Helen Alexander received two rounds of spontaneous applause without even speaking at the CBI dinner last week, such is the excitement about the employers’ group having its first female president. Ms Alexander, whose election is expected next week, has called for greater boardroom diversity, saying it could put an end to the ‘groupthink’ that contributed to recent financial disasters. ‘It is clear that teams that have diversity within them don’t result in groupthink. People come at things in a different way and organizations have to take those into account,’ she told the Financial Times.
Given the mess that an overwhelmingly white male business elite has made, the idea of changes to company boardrooms looks compelling. Ms Alexander, a former chief executive of The Economist, is not the only person who thinks so. Lord Myners, the City minister, told the House of Commons Treasury Committee that too many directors were ‘people who read the same newspapers, went to the same universities and schools and have the same prejudices’.
Is there any evidence that diverse groups make better decisions? Yes, according to an excellent article by Lisa Fairfax, a law professor at the University of Maryland.
Writing in the Wisconsin Law Review, Professor Fairfax cites studies that show heterogeneous groups make higher-quality decisions because of their disparate backgrounds. ‘When group members all have the same perspective, it limits the range of information they have and the issues they consider,’ she writes.
However, putting that diverse thinking into practice in the boardroom is another matter. Professor Fairfax’s article is about ethnic diversity, but the same principles apply to having more women on the board. One problem is that directors recruited to make boards more diverse are often stretched thin. The same people tend to serve on many boards. A US study in 2002, revealed that five directors of S&P 500 companies served on six boards or more. Four of these were African-Americans. Another problem is that female and ethnic minority directors often come from the same educational and class background as the white males.
There are solutions. If companies made greater efforts to appoint women and ethnic minority directors, the pool of candidates would become deeper and there would be less need for the same people to sit on everyone’s boards. An effort to look beyond business to people with experience of government, education, health and trade unions would increase the social mix.
The real problem is deeper: there is enormous pressure to agree with those sitting around the table with you. Some years ago, I was the union representative on a company health and safety committee. At every meeting, I made a complaint that the rest of the committee did not want to hear: botched fire drills, filing cabinets toppling over. I tried to ignore the impatient shuffling and barely suppressed exasperation. I was doing my job. But, the cosy camaraderie of the other members seemed very enticing.
Most of us feel a need to belong. Those who, to begin with, are outsiders in the boardroom may feel it even more intensely. It is uncomfortable being the constant dissident. Disagreeing with the company’s direction is hard enough. Doing so when an entire industry is going in the same direction is harder still. It is not just boards that suffer from groupthink – entire sectors do. The banking industry did. Any investment banking chief executive who had listened to a director’s warning that complex financial instruments spelt trouble would have been in trouble himself. As Peter Hahn, a fellow at Cass Business School, told the Treasury Committee: ‘If one of those banks in 2005 decided to be more conservative and hold back in their activity, they more than likely would have had their CEO and board replaced in 2006 for failing to take advantage of the opportunities.’
Even the most experienced outside directors find it hard to know what is really going on in the company. They depend on the executive directors for their information. Asking the right questions is only part of the job; what counts is knowing when you have been given an inadequate answer. None of this is to argue against broadening the range of company directors. There are many reasons to do so, one of which is that, if any institution is to retain public legitimacy and acceptability, its leadership needs to look something like the society it represents. This is as true of business as it is of the police, the judiciary or the legislature. But we should avoid placing too much hope in what board members from different backgrounds can achieve. On their own, they are not going to stop businesses making the wrong decisions. Expecting them to do so is both unrealistic and unfair.
To export a reference to this article please select a referencing stye below:
My Assignment Help. (2021). Education Culture And Diversity. Retrieved from https://myassignmenthelp.com/free-samples/educ-6201-education-culture-and-diversity/case-diversity-fails-to-end-boardroom-groupthink.html.
"Education Culture And Diversity." My Assignment Help, 2021, https://myassignmenthelp.com/free-samples/educ-6201-education-culture-and-diversity/case-diversity-fails-to-end-boardroom-groupthink.html.
My Assignment Help (2021) Education Culture And Diversity [Online]. Available from: https://myassignmenthelp.com/free-samples/educ-6201-education-culture-and-diversity/case-diversity-fails-to-end-boardroom-groupthink.html
[Accessed 18 April 2021].
