Let’s shake things up and add more diversity to corporate management

They were met with doubt when they explained their ideas. People seemed so dismissive.

They were constantly asked, “Are you sure?”

Some were just downright condescending. One time they were told, “Listen ladies, you just don’t understand. People just don’t normally do it this way”.

When Kate Dwyer and Penelope Gazin launched Witchsy – an online marketplace for alternative art – they found the developers and graphic designers they hired, slow to respond and at times vaguely disrespectful.

So they created a third co-founder Keith Mann. This fictional character would communicate with outsiders over email.

“It was like night and day” explained Dwyer. “Not only would Keith get a response and a status update, but he was now also asked if there was anything else he needed.

Diversity in the workplace is incredibly important. It can help bring a business closer to their clients and widen their potential client base rather than leave them feeling alienated like the women at Witchsy. Hiring a workforce that reflects their market allows a company to understand and serve their clients better. If they want to win in their market, they need to hire within their market.

When diversity is lacking the same decisions are made, the same actions are taken, and therefore the same mistakes occur without question. Inefficiencies that the business suffers from go unchallenged because they are never noticed. And, creativeness and innovation cannot flourish among the workforce because there is no diversity of opinion or any difference in mind-set to accommodate fresh ideas.

Many companies do appreciate the benefits of workforce diversity. It’s more than just marketing – it’s a business imperative for them. Without it, you are diluting labour – an important factor of production. Diversity help increase labour productivity, which increases efficiency and delivers growth. It just make economic sense.

There is lots of evidence to show that it works. In a recent study by McKinsey, top quartile companies that are gender diverse were shown to be 15 percent more likely to outperform. Those that were ethnically diverse meanwhile, were 35 percent more likely to outperform. This is diversity’s dividend.

However, diversity isn’t going to pay unless it reaches the upper echelons of senior management. In the US, only sixteen Fortune 500 companies actively share their demographic information on their workforce. This does however; provide a decent dataset that covers 800,000 employees.

Unsurprisingly, 72 percent of corporate leadership at these companies consists of “white men” and this is where diversity is arguably needed the most. When you have diversity at a senior management level, it can foster loyalty across a diverse workforce and put senior management more in touch with who works for them. A happy and motivated workforce will serve the firm’s clients more effectively. It might generate more profit, which is good for the shareholders.

The status quo needs to be challenged. Something disruptive needs to occur to make senior management team more diverse. Otherwise, these corporate leaders are not working in the best interests of those who hire them – the investors.

A bold move needs to be taken. For instance, if you placed least 50 percent of women in senior leadership positions, this would present a powerful challenge to what is considered normal. Their presence would be brilliantly disruptive.

It’s not that women are necessarily better leaders or managers. But they don’t fit in with the traditional “old boys club” that appear cemented into the foundation of corporate structure. They don’t need to be in the right clique to climb the corporate ladder. Putting them in place would present a wonderful show of strength and diversity and might just bring about the benefits of change described.

If left unchallenged, these “old boys clubs” will perpetuate the homogenous mind-set that exists in corporate leadership. They encourage groupthink and are blinkered to risks that really ought to be challenged. They continue to exist because they have the mentality of a pack, whose interest is to keep their CEO in power and ensure their collective survival.

None of these individuals would survive outside this group, which is what makes them so feeble, including the CEO. They are underwhelming and uninspiring to their workforce. Yet they remain in power because they have secured territory and dispatched off any would-be challengers that are better than them.

The politics can be brutal and anyone outside the leadership club is vulnerable and exposed to the decisions made. It’s ironic because leadership is meant to serve and protect those that it is suppose to lead. This is what inspires a workforce and commands loyalty.

Instead what often happens is that they try to manipulate the outcome for instance by waving large wads of cash under the nose of their employees. This carrot and stick approach to motive people does work, and has been very popular in the banking industry. But it is a flawed system.

It commands very little loyalty because if a competitor to waves a bigger wad of cash, then your workforce deserts you. This is why the bonus culture got so out of hand pre-2008.

The global marketplace is constantly changing, so you need corporate leadership that is agile and able to adapt quickly to new challenges. In this fast paced information age, this is more important than ever. That’s why greater diversity in corporate leadership is crucial. If it doesn’t happen soon, shareholders will revolt. In fact, they already have.

Millions of shareholders revolted against some of the largest London-listed companies in 2016. Engineering group Weir Group lost plans to bring in a lucrative share deal for its top executives after 72 percent of shareholders revolted. That same year Drug giant Shire also experienced something similar, although it didn’t succeed.

The truth is that the old boys are just not good for business. Their set-up delivers them comfortable salaries for sub-optimal result. But it’s not their pay package that needs to change. If results are achieved, then they do reserve to be rewarded. What needs to change is the old boys themselves.

Let’s shake things up. Add a bit more diversity to corporate management – more women perhaps.

It might be good for business.