Diversity, Equality, and Inclusion on Corporate Boards

Organizations, investors, policymakers, and society at large are increasingly focused on fostering diversity, equality, and inclusion (DEI). Diversity, Equality, and Inclusion initiatives are driven primarily by two factors: enhancing long-term financial performance and contributing to societal objectives. Both financial and social motivations emphasize the importance of comprehensive measures of DEI. Innovation and improved financial outcomes result from cognitive diversity rather than mere demographic representation. Similarly, social progress arises from providing opportunities across various dimensions, including demographics, disability status, socioeconomic background, and education. Additionally, achieving both financial and social goals necessitates not only diversity but also equity and inclusion. 

 

There is a weak correlation between traditional measures of demographic diversity, such as the representation of women and ethnic minorities in leadership positions, and DEI . Ensuring that organizations prioritize diversity, equity, and inclusion is a fundamental responsibility of the Board as doing so aligns with good corporate governance and the expectation of Principle 2.2 of the Nigerian Code of Corporate Governance (NCCG).

 

Equality  means “offering the same rights and opportunities to everyone. This requires a proactive approach to make reasonable adjustments that address both the visible and invisible barriers that people face .”

 

Diversity is understanding that each person is unique. It means embracing people’s differences, including their beliefs, abilities, preferences, backgrounds, values, and identities. It recognizes people with differing identities, background and experiences and advocates equitable access to resources and decision making.

 

Inclusion is an extension of equality and diversity. It means that all people, without exception, have the right to be included, respected, and appreciated as valuable members of the community.

 

Creating a diverse environment is not sufficient; fostering a culture of inclusion where individuals can fully express themselves is essential for the effectiveness and sustainability of equality and diversity efforts. 

 

Increasing diversity on the Board offers several benefits, including:

 

a. Better alignment with Stakeholders: to avoid a disconnect between Board members and stakeholders, it is imperative that the Board reflects as much as possible, the larger society. By having members with diverse relevant experiences, decision making will be more informed and supportive of stakeholders. This will involve being intentional about the Board's gender split, age groups and ethnicity. 

 

b. Fair and transparent Decision making: A more diverse range of Directors help to make sure that the organization is fair and open in all its dealings.

 

c. Enhanced innovation and adaptability in response to evolving changes: Having a range of perspectives and experiences on the Board, helps the Board to remain innovative, relatable, and agile to adapt to changing environments as a diverse Board is composed of a broader mix of skills, knowledge and experience which should give it greater flexibility to overcome challenges.

 

The key strategies for promoting Diversity, Equality and Inclusion on the Board include: 

 

a. Fostering an inclusive Board culture: The Board Chairman plays a key role in setting the board culture and creating an inclusive board. In turn, this impacts the organisation's overall culture. Where the Chairman takes time to attend Director onboarding sessions and periodically meets one on one with Board members, this can help provide insight into how best to support board members to participate and identify areas for learning for the individual Directors and the Board collectively. 

 

Boards can create a set of expectations regarding how members should conduct themselves during meetings, send post-meeting surveys to obtain regular feedback and gauge culture, as well as create opportunities to connect outside the boardroom.

 

b. Conducting regular reviews of skills and diversity on the Board and setting a positive example for the Organization.

 

c. Being transparent about the Board’s diversity goals and progress can help to create a more inclusive and diverse culture as transparency is key to building trust and fostering a sense of belonging among all members of the Board.

 

d. Boards should periodically review governance policies, procedures, and practices to ensure that these support DEI. This may include revising Directors’ selection and appointment policy such that diverse candidates are considered for Board positions as well as implementing a Board diversity policy (Principle 2.4 of the NCCG) that describes the Board’s dedication to DEI, its goals for underrepresented groups, and its methods for locating and appointing candidates from various backgrounds. A board diversity policy encourages organizations and society at large to move toward a more equal future.

 

Boards that commit to diversity, equality and inclusion are more likely to set a positive example and tone for the organization. Seeing their identities represented at board level can signal to employees how seriously the Board is furthering these issues and is following an appropriate and deliberate strategy for delivering its purpose and setting inclusive values and culture.

 

Furthermore, to prevent the revolving door effect of skilled individuals leaving the organisation due to a culture that is not centred on inclusion and equality, organisations need to work on reflecting, learning and improving on their practices.