I regularly get asked by directors to help them find a ‘diverse’ board member because I’m a known people connector and champion of the role of diversity of thought in the boardroom. 

While we can all agree to have a diverse board (from a gender, ethnicity etc) perspective is what we absolutely want from an equality standpoint, it is not necessarily what will lead to the best decision making in the boardroom. 

Here, we are looking for ‘diversity of thought’. This is the culmination of one’s experiences, skills and background along with their demographic characteristics. To give a crude example, adding a fourth male director to a board of three males may result in more diverse thinking if they have experience in an industry different to the other three, rather than adding a woman with experience in the same industry. 

However, it is true that what you can superficially observe is often our best proxy for diversity of thought, so it is often one input for a new director ‘wishlist’. 

Here are some ideas on how you can build diversity of thought in your decision making: 

Expand your search to board ready first timers. We estimate that <20% of kiwi start-up directors are female, with almost half of those being the investor director. It can be challenging to find a qualified female director (or other underrepresented group in Tech) from this very limited pool, which means you might need to lower your expectation on the level of core governance experience they have. By opening your mind to appointing someone with less governance experience, you will also be helping to make that pool bigger.

Ask yourself: 

1. Can you take comfort in the level or core governance experience you have elsewhere at the table, and together make a commitment to mentor your freshie? Consider this in the context of the hierarchy of other criteria you have. Is governance experience more important than e.g intros to customers, experience in complex sales. Intelligent people can learn what good governance looks like, and what being a good board member means very quickly if they are learning from the right people. 

2. Can you find out what other experience they have which is in fact relevant governance experience? E.g. advising a CEO formally or informally, having a exec role which inputs to board reports and interacts with the board, holding a role on a NFP board.

3. Are you making a conscious effort to understand whether you are subjecting the candidate to my unconscious bias? If left unchecked, you may find yourself with similar people around the table. Question your assumptions, for example: a lesser known logo doesn’t mean they don’t have the skills, more tenure in a specific level doesn’t mean they are an under performer. An objective competency framework should in place, along with running a respectful process. 

Remember:
you were a first time board member once, and someone bet on you! If you are truly prioritising diversity of thought, then you should be open to taking on a freshie and mentoring them on governance. 

Have a refresher term for independent directors
What a board needs over time will change, depending on the composition of other members, and the key challenges and opportunities immediately in front of the company. Unlike investor directors who are appointed and may be replaced in connection with a capital raise, independent directors are often not tied to a specific period. Consider attaching a term to your independent directors (e.g. 2 years, with ability to extend) so that they are in place at the point in the company’s evolution which best suits what they bring to the table (and…..if they are not performing, it can also avoid an awkward removal exercise……). This will provide you with opportunities to revisit the level of diversity of thought in the room, and appoint a new individual/s in line with these gaps and the company’s needs of the time. 

Host an Observer.
Together with Sophie McLernon, I run a program called OnBoard. OnBoard places leading talent from the tech sector on start-up board as an Observer as an entry to governance. You don’t need to be part of a program to capture the value an observer can bring. Once an NDA or Letter of Appointment is signed, and very simple steps are implemented to avoid director’s liability, it is a very very low risk way to access fresh perspective, while developing an individual to build out that pool!.

Top tip:
Host them for one year, then set them free - they won’t be extracting value after one year, and if they are delivering you value after a year, you need to appoint them to an independent director or advisor role. 

And then….
make sure you have a board culture that enables you to fully realise the benefits of diversity of thought. New board members bring different perspectives, with might include challenging the status quo. They need an environment that invites authentic sharing and robust discussion in a manner that makes sure that all voices are heard (1). A couple of tools to build psychological safety include balanced turn-taking and ‘social sensitivity’ (being skilled at understanding how others feel based on tone of voice, facial expression and nonverbal cues) (2).

We would love to share your ideas on ways to build on diversity of thought in the boardroom. Please get in touch so that we can all learn. 

- Cassie McAdams, OnBoard Founder, Movac Investment Manager