Nurturing Roles for Growing Better Boardrooms

By Helen Pitcher

Arriving at the Charity Gala Preview of this year’s Chelsea Flower Show in time to greet guests, the phrase ‘let a thousand flowers bloom’ came to mind. But of course, it is a misquotation, like many sound bites today. What Chairman Mao said in a speech in Peking in February 1957, was: "Letting a hundred flowers blossom and a hundred schools of thought contend is the policy for promoting progress in the arts and the sciences and a flourishing socialist culture in our land."

He was referring to a brief period when China’s intelligentsia was invited to criticise the political system. Today, in a very different political system, the need for debate and constructive criticism of the structures that govern our businesses is also acute.

As I wrote recently in my piece for Ethical Boardroom, one of the markers of great boards is their continuous questioning of themselves and how they can improve. Part of that questioning should involve the changing role of different functions, and whether they should be elevated in terms of their importance to the strategic development of a business.

Human Resources is one such function. Despite all the debate around the need for true diversity for better boardrooms, we repeatedly lose our way in emphasising just one component of diversity, and often it is gender. A fast-changing world demands cognitive diversity in boardrooms, and representation reflecting the perspectives of business customers to the greatest extent possible.

Targets on gender diversity have been set in the UK, and met – despite prevailing views six years ago that it was not possible to find women qualified to be non-executive directors on plc boards. But the figures on the representation of broader diversity, particularly around ethnicity and race, remain negligible.

The Financial Times has just published a special report on ethnicity and inclusion in the workplace which includes a list of the 100 most influential Black, Asian and Minority Ethnic leaders. The drive for companies to report pay on the basis of ethnicity is on, and HR departments need to step up to the table before they are dragged there by legislation.

As I wrote at the end of 2016, HR has an increasingly important role – on diversity, on the development and oversight of the leadership pipeline, and around general oversight for the culture of behaviour in the boardroom. It must not, as a department, get so bogged down in process that it loses sight of the goal.

While improving boardroom performance is about being proactive in rethinking functional roles, it is also about managing risk. As our Governance Watch has regularly highlighted, cyber risk and cyber security remain very much in the media headlines. Today they amount to a critical risk for the better corporate governance of any business.

Yet the issue of cyber security – which we are all wrestling with today – is one that is still being considered in terms of an IT problem in many businesses. This was underlined by the decision taken by the UK government to step into a leadership role with education and support.

But does HR see itself as a responsible team player in any digital transformation, intent on creating a way forward via recruitment and training?

It seems safe to assume that the pool of talent for issues involving technology and risk is likely to be of a younger generation than currently sits in our boardrooms. It may also be far more ethnically diverse, as anecdotal evidence certainly suggests that much of business IT is looked after by immigrants.

Which leads me to believe that there is a virtuous circle that can usefully be created here by the active engagement of HR directors in boardrooms.

There has been a lot of attention paid recently – again in terms of gender diversity – to how conferences are run in terms of the speakers who get the platform and the panelists who are invited to sit on a very visible podium. Social media has a tendency to call out all-male panels, just as the UK government called out all-male boards in the FTSE 100 until there were no more.

Except that it is no longer true that there are no all-male boards in the FTSE 100. As the Financial Times reports, the first all-male FTSE 100 board since 2014 was recently overwhelmingly approved by shareholders.

Boardrooms need regular debate around these issues for them to remain alive and a part of a responsive business strategy. Like all-male panels at public events, all-male boardrooms in 2017 suggest a blinkered business. A shortlist screaming out such lack of diversity should surely have raised alarm bells.

Coming back to the glorious Chelsea Gala Preview, we could not help being struck by the fact that our guest list was very diverse by gender, nationality, ethnicity and race. We noticed because the contrast was striking - there was largely a homogenous crowd of all-white faces at one of the most prestigious events of Britain’s social calendar.