4. Identify and appoint diverse talent

Board appointments must be based on merit, the needs of the board as a collective and its strategic objectives. A robust and objective process will enable the best talent to be put forward for consideration.

Director candidates are often identified through personal networking or word of mouth. By focusing on ‘who we know’ and shoulder-tapping, potential candidates may come from similar social circles or professional relationships which can perpetuate the status quo in board composition.³ There needs to be clarity about what skills are required rather than who the board may know. Formal and transparent appointment processes will help ensure appointments are based on merit.

Diversity is not about throwing the baby out with the bath water. We need to retain the wealth of knowledge and experience of senior directors and ensure they are champions for diversity.

It’s important to also look beyond traditional sources of potential directors (such as chief executives, senior managers, lawyers and accountants) for candidates that have business acumen and core director capabilities but who also have diverse skills, experience and attributes.

Tips for identifying and appointing diverse talent:

• Skills first: recruit on the basis of merit and capability
• Establish a proper process for appointments and benchmark all candidates
• Ensure nomination committees and interview panels have at least one woman on them
• Ensure transparency in board selection and appointment processes
• Ask for CVs without names, gender, age, ethnicity, residential addresses and other personal identifying information to help reduce bias
• Do not accept short-lists with a lack of diverse candidates, have a process for returning to the market for further candidates
• Periodically advertise board positions to encourage greater diversity in applications
• Provide appropriate support for the candidates
• Seek the advice of search firms and ensure they have a commitment to diversity

Using a range of methods to identify candidates, such as search firms, databases and advertising will ensure the short list has a diverse range of candidates with the required skills and competencies.

Executive search firms provide services to identify and appoint board members, as do a number of other specialist services such as the IoD’s directorSearch.

Several government agencies provide diversity nomination services for their respective areas, these include:

• Ministry for Women
• Te Puni Kokiri
• Office of Ethnic Communities
• Treasury

Reducing the risk of groupthink

Board diversity is not an end in itself but a means to improve board effectiveness and company performance. When presented with options, a board with a variety of perspectives is likely to ask a wider range of questions. Whereas overly homogeneous boards run the risk of groupthink and can struggle with change.

Groupthink can occur when boards become deeply cohesive and of one mind. Members try to minimise conflict and reach consensus without considering alternatives. They can fail to weigh decisions against strategic objectives and assess risks of the preferred option. Irving Janis (1918-1990), a research psychologist who coined the phrase groupthink, identified eight symptoms that can indicate a groupthink problem exists.

Deloitte partner Juliet Bourke’s⁴ diversity research suggests that leadership groups are often dominated by people who tend to focus on outcomes and options. There is a need to widen the kinds of thinking we typically see at New Zealand board tables. Thought leadership tends to be broader and deeper if the group has a balance of problem solving approaches, including through discipline and functional/role diversity, gender and racial/cultural diversity.

Consequences of groupthink

³ NACD, The Diverse Board: Moving from Interest to Action, 2012, page 13.

⁴ Juliet Bourke, Which Two Heads are Better Than One? 2016 AICD