By-line: Peter Swabey, Policy & Research Director at The Chartered Governance Institute UK & Ireland
One of the issues on which The Chartered Governance Institute UK & Ireland has focussed work in recent years is that of diversity and inclusion, particularly at board level. It is axiomatic that diverse viewpoints make for better boards. However, persuading boards to accept candidates from non-traditional backgrounds can be a struggle. We often hear that there are concerns about whether they are ‘board ready’ or ‘promotion ready’ or ‘senior
enough’. Likewise, we see advertisements that require non-executive director candidates to have been CEO or CFO of a FTSE company, or state that a role has a ‘competitive salary’ but then ask what candidates are currently paid. Both scenarios merely perpetuate whatever biases candidates may have previously faced.
It was in the context of our work on diversity that, in Summer 2019, we began to work with Justine Lutterodt and the Centre for Synchronous Leadership (CSL). We saw companies grappling with the desire to improve diversity without compromising performance and were drawn to Justine’s concept of Mindful Exclusion. The notion of ‘excluding better’ struck a chord.
We soon realised, however, that Mindful Exclusion addressed a wider range of issues relating to good governance, beyond boardroom and workforce diversity. It provided a deeper systemic lens for examining our criteria for decision making and aligning them with our ultimate objectives. Grounded in insights from social psychology, Mindful Exclusion was less about understanding the nuances of specific issues, and more about understanding ourselves as human beings and the influences that drive us.
We embarked on a journey of exploring how the principles of Mindful Exclusion, with which CSL was so familiar, applied to governance. This involved qualitative interviews conducted by CSL, roundtables with a mixture of Institute members and senior leaders from CSL’s network, and a number of fruitful bilateral discussions, as well as a quantitative survey completed by more than 300 company secretaries, directors, and C-suite executives, designed to explore these issues, and to understand what distinguished those who were coping well from those who were struggling with the volume and pace of change. Both Justine and I were taken aback by the level of overlap between the issues that Mindful Exclusion naturally surfaced and key trends that we believed were (and still are) shaping the future of governance.
And, of course, at the same time that we were doing this work, we found ourselves in the grip of the COVID-19 pandemic which has, of course, affected many of these trends. A dramatic shift was required in a short space of time – in some cases accelerating change, in other cases causing delays.
The research focussed on three core processes of decision making at the board and executive committee level: what was decided on, how these decisions were made and who was selected to make them. For each area, it sought to find out if there was evidence of mindless exclusion (i.e., if some things were being excluded that appear to be important for decision making); what distorting factors might be at play if there was evidence of this; what ‘mindful’ practices could potentially be used to counter this effect; and whether these practices led to more effective governance.
Because one of the key functions of boards – of management more generally – is decision making and exclusion is an inevitable aspect of decision making, since the choice to include one thing typically involves excluding another. Moreover, the problems we typically associate with exclusion are a result of the mindless way we tend to approach it. The challenge then is not to avoid exclusion but rather to exclude more mindfully.
It is time to stop demonising exclusion. As Michael Porter famously states ‘the essence of strategy is choosing what not to do.’ What actually matters is not whether we exclude, but how. Too often exclusion is mindless – driven by cognitive shortcuts that helped our ancestors survive on the savannah. Mindful exclusion is guided by vision, not reactivity. It takes into account factors beyond mere survival to deliver sustained organisational performance. Rather than being a form of rejection it is an expression of interdependency – directing power to whoever is best positioned to serve. This is the type of exclusion observable in high-performing teams and it requires diversity.
The CSL’s report has been divided into three sections to reflect those three core processes:
- Part I: Agenda, looks at the types of issues that were ‘mindlessly excluded’ from the boardroom agenda pre-COVID-19. Many of these – for example climate change – seem surprising or even shocking now;
- Part II: Dynamics, looks at exclusion in relation to how decisions in the boardroom are made and the types of conversations that are or are not occurring as part of group dynamics. We found evidence to suggest that boardroom dynamics are often distorted by the inclination to stick with what is comfortable, causing conversations involving vulnerability and challenge to be avoided;
- Part III: Composition, looks at who is making decisions and the types of people who are or are not being selected to join boards and executive committees, with evidence of resistance to selecting qualified candidates who have a different profile from existing board or executive committee members in terms of both lived experience and expertise.
The coincidental timing of COVID-19 has given the findings an extra level of significance, as the future of governance is being actively shaped in response to our new circumstances. This report provokes us all to get out of our bubbles (and avoid being ‘Bubble Bound’), notice our instinctive responses and reconsider whether the criteria that we use to make decisions are fit for purpose.
Having considered the criteria on which we base our decisions, we should not be afraid to make them, provided we are doing so mindfully. As Justine puts it, ‘being mindful of exclusion forces us to acknowledge that there is a universe of options that we are not selecting, and in some cases do not even see.’
The reports can all be downloaded from the The Chartered Governance Institute UK & Ireland website at: https://www.cgi.org.uk/knowledge/research/mindful-exclusion