The case for greater gender diversity in non-profit boards

    By SHAI GANU and SUHAIMI ZAINUL-ABIDIN

    The Business Times, 5 March 2020

    Board diversity is becoming increasingly important, but it is especially so for non-profit groups, given the diversity of the people they serve.

    EVEN though there has not been a definitive study linking demographic diversity of an Institution of a Public Character (IPC) or non-profit organisation (NPO) board to high organisational performance, it is difficult to imagine anyone arguing otherwise.

    The Council for Board Diversity (CBD) interviewed a few prominent corporate and NPO leaders - Edmund Cheng, Anita Fam, Ho Kwon Ping, Lee Tzu Yang and Chandra Mohan Rethnam - for their views on the issue of board diversity and its importance for NPO governance.

    We thank them for their invaluable contributions towards this article and to the cause of improving diversity on boards in Singapore.

    NPO leaders largely agree that diversity is simply good business practice, and that diversity is especially important to NPOs because charities exist primarily to support beneficiaries who come from diverse backgrounds or circumstances.

    Diversity should necessarily be part of each NPO's value system and formally recognised as being critical to supporting its mission. It is more important than ever for NPOs to have truly diverse and inclusive boards.

    Homogenous boards are more likely to fall prey to strategic blind spots and to miscomprehend the full impact of their decisions on the diverse communities it seeks they seek to serve. On the flip side, diverse perspectives lead to better identification of opportunities and risks, and generally better outcomes for the organisation.

    Given that the reason for several NPOs' existence is to serve the broader community - comprising individuals from diverse backgrounds - the lack of diversity on any NPO board can only be described as disappointing. Diversity and inclusion must be central to the sector's and each NPO's vision of advancing and achieving its mission of public good. The NPO sector is expected to bring communities together and speak out against systems and practices that marginalise, exclude or even harm particular individuals.

    To do this effectively, they need to embrace diversity and inclusiveness. To this end, targets - such as that the one set by CBD to achieve 30 per cent women on boards - should only be seen as the bare minimum. NPO boards must constantly review and seek to improve the quality of its diversity.

    No shortage of capable women willing to serve on boards

    Many NPO chairs still claim difficulty increasing the gender diversity of their boards, despite acknowledging its value to the board and the organisation. With their boards now comprising 27.4 per cent women, it would seem that the top 100 IPCs in Singapore are faring better than the top 100 Singapore Exchange primary-listed companies (15.7 per cent) and statutory boards in Singapore (24.5 per cent).

    Yet, the IPC's women-on-board percentage is the only one that has failed to rise since the end of 2018. Four out of the top 100 IPC boards remain fully male.

    The notion that there are no women with both the passion and the ability to be effective NPO board directors is simply untrue.

    One would certainly need to look out for them, but one would not need to look too far to find them. A rising number of women have risen to C-suite positions, especially in the past decade, and there is as well also a substantial pool of talented women immediately below the C-suite level who can be particularly suitable for NPOs.

    In addition, many enlightened companies now encourage their high-potential talent, including women, to seek developmental experience outside of the organisation, including taking on non-executive director positions at NPOs. So, there is no shortage of willing and able women for NPOs to tap.

    Communicate your diversity philosophy

    Organisations should discuss and agree on concrete steps and targets to improve board composition, diversity, engagement and communication, and, ultimately, board performance. A case can also be made for being transparent and going public with the organisation's diversity policy. This would represent true commitment to the cause of furthering NPO board diversity, including gender - though few NPOs in Singapore have taken this bold step.

    Cast the net wider

    The majority of NPOs today still exclusively or primarily recruit new board members by word of mouth. This often reinforces continued homogeneity on the board. Directors - and, indeed, all individuals - are often unaware of how limited their networks are, because people tend to interact most with others within the same circles. There is a much larger universe of candidates out there, and NPOs simply need to cast a wider net.

    Boards should consider using executive search firms, as they have databases of people with diverse skill sets and backgrounds. Some professional search executives may be open to giving such recommendations on a pro bono basis.

    The Centre for Non-Profit Leadership (CNPL) also operates Board Match, a programme which matches senior executives from the public and private sectors to NPO boards. It maintains a pool of CVs from existing and aspiring NPO directors with a very wide range of useful skill sets and diverse backgrounds. This is often the first port of call for many well-run NPOs in Singapore when they need to draw up a shortlist of board candidates.

    Most NPOs have also, in more recent times, relied on online and social media job postings, using LinkedIn's Talent Solutions tool (which has a dedicated module for NPOs) and also seeking recommendations from key donors and experienced volunteers.

    Grow the pool of first-time directors - and mentor them

    NPO directors should also bear in mind that, as with most men, the majority of women directors were appointed to their first board seat because someone actively championed them. New members of the boardroom are often introduced by more experienced directors who have seen them in action and can vouch for them. To embed the culture of effective board renewal into the NPO sector, NPO directors must actively champion new or younger potential board members, and also look to mentor them.

    Pick the relevant diversities; tokenism is not beneficial

    Boards must be careful not to seek diversity for the sake of it. Each NPO director must firstly display the characteristics necessary for NPO leadership. In addition, they should have suitable experiential attributes and, ideally, add to the board's demographic diversity. These are all important to the process of picking a good NPO board director.

    When pursuing board demographic diversity, it is also important to consider the need for critical mass to support broad thinking and to create a culture that thrives on the creative tension of different perspectives and the cross-pollination of ideas, all of which are necessary to achieve good corporate governance.

    Appointing a token director from a particular gender, ethnic or age group will likely lead to feelings of isolation - particularly if that single token director ticks all three boxes of demographic diversity - and may not reap the desired results. There is no point engineering board renewal and diversity if new board members do not feel welcome and are not assimilated into the board, because they will not stay for long or contribute to the best of their abilities.

    Make gender diversity a priority

    NPO board members should reflect on the importance of gender diversity and what it means, not just to the organisation, but also to the NPO sector and greater society. While there has been much commentary and publicity about board diversity and how it contributes to board and organisational performance, the importance of diversity among NPOs takes on a different magnitude of importance because diversity reflects and enables inclusivity and acceptance - which is ultimately what NPOs are all about.

    If we set out to build a nation that cherishes and nurtures all our people, then we need to make sure that no one is left behind; and that, in particular, no woman is left behind. We need to ensure that opportunities to contribute are available to people from all age groups and all men and women, regardless of the colour of their skin or the size of their wallet. It is only by doing so that we can ensure the creation and sustenance of an inclusive society, harness the full power of its people, and include everyone we can in the good that we do.

    Board diversity cannot be changed overnight. NPOs face an enduring challenge to stay relevant, deliver quality services for their beneficiaries and achieve long-term sustainability. The sooner they embrace and pursue greater board and gender diversity, the better their odds of success, which will consequently help ing to enhance Singapore's society.

    Shai Ganu is a managing director at Willis Towers Watson, and leads its Executive Compensation and Governance practice globally. He is a member of Singapore Institute of Directors' Board Diversity and Appointment committee.

    Suhaimi Zainul-Abidin is chief executive officer of Quantedge Capital and a member of the Charity Council.