Tackling the ‘Diversity in Leadership’ Problem

By Matthew Owens

In 2023 it should be a source of embarrassment that diversity in the boardroom remains an aspiration and not the norm in most parts of the world. Progress has been made in recent years, particularly in terms of gender diversity, but the pace of change has been painfully slow. The FTSE 100 is leading the way in the UK (c.38% of Boards now include at least one woman), but the UK still lags far behind many other mature economies. For example, in Norway gender diversity in the boardroom isn’t just a nice idea, it’s the law; the boards of all publicly traded and public limited companies must have at least 40% female representation. Companies that do not comply (at least in theory) can be shut down. ‘Diversity in leadership’ is a multi-layered problem requiring multi-faceted solutions, but as we stand, nation states, employers and the ES profession as a whole have only addressed the tip of this particular iceberg.

Unsurprisingly Executive Search (ES) professionals are now clamouring to be part of the solution. As the call for greater diversity on boards has intensified, we have seen Search Firms increase their focus on diversifying their networks and their capabilities to meet this demand. This is making a difference, but the pace of change remains slow. Arguably, more needs to be done to highlight the substantive contribution the ‘conventional ES method’ (reliant on the rolodex of ES professionals and the CVs of their known contacts) has made to the creation of the ‘diversity in leadership problem’. When the hiring process is not inclusive, and or when ineffective steps are taken to manage the risks associated with cognitive bias and ‘noise’ (as described by Nobel Laureate Daniel Kahneman in his seminal work ‘Noise’), it can be no surprise that leader selection decisions continue to reflect both systemic and random errors. It is these built-in errors that contribute most to ‘the diversity in leadership problem’.

The ES Profession now faces its biggest challenge. Analysts are now shining an uncomfortable light on the impact of out-dated ways of working. There is an abundance of data indicating capable diverse and plausible candidates continue to be systematically excluded from the boardroom and from executive leadership teams. Buyers of ES services are waking up to this reality and are now better informed than ever before. They are demanding more reliable and more inclusive leader acquisition and selection advice. As a consequence, we are already seeing more innovation in the leadership advisory sector than ever before.

In 2023 the MU Research Institute conducted a literature review to understand the most recent research into diversity in the workplace. Diversity has different forms, and studies into the effects of more diverse or less diverse teams and their impact on business results need to bear this in mind. We can summarise todays scientific knowledge regarding the impact of diversity on team performance as:

  • Variety Diversity (diversity in personal characteristics) should be understood as a valuable resource and not a problem to manage. Recognising individual difference and the fluidity in them is an opportunity for leaders.
  • Separation Diversity (diversity in perspectives) should be reduced through inclusion. Separation diversity leads to opposition and antagonism which are counter productive workplace behaviours. Leaders should foster greater inclusion - cohesion, understanding and appreciation between employees
  • Disparity diversity (inequality) should be reduced through fairness. Greater equity and equality should be strived for (Harrison & Klein, 2007).

Gender diversity is just one dimension of the ‘diversity in leadership problem’, but for many good reasons this dimension has been the focal point of the debate for some time. Increasingly, more recent studies distinguish between forms of surface-level diversity (observable characteristics such as gender and ethnicity) and deep-level diversity (none observable characteristics such as cognitive diversity). How we measure and account for deep-level diversity  raises a whole new set of questions, and the language used to explore this topic is evolving faster than ever before. Our industry should be leading the debate when it touches on ‘diversity in leadership’, not just reacting or contributing from the side-lines. To increase diversity in teams and organisations, inclusive leaders and selection processes that include different individuals are paramount.

At Mercuri Urval, the home of Leader Selection Science®, we have quietly pioneered a different approach to leader acquisition and selection. Guided by science, each step in our process has been engineered to mitigate the risks commonly associated with the conventional ES method. A recent study undertaken by the MU Research Institute (based on more than 10,000 leadership appointments between 2019 and 2021) concluded unequivocally that our science-based approach to leader selection is factful, effectively mitigating risks of subjectivity, stereotyping and shortcutting found in conventional recruitment decision making.

There is insufficient room here to explain how every component of the MU science-based method assures inclusiveness, and so diversity, but one significant recent innovation can be singled-out to highlight the impact of good science on decision-making when making senior appointments. One of the most significant in-built flaws within the conventional ES method is the way in which ES professionals and clients evaluate the track record of candidates. How candidates present themselves in CVs, on social media, and in interviews clearly has a profound impact on those making inclusion and selection decisions. Without a robust science-based, evidence-based approach, many qualified ‘diverse’ candidates are overlooked and not included in shortlists. To address this issue, in collaboration with Mercer, the global leader in position benchmarking, the MU Research Institute has developed a unique position benchmarking tool to increase consistency in track record evaluation. This tool enables MU Experts to objectively evaluate the career progression of candidates when matching them with senior leadership roles. One very significant consequence of this analysis is the inclusion of candidates based on facts and evidence, and not irrelevant criteria triggered by either bias or ‘noise’.

More work needs to be done by many in our profession to address the barriers to inclusion at every level of the business community, not just at a leadership level, but unless the profession as a whole starts to make the changes needed, the pace of change in the clients we serve will continue to be glacial.