders and supports the sustainability of the organization. We know that part of creating long-term value means having a robust mix of skill sets, experience and perspectives around the board table that align with long-term strategy goals. The business environment has become increasingly dynamic and disruptive driven by a whole host of things from globalization and digitization, to shareholder activism and shifting social and demographic trends.
These changes are driving a shift in those strategic goals. The skill sets and perspectives of the people sitting around the board table need to shift to meet the business where it is moving to. Ron Williams, the former chairman and CEO of Aetna who sits on the boards of American Express, The Boeing Company, Johnson & Johnson and Envision Healthcare, talked about this at our Global Board Leaders’ Summit last year and I think he put it best: “Boards have to reflect the communities they serve. It’s as simple as that.”
How will this partnership help address that goal?
We tell our member companies that if they are serious about creating real diversity on the board, they need to expand their lens and expand the pool of potential candidates by looking to new sources. The partnership with Ascend allows us to walk our talk. It gives us a strong partner in the corporate governance space, who is connected in with a different community.
Sometimes, there is overlap in our membership and sometimes there isn’t. This partnership allows us to connect with a broader, more diverse group of directors and potential directors that could be a great asset to the boardroom. We have many partnerships like this – both formal and informal – with a wide variety of groups to the same end. We have worked closely with the Executive Leadership Council (ELC), the Hispanic Association on Corporate Responsibility (HACR), Women Corporate Directors (WCD) and other groups to broaden our approach and our perspective to board education and resources.
We also have our annual Battlefield to Boardroom program, which takes retiring and recently retired military officers and helps train them for board readiness, as part of our diversity effort as well. Those men and women bring important skill sets to board service but are not a group that has traditionally been looked to serve as directors in large numbers.
How does diversity help companies evolve?
If you are a company who is betting a large stake of your strategy and future profits on expansion into China and you don’t have anyone on your board has understands China policy, has worked in China let alone even been to China, that’s a potential problem. If you’re not thinking deeply about how technology is impacting your business – because in this environment I guarantee you it absolutely is – that’s a problem.
Having someone on the board who brings experience with these kinds of issues is critical to helping the board make the best strategic decisions. Without that, the company risks a small blind spot turning into a big one that can lead to a misstep or a missed opportunity. Going back to Ron Williams’ point, if you don’t have people in leadership who reflect the communities you serve, it’s hard to serve them well.
It’s difficult to anticipate the next trend and the next great product, if you don’t understand your customer base, in relation to those innovations. It’s hard to serve your employees and build high performance teams if you don’t have leadership at every level who understands their needs.
How is diversity good for business in general?
There’s research out across many fields that shows that long term diverse thinking leads to more creative, innovative solutions. When a group is thinking homogenously, it leads to blind spots. One of my favorite examples came from Scott Kupor from the famed Silicon Valley investment house Andreesen Horowitz, speaking at our 2014 Summit.
He described how his team missed the chance to invest in AirBnB earlier because their group didn’t see the value. They didn’t see the value because they weren’t the initial target market for that service and they all came from similar cultural, socio-economic backgrounds, and similar travel experiences. They eventually got in, but at a higher price point. We see this dynamic play out at every level of business, including the board. Not only does diverse thinking lead to better innovation and decisions, it just makes sense. We live in a diverse and dynamic world. Our companies should reflect the world we live in.
