Diversity in Leadership Teams

Last month, WeWork parent – the We Company – pulled its IPO after disclosing conflicts of interest and ousting its co-founder and then-CEO Adam Neumann for mismanagement. The company’s IPO filings were rocky from the start. Back in August, they faced backlash after their original filing for a lack of gender diversity among the board of directors. To address the issue, the company added Frances Frei, previously the senior vice president at Uber, to the board. The change, however, did not sway investors. 

When a startup makes plans to go public, it draws national attention, both good and bad. For WeWork, the first downfall was criticism surrounding its board of directors, who all shared similar gender identities. Looking at the bigger picture, it seems that organizations with a similar structure in leadership, particularly one that lacks diversity, are not achieving their full potential.

Diane Crawford, executive director of institutional culture at the Martin J. Whitman School of Management, explains that “homogeneous teams, because of shared similar perspectives, may limit the creativity potential” of an organization. She also adds these “shared experiences and perspectives influence decision making, risk-taking,” and “limit exposure to different creative ideas and solutions.”

Last year McKinsey & Company, a management consulting firm, released a “Delivering through Diversity” report. The report presents how organizations can use diversity as a driver of business impact. It addresses the relationship between diversity and business performance, explaining that there is a statistically significant correlation between diverse leadership and the financial outperformance of an organization. The report also found that the highest performing organizations in terms of profitability and diversity had more women in revenue-generating roles on their leadership teams. Similarly, top-quartile organizations for ethnic and cultural diversity on leadership teams were also more likely to possess industry-leading profitability.

“There are clear and compelling hypotheses for why this relationship persists, including improved access to talent, enhanced decision making and depth of consumer insight, and strengthened employee engagement and license to operate.”

McKinsey & Company, Delivering through Diversity 2018

Diversity, as Crawford describes it, can show up as age, gender, geographic, racial or ethnic diversity. “I think that a diverse leadership team inspires performance and innovation. They bring a diverse perspective that fuels innovation and creativity that drives success,” she says.

Employee morale can also be affected by a lack of leader diversity. According to Crawford, studies have shown that when diverse individuals see others like themselves in leadership roles such as a teacher or faculty, they are more likely to succeed and feel supported – a concept referred to as ‘role modeling.’

“If I see a woman CEO in an organization, I know it is not out of reach for a woman to make CEO,” she explains. “In terms of morale, when workplaces lack diversity, those from diverse backgrounds tend to feel isolated and alone.”

She went on to explain there is a phenomenon where underrepresented persons will try to fit in, experiencing imposter syndrome – acting like the majority population just to fit in – leading to identity confusion, impacting successful performance and not showing up as their authentic self. 

In June, a new bill was introduced to the House of Representatives. It is called the Diversity in Corporate Leadership Act of 2019 and would require issuers to disclose the race, gender and ethnicity of its board of directors and nominees for board memberships for annual shareholder meetings. 

Crawford commented that she believes the bill is necessary, given the slow progress of underrepresented groups in corporate America and higher education.

“Until there is true parity in this world, there will always be exclusion. It is unfortunate that Congress has to introduce a bill to enforce parity and equity,” she says.

Syracuse University is developing solutions on how to further create a more diverse and inclusive climate at the University. Learn more about what Syracuse University is working on.

Lindsey Godbout
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