13 January, 2017

Pale, Male and Stale?

The collapse of Kids Company underlined the importance of ensuring that ‘groupthink’ doesn’t pervade charity boards and that trustees are sufficiently diverse to provide effective challenge. But what does diversity really mean, and how can charities achieve it?

TANIA MASON reports.

The recent Parker Review of ethnic diversity on private sector boards highlighted that just 8 per cent of all FTSE 100 directors are non-white and over half of all FTSE 100 companies do not have any non-white directors.

Similarly, research by Inclusive Boards into the boards of the UK’s 500 largest charities in November last year found that more than half (57 per cent) had no black, Asian or minority ethnic (BAME) trustees.

Yet 14 per cent of the total UK population is from a BAME background, up from 2 per cent in 1971, and by 2030 this proportion is expected to reach 20 per cent.

Lord Davies’ latest Women on Boards review, in 2015, found that women made up 25 per cent of all directors on FTSE 100 boards – twice as many as during his first review in 2011. Yet there were still fewer women chairing FTSE 100 companies (three) than men called John who did so.

It was a marginally brighter picture on the boards of the largest 100 charities in 2015, but not by much. There were 16 women chairs of these charities, compared with 11 chairs called John.

The Charity Commission’s records show that out of 810,000 trustees, only 4,200 – just over half a per cent – are under 25. The average age of trustees is 57.

The depressing picture painted by all this research is of a corporate and charity governance culture that is resolutely pale, male and stale. Women, young people and BAME people are few and far between in UK boardrooms.

Do you recognise this picture in your charity’s boardroom?

Better decision-making

Ian Joseph, chief executive of Trustees Unlimited, points to a “growing, compelling body of evidence” which demonstrates that diverse boards make better decisions. It is certainly true that high-profile failures of governance have occurred where boards are less than diverse. The Financial Services Authority attributed the collapse of RBS largely to the homogeneity of its board. And the Public Administration and Constitutional Affairs Committee said that the lack of relevant experience and knowledge of Kids Company’s activities by its trustees was a major contributor to its failure. The Governance Forum says: “It is clear that negative board behaviour such as groupthink perpetuates where boards are stagnant and their composition stereotypical.”

But what does diversity mean in practice?

Kai Adams, a partner at recruitment agency Green Park, says there is no single common definition of diversity and that a lot of work Green Park does with clients is to encourage conversations that start ‘what do you actually mean by diversity and inclusion? What are you looking for? Do you want greater female representation, or younger trustees? Or do you want more challenge from the top – better questions from the board or senior management?’

Visual vs cognitive

“Diversity can be that which is visible – gender, race, age, for example – but it can also be about our experiences,” Adams says. “Visible diversity is a good indicator that an organisation is thinking about diversity, but they also need to think about cognitive diversity; that diversity that goes with experience, with having done things in different areas, different geographical locations, different organisations, different sectors.

“As our chairman Trevor Phillips says, it’s all well and good having a balance of men and women, for example, or black and white, but if all of them listen to Radio 4 and read The Times then you don’t have diversity.”

Andy Gibson, founder and head gardener at mental health promotion agency Mindapples, refers to this as neuro-diversity.

He says that diversity is one of the three things – alongside staff motivation and wellbeing/stress levels – that the most progressive organisations seek to measure and manage. But it goes beyond gender, age, race, or religion, to include functional diversity (the expertise that people have); cultural diversity (their background, the languages they speak); and also neuro-diversity.

“Neuro-diversity is about having a broad range of personalities on your board or in your organisation; some who are risk-averse, some who love trying new things; some who love people, some who just want to be left in their dark corner to get on with their work. Generally speaking, if you have a range of personality types in your organisation, creativity seems to improve, decision-making improves, and you de-risk some of the factors that contribute to stress.”

Ian Joseph adds that anecdotally, his experience of working with boards and being on boards is that diverse boards definitely make better decisions. “I’m on the board of an Olympic legacy charity and we have a member of the cabinet of the local county council as a trustee. I’m constantly amazed when we’re debating an issue and I’m coming at it from one angle but David sees the political angle and I’ve been totally blindsided by it. Many’s the time I’ve sat there and thought ‘thank goodness David’s here’ because we would have totally missed that angle otherwise. That’s diversity in action.”

Is diversity particularly important in charities?

Mohamed Omer, chief executive at cemetery charity Gardens of Peace, believes that diversity is even more important in civil society than in other sectors, especially within national organisations that serve the wider community. This is because trustee boards and senior teams are there to make policy, but if they are not fully clear on the requirements of certain communities, they can’t make the best policy or provide the best services for all their beneficiaries.

Similarly, Lesley-Anne Alexander, former chief executive at blindness charity RNIB, says what really sums up the issue for her is “reflecting your customers in your decision-making processes”. RNIB has been keen to get more blind and partially-sighted people on its staff but also onto its board, to ensure they are involved in making key decisions.

“You don’t get onto RNIB’s board because you’re blind,” Alexander says, “you get there because you’ve got the skills that we have identified we need from our trustee appraisals and skills audits. But we deliberately go looking in places where blind people hang out to try to find people with those skills – we advertise in audio books, for instance, or on websites configured for partially-sighted people.”

But she also qualifies this with the reminder that “not every blind person wants to work for RNIB, which is where this whole issue gets a bit tricky”.

