In light of the fact a recent report from the Financial Conduct Authority (FCA) highlighted diversity of thought as a fundamental factor in tackling the complex and evolving issues facing the financial sector and wider society, Scottish Widows’ new report Great Minds Don’t Think Alike: Cognitive Diversity in the Boardroom couldn’t be more timely.
Speaking as part of Management Today’s 'How Your Board Can Think Better: Unlocking Cognitive Diversity' webinar in partnership with Scottish Widows, responsible investment manager at Scottish Widows Lauren Peacock agreed that for society to be able to tackle immense challenges such as climate change, “we need to do things differently and therefore need different voices and different people to help deliver that.”
“[Right now], we really need to work hard to listen to people with different views from ourselves,” she said. “And I think that is relevant to us all as individuals, but actually feeds up into the corporate boardroom where you're not necessarily having people who have different views than yourself, and you're getting a smaller picture of what's out there.”
The importance of a broad set of views, experiences and opinions
Fellow panel member Dr. Johanne Grosvold, associate professor of corporate governance and CSR for the School of Management at the University of Bath, drew attention also to the initial findings of some of the COVID investigations the Cross Party Working Group conducted which recently highlighted groupthink as potentially one of the challenges that faced the emergency response.
“[The notion of groupthink is] that if you have a set of people who are all trained to think alike, there is less chance of proper interrogation of questions of opposing views that may be really important, and that those opposing views might get a bit lost. So cognitive diversity begins to address this,” Dr Grosvold said.
“It's essentially about being prepared to have a broader set of views, experiences and opinions reflected at the table so that you're interrogating your decision making in a more thorough way and eventually make better decisions.”
The definition of cognitive diversity used by the panel was that of the Prudential Regulation Authority, the Financial Conduct Authority, and the Bank of England in their recent discussion paper into diversity inclusion in the financial sector: ‘Bringing together a range of different styles of thinking among members of a group. Factors that could lead to diverse thinking could include, but are not limited to different perspectives, abilities, knowledge, attitudes, information styles, and demographic characteristics, or any combination of these.’
‘The role of the chair is absolutely essential’
Now, Scottish Widows are calling on companies to work hard to identify their “blind spots” when it comes to cognitive diversity, and on chairpeople specifically as instrumental in building and nurturing diverse teams.
During the panel discussion, Dr Grosvold explained that “the role of the chair is absolutely essential” as it’s their role to take the time to get to know the individual, create a sense of trust between the members of the board, in particular around the notion that it's okay to to think differently, and to be candid about those views.
Scottish Widows are urging chairpeople to, for example, hold regular one to ones to develop a deeper understanding of individual directors’ views, opinions, experience, and how they can inform board discussion, also providing a safe space to air less commonly held opinions, delve deeper into topics, and allow trust to develop. The report also encourages playing devil’s advocate and–importantly–learning to be comfortable with constructive tension.
“There are many cases where the person who was sort of the opposite of what you thought you might be looking for really reaps rewards,” Amanda Mackenzie, chief executive for Business in the Community (The Prince’s Responsible Business Network), told the panel.
“But don't embark on this lightly because I think there will be moments when it will be uncomfortable, because you're putting together a group of slightly different people. You should all be bound by the same values, because otherwise you're never going to agree, but assuming that there will definitely be moments of tension and you have to be comfy with that. You have to embrace it, because you will get a better outcome.”
For Belinda Asante, senior manager of group inclusion and diversity at Lloyds Banking Group, it comes down to this: “Applying a different approach to the way in which you recruit which means looking at skills capability, the way we think, the way we work, will bring about a better mix a more rich mix of talent which is only going to serve the business.”