My Assignment Help. 'Education Culture And Diversity' (My Assignment Help, 2021) <https://myassignmenthelp.com/free-samples/educ-6201-education-culture-and-diversity/case-diversity-fails-to-end-boardroom-groupthink.html> accessed 18 April 2021.
My Assignment Help. Education Culture And Diversity [Internet]. My Assignment Help. 2021 [cited 18 April 2021]. Available from: https://myassignmenthelp.com/free-samples/educ-6201-education-culture-and-diversity/case-diversity-fails-to-end-boardroom-groupthink.html.
MyAssignmenthelp.com is one of the best college essay writing services. Our comprehensive services provide students with confidence to overcome assignment related issues. Our assignment services help you meet urgent assignment deadlines with ease. We are the best among fast essay writing services. We have a team of Native essayists with more than 10+ years experience in providing A-grade worth essays. Our urgent essay help services ensure that top quality work is provided in minimum time. We also provide application essay help, exploratory essay help, literary review essay help and argumentative essay help.
Answer Evaluating the financial management strategies of the top four Australian banks i.e. Commonwealth, Westpac, ANZ, and NAB Research Topic Evaluating the financial management strategies of the top four Australian banks i.e. Commonwealth, Westpac, ANZ, and NAB Introduction This report will discuss several components such as research objectives, research motivation, and conceptual information about the research concepts, and research di...Read More
Answer Introduction: Tasmanian Mountain Waters is an Australian company, based in Tasmania. The company exclusively sells bottled mineral water across Australia and plans to extend its business globally to increase its international presence. The companyaims to retain the pureness and natural quality of the bottled water which is collected from remote springs of freshwater in Tasmania. Tasmania with its plentiful supply of freshwater that is ...Read More
Answer: Souq is an e-commerce platform that is owned by Amazon. It is one of the largest e-commerce platforms in arab world. In this report, I have considered myself as a global manager of marketing department. The business of souq is localized in Saudi Arabia, united arab and Egypt. It was suggested that business need to widespread in other countries rather than just in gulf region. This report covers the strategies through which Souq c...Read More
Answer Introduction The principles of Corporations Act put the obligation on the company directors to release their duties, responsibilities and powers with the aim to act for the business interest of the companies. The underlying fact is that the directors need to discharge their duties and powers for maximizing the organizational wealth for the best interest of their shareholders (Tricker and Tricker 2015). However, the occurrence of some r...Read More
Answer Overview of Red Rooster Red Rooster was founded in 1972 is a chain of Australian fast food restaurant that specializes in serving roast chicken. The first Red Rooster store was opened in 1972, in Perth suburb of Kelmscott, Western Australia (Lasek, Cercone and Saunders, 2016). There possess a wide range of products including half roasts, whole roasts, burgers, wraps, salads, desserts, beverages, promotions formerly including Cheese and...Read More
Just share requirement and get customized Solution.
Our writers make sure that all orders are submitted, prior to the deadline.
Using reliable plagiarism detection software, Turnitin.com.We only provide customized 100 percent original papers.
Feel free to contact our assignment writing services any time via phone, email or live chat. If you are unable to calculate word count online, ask our customer executives.
Our writers can provide you professional writing assistance on any subject at any level.
Our best price guarantee ensures that the features we offer cannot be matched by any of the competitors.
Get all your documents checked for plagiarism or duplicacy with us.
Get different kinds of essays typed in minutes with clicks.
Calculate your semester grades and cumulative GPa with our GPA Calculator.
Balance any chemical equation in minutes just by entering the formula.
Calculate the number of words and number of pages of all your academic documents.
Our Mission Client Satisfaction
It is a good source of help for any assignment. My order completed before the deadline, and rework have done for the assignment. It is quite expensive for the students. wishes for better deal regards roh
Great help and great service! I was concerned it wouldn't get to me on time, but sure enough, it was on time! This saved my rear. Thanks, you guys are awesome
Great paper. It was very detailed and everything was what was necessary for the paper.
seems ok to me, but once you forward the assignment it take 2 weeks for the feedback, then I will know if they are ok, so please do all the rest as well, if some answer are not ok they will ask to do it again