“Some say: ‘no thanks, I want a real job with a decent wage, not charity money’. Others say: ‘being blind is really tough, I don’t want to have to deal with it all day as well as live with it’. And yet others say, ‘I want to get a job on my own merits, I don’t want my mates to think I only got this because this is where blind people work’. So what this tells me is that diversity is really tricky and you simply can’t please all of the people all of the time.”

Diversity can be more difficult to achieve in charities that are established to serve specific groups, as many are. But Kai Adams argues that even these can benefit from increasing their board diversity.

“Let’s take the case of a Muslim charity – a board of all Muslims serving a community of all Muslims. What the board and any recruiters working with that board need to think about is ‘have you got cognitive diversity on that board? Have you got a range of experience?’ I’d argue that they might benefit from someone who is non-Muslim. While it’s not wrong to have an all-Muslim board, it’s not giving them the broadest range of thinking and it’s not allowing the board to challenge and ask as many questions as it might otherwise do, because they’re all probably very like-minded.”

Joseph adds that a diverse board can increase public confidence in an organisation. “A lot of charities promote equality as one of their objects and to say that and then not have it reflected in your board is a bit disingenuous. It helps if people can’t accuse you of being just a bunch of white men all from the same background, but that you actually represent the society that the organisation is working in. There’s an accountability aspect there which is important.”

Young trustees

Alexander also touched on the challenge of recruiting younger trustees. She said: “My 28-year-old son would no more sit in an RNIB board meeting, reading our telephone book of papers, and do business in the way we do business, than fly. If we want to attract young people to our organisations then we have to start doing things differently.”

ActionAid, however, recently recruited two people under the age of 25 to its board, and its chair Margaret Casely-Hayford says they are fantastic. She admits she had concerns because of the numbers of people who warned her ‘they won’t be properly interested, they won’t be able to engage, they won’t have enough experience’.

“But ‘not having enough experience’ was the same excuse that was used to keep women off boards and if we continue to use that excuse we will never bring new blood into our senior management or onto boards,” she says. “What’s required is support, mentoring, training. Our young trustees are fantastically intelligent people, I’m so impressed by them. We’ve got a couple of senior trustees mentoring them so they understand the issues and deal with them at an appropriately high level.”

Increasing diversity

There are many tactics you can employ to increase diversity on your board. But Adams warns against setting a ‘diversity strategy’.

He says he often hears people talking about delegating authority for diversity to their charity’s HR director or diversity & inclusion specialist, or some other individual or business unit. But, a bit like the digital agenda, this isn’t something you can hive off.

“There shouldn’t be a diversity strategy, you need to have a corporate strategy within which diversity is a really important part. It needs to be ingrained in the fabric of your organisation.”

Guy Pink, executive director of HR and interim CEO at Addaction, recommends starting by establishing a set of values and making sure your organisation lives and breathes them. Then, carry out skills audits of boards and senior leadership teams, use competency-based recruitment, and make sure you have flexible and home-based working policies. Alexander suggests advertising roles where your target audiences are. Adams advises ensuring your headhunters are properly briefed, and that all your external communications reflect the diversity of your organisation.

Skills beat diversity

But Adams also cautions against tokenism; any approach to someone to join a board must be a legitimate one. Charities must never recruit on the basis of diversity alone; the right skills have to be there too.

“My boss [Raj Tulsiani] gets approached to join boards a lot, and he always asks, ‘do you want me because I’m a British Indian, or because I’m an entrepreneur or chief executive?’ You have to give people a mandate for why they are coming onto your board, and hopefully it’s because of their leadership qualities or technical skills, not just because they’re a woman or a member of the transgender community.”

And diversity in and of itself can only go so far in improving the culture and productivity of your organisation. Adams says inclusion is just as important: “It is a place that really listens to differences of opinion, differences of culture, and appreciates those? We are told time and again by women, or young or minority ethnic trustees, that they lose interest because they will say something at a board meeting, it will be politely nodded at, and then ten minutes later one of their older white male colleagues will say the same or similar and everyone says what a great idea it is. We hear that again and again, worryingly.”

Andy Gibson adds: “Diversity in your organisation only really benefits your business if you also have an open culture where people’s opinions are heard and respected – otherwise you negate all the positive factors that you have created by having a diverse workforce.”

And all agree that getting people with the right skills is the highest priority for any organisation. Mohamed Omer says: “Skillsets is the most important aspect for any board of trustees. That must take priority.”

Targets for improvement

The recent focus on diversity in the sector has prompted various organisations to produce a flurry of recommendations and targets to improve the situation. In May 2016 the Equality and Human Rights Commission published guidance for companies and executive search firms on improving the diversity of company boards, and its six-step guide is useful for charities too. 

Inclusive Boards has implored the government to set a target of doubling the number of BAME trustees to 12.6 per cent by 2020, and said the Charity Commission should play a proactive role in strengthening diversity, using the private sector as a benchmark for best practice. 

The draft Charity Governance Code recommends that boards ought to publish an annual explanation of what steps it has taken to address the diversity of its board’s and organisation’s leadership and explain which targets have not been met. 

 Tania Mason is editor of Governance & Leadership magazine

This article was published in Civil Society Magazine. Visit their website on www.civilsociety.co.uk

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