Good diversity practices improve ethical resilience

Recruiting people from diverse backgrounds, with ideas that question the status quo, can change an organisation for the better.

Leading and sustaining a successful and ethical business can be a complex game. For some people, it is made all the more (seemingly) complex by bringing together individuals with different backgrounds and perspectives.

However, we now know that well-managed, diverse teams lead to greater benefits for a business, including more innovation and creativity. Some organisations are still connecting the dots in understanding the impact that good diversity practices – which should encompass inclusive behaviours and understanding of unconscious bias – can have on improving ethical decision-making and corporate governance.

Gender diverse boards perform better

According to a 2010 Australian study of 849 directors on more than 100 boards in Australia and New Zealand, board members on gender-diverse boards believe they add more value than male-dominated boards through the quality of their decision-making.

They also believe that directors on gender-diverse boards act with greater integrity and require better documentation of roles and responsibilities.

In addition, several studies have shown that gender diversity on boards brings fresh thinking, increased focus on problem-solving and greater transparency.

It’s tempting to infer that the reason for this higher emphasis on integrity is because women bring ‘different’ and ‘special’ qualities. But that’s one of those flawed cognitive shortcuts that do more damage than good.

What really counts is the different dynamics that characterise gender-diverse boards, rather than women perceiving matters differently from men.

As organisations begin to extend their diversity focus – from inherent diversity (traits such as gender and ethnicity) to inclusive leadership that encourages diversity of thinking – we start to appreciate the positive impact this can have on business ethics.

Learn from mistakes: BP Deepwater Horizon oil spill

In 2011, one year after the Deepwater Horizon oil spill in the Gulf of Mexico, I joined a global facilitation team for BP’s newly formed Diversity & Inclusion program. As a result of this crisis, and following a range of independent studies on the situation, it became clear that decision-making biases and the lack of a ‘speak-up’ culture about safety issues were factors that contributed to the disaster.

I say kudos to BP for its subsequent commitment to ensuring its leaders act with greater awareness of core values such as safety, respect and courage.

Although we’re all susceptible to forces that make us ignore risks, leaders at all levels of an organisation can take steps that will encourage diversity of thought and potentially reduce ethical risk.

How to promote diversity

1. Be aware of cognitive biases

We all have biases, but we’re often not aware of them. Psychologists and behavioural economists have highlighted many biases that impair our ability to make objective and effective decisions.

2. Give teams express permission to disagree with you

Some leaders appoint a ‘devil’s advocate’ in meetings to encourage multiple perspectives. One CEO we know routinely tells colleagues “you have an obligation to disagree with me”.

3. Engage team members from outside your regular circle

Inclusive leaders make a real effort to understand the experiences of people who are not part of their tight-knit in-group. Where you hold meetings and who gets invited can make a significant difference.

4. Invite Team members to put their Opinions first

This is a simple leadership tactic to avoid ‘priming’ or ‘framing’ bias – when we unconsciously ‘plant’ ideas.

5. Actively measure Diversity

Track gender, cultural and age diversity as indicators of how your organisation is leveraging different perspectives. Use surveys to track employee perceptions of being able to speak up and contribute to decision-making.

6. Openly support diversity and inclusion

Our experience with companies in Australia supports global research that shows leadership teams which have a highly visible commitment to diversity and inclusion are more likely to make significant diversity progress.

*This article first appeared in the Australian Institute of Managers (AIM) 'Leadership Matters' publication.

 Diversity of thinking contributes to ethical resilience.

Diversity of thinking contributes to ethical resilience.