Boardroom diversity key to crises

Good 'critical mass' ethnic, gender mix needed for strategic thinking, female activist advises

by Maya Kaneko

Kyodo News

Bringing fresh perspectives to boardrooms by promoting diversity in gender, race, culture and age has become vital to companies struggling to recover from the global economic crisis, a key U.S. advocate for women’s leadership says.

Beth Brooke, global vice chairwoman of accounting giant Ernst & Young, who has been named three times by Forbes magazine as one of the World’s 100 Most Powerful Women, said during a recent trip to Tokyo that business success today hinges on the ability to develop diverse teams and get the most out of them.

“I really do believe that cultural diversity or diversity more generally is a very important key to re-creating the global economy,” she told a meeting of the American Chamber of Commerce in Japan.

Brooke presented her company’s latest report, titled “New Global Mindset,” at the World Economic Forum in Davos, Switzerland, in January. It found that cultural diversity offers flexibility and creativity, and drives innovation needed for companies to maintain a competitive edge.

As an example, she said many companies are now turning their eyes to women in emerging markets, because they are key consumers of their products and services, and promoting cultural diversity within the firms can help in understanding the demands of consumers in those markets.

“Too often diversity has been talked about in terms that it is ‘right’ and a ‘nice’ thing to do. But we are fundamentally trying to change that conversation,” Brooke said.

“It is a smart thing to do, and frankly in these economic times, it is an absolute imperative to appreciate the power of diversity from innovation perspectives and achieve better outcomes for society.”

As a tangible step to use diversity as a tool for success, she said companies should first create a “healthy clash of ideas” and “invite dissent” to boost companies’ energy and creativity. But leaders have to carefully manage diverse groups to avoid disastrous outcomes, she added.

Brooke pointed out that research shows diverse teams actually outperform homogeneous groups and stressed the importance of creating a safe environment for people to express differing views, and then embracing their ideas.

U.S. President Barack Obama is known for listening to dissenting views to avoid marginalizing those who disagree, she added.

Brooke also said it is important to have a “critical mass,” a group of people with diverse backgrounds that account for at least 30 percent of the total, to make their voices heard and advance changes.

If there is only one woman or one person from a minority group, their presence tends to be regarded as “token,” she said.

Brooke said Japan, which is more homogenous than the U.S., will have “great opportunities” as the nation is facing major demographic shifts toward older generations and the need to “think differently” about utilizing female and non-Japanese workers.

She welcomed news that the mayor of Bunkyo Ward, Tokyo, has announced that he plans to take about two weeks of paternity leave in April to encourage other male employees at the ward office to follow suit.

Touting the case as a “very good example,” Brooke said, “It’s important for the mayor to say ‘This is for everyone and I support you.’ “

Top leaders should visibly assist subordinates to change the culture of their groups and ditch expectations that someone should work 24 hours a day to succeed, she said.

Brooke, who was a U.S. delegate to this year’s session of the U.N. Commission on the Status of Women in March, said she found European countries were ahead in terms of public policies to encourage women’s participation in the workforce, whereas moves in the United States toward the same goal were being led by the private sector.

Noting that Norway has introduced a quota system to allocate 40 percent of corporate board membership to women, she said such a measure can be “the last resort to force change” when voluntary efforts by the private sector are insufficient.