How Cognitive Diversity Builds Better Boards
Strategic blindspots are a pernicious and understated obstacle in the boardroom. Despite recognising the importance of addressing problems from as many different angles and perspectives as possible, few board members appreciate how much a lack of voices from dissimilar ethnic, socioeconomic and professional backgrounds can leave them vulnerable to catastrophic losses and poor decision-making.
British journalist Matthew Syed famously highlighted one of the more extreme examples of the dangers posed by collective blindness when he wrote on the failure of U.S. intelligence agencies to act on potential threats to national security leading up to the September 11th attacks, largely due to a lack of understanding regarding cultural differences. This can be seen more specifically in the case of the now-incarcerated Zacarias Moussaoui, a French-Moroccan member of al-Qaeda who had raised suspicions after enrolling at an American flight academy and who had later been found to have ties to the 9/11 terrorist plot.
At the time of Moussani’s arrest, the FBI was predominantly made up of the ‘White Western Protestant Elite’, whose homogeneousness stopped them from acting on the mounting evidence hinting at 9/11 that they had obtained from Moussani and other sources. This poses a question of whether they could have preempted the attacks had their decision-makers not been so monolithic and lacking in unique points of view.
Cognitive Diversity is a forward-thinking solution to the little-understood problem of short-sighted boards and one which will only become increasingly relevant as greater importance is placed on areas such as ESG and regulation. By prioritising Cognitive Diversity, boards can both insulate themselves against the threat of strategic blindspots by covering a wider range of potential viewpoints and unlocking more growth opportunities.
To understand the value of Cognitive Diversity to your organisation, you first have to understand what it is and why it creates better more high-impact boards.
What is Cognitive Diversity?
Cognitive Diversity has been defined as the differences in perspectives, knowledge, abilities and insights between members of a team. Though different behavioural experts have addressed it using different terms, it is generally agreed that it represents the increased level of creativity associated with team members who can more accurately engage in ‘perspective taking’, or viewing things through the eyes of your colleagues.
How does my board benefit from Cognitive Diversity?
Research suggests that cognitively diverse groups lead to better decision-making, reduced groupthink and a greater tendency to reach accurate conclusions. Companies in the top quartile for racial and ethnic diversity, for example, were proven to be 35% more likely to have financial returns that exceeded their respective national industry medians in 2015, while companies with gender-balanced leadership teams outperformed less balanced companies in valuation by as much as 25% in 2019.
Cognitive Diversity is important not only because it drives tangible strategic results, but because it creates more opportunities for fostering the internal dynamics that make boards more successful. Members of cognitively diverse boards have displayed a greater ability to understand one another and overcome argumentative biases for increased productivity and creative problem-solving.
How do I hire a Cognitively Diverse board?
Formalised, skills-based open-hiring will typically lead to more sustainable appointments that secure higher-quality candidates to fill key competency roles. Open-hiring during early board recruitment especially is a form of strategic future-proofing that minimises the need for dramatic organisational shifts at later stages in a company’s growth.
To achieve better cognitive diversity through skills-based hiring there are four key steps:
- Create a matrix of skills and experience held by current board directors.
- Identify gaps between the current matrix and the ideal matrix your board needs to accomplish key strategic goals.
- Use these gaps as criteria for potential board appointees during the recruitment process
- Create a shortlist of potential appointees based on how well they fill these gaps
Once a shortlist has been established, further distinction and cognitive diversity can be achieved by considering how well certain candidates fill characteristic gaps in education, age, culture and background on your existing board. The objectivity of this approach to board-level recruitment helps to eliminate the inherent biases that lead to homogenous leadership.
An open-hiring platform can simplify this process by drawing from a much larger pool of candidates than traditional hiring methods, screening candidates based on skills, experience and characteristics to provide shortlists tailored to exacting specifications. In terms of promoting cognitive diversity, open-hiring platforms draw in more engaged applicants who are also likely to add tangible value due to more rigorously defined job specifications.
With the stronger and more relevant shortlists open-hiring platforms provide, the risks of board recruitment are more effectively minimised to ensure the hiring process offers the greatest possible level of return on investment in terms of time, money and effort.
How can Nurole help?
Nurole is an open-hiring platform that specialises in providing clients with board-ready candidates from a wide range of professional and personal backgrounds. With Nurole, boards can benefit from a base of over 50,000 members, all of whom are given the means to seek out board-level opportunities that align with their skills, experiences and values. By matching candidates to roles tailored to their competencies and providing clients with carefully curated shortlists, Nurole ensures that each board hire brings a unique value and a high standard of cognitive diversity to their new appointment.
If you are looking for senior executive and non-executive director roles, Nurole's innovative recruitment platform can help.
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