Cognitive Diversity and the Board
CMA’s Associate Director George Weston discusses the difference between diversity and cognitive diversity when it comes to hiring on the board – and warns of the risks of groupthink.
When I’m discussing a CFO/Finance Director appointment I often get informed by a CEO that the board is keen to add ‘diversity’.
Now, diversity is hugely important, and obviously includes factors such as gender, race, ethnicity, age, education, and professional background. It is well documented that a diverse board can bring a wider range of insights and ideas to the decision-making process, which can contribute to better corporate governance, overall business, and board performance.
In fact, 82% of respondents in the 2023 PWC Annual Corporate Directors Survey say, ‘diversity enhances board performance’.
However, when I ask ‘do you mean cognitive diversity?’, that is an individual with a different thinking style, perspective and approach to problem-solving, I often get a rather blank look.
The CEO’s request is usually genuine, but by focussing on factors such a gender, race, ethnicity, age, education, and professional background, the board risks overlooking individuals who can bring a different perspective. They tend to appoint people in their own image, who are easily relatable and have a common background. This in turn can compound the lack of diversity they were trying to address in the first place.
Groupthink and the homogenised board
If the leadership team is longstanding or share very similar backgrounds, there is a risk of groupthink. Where those individuals are more inclined to conform to the prevailing opinions, the group minimises conflict and reaches a consensus decision without critical evaluation. Homogenous boards struggle to consider various factors and angles, leading to suboptimal decision making.
To leverage cognitive diversity effectively on a board, it is important to actively seek out and appoint individuals with different backgrounds, experiences, and thinking styles. Furthermore, fostering an inclusive and respectful board culture is essential to ensure that all members feel comfortable expressing their diverse perspectives and engaging in constructive dialogue.
However, it’s important to note that while cognitive diversity can bring many benefits, it also requires effective communication and collaboration to harness its potential fully. Board members must be willing to engage in open and constructive discussions to make the most of their cognitive differences and work together for the organisation’s success.