ILMA Compoundings - June 2021 - 37

Several studies on decision-making
have suggested that developing a positive
culture around dissent is essential
for strong judgment in a leadership
capacity. Dissent comes from diversity
- specifically differences in:
* Educational backgrounds.
* Professional backgrounds.
* Generational gaps.
* Elements of social diversity.
VALUING DIVERSITY OF
THOUGHT
Jared Landaw, in his 2020 Harvard
Business Review article on diversity
in boardrooms, focuses on cognitive
diversity as a requirement for improving
financial performance. For his
study, he interviewed 18 directors of
underperforming firms that had been
subject to shareholder activism by the
Barington Capital Group, an activist
investment firm that assists publicly
traded companies in designing initiatives
to improve long-term value.
His findings were that cognitively
diverse boards were more likely to
challenge the status quo, which then
led to improved financial performance.
Cognitively diverse directors
also helped change the culture in the
boardroom. As one of the interviewees
stated: " The new directors [on our
board] brought not just a diversity
of opinions and perspectives, but a
diversity of behavior - a willingness
to openly challenge management and
other directors, which was missing
from the boardroom. By having more
open debate, it created an environment
where others saw it was good
and healthy to have frank discussions
regarding important decisions. When
members of the board began challenging
each other - and listening to each
other's viewpoints - it led to positive
outcomes. Good, healthy disagreement
led to good decision making. "
EMBRACING FAMILY DIVERSITY
Landaw recommends that boards
recruit racially, ethnically and genderdiverse
directors who can bring new
professional backgrounds, skills and
experiences in areas relevant to the
company's strategic and operating
needs - and who can introduce new
views, perspectives and approaches to
problem-solving. In a family-owned
business, this definition needs to
include a multigenerational and
multibranch board that can represent
the many generations dedicated to
preserving the familial legacy.
Boards that promote open communication
or are egalitarian instead of
hierarchical in their decision-making
style are more likely to benefit from
social and professional diversity in the
boardroom. It is not enough to simply
add diverse voices to the board or
council; the governing body needs to
adapt to support the diversity of opinions
in order to experience the benefits
from diversity in decision-making.
And studies have provided evidence
that a culture that supports dissension,
while sometimes challenging, will
typically result in decisions that are of
higher quality.
Continuity through generations
cannot be realized without strong stewardship
in the family. Stewardship is
not innate - it is developed over time
and earned by the groups responsible
for steering the ship. Those groups
discuss, debate and make important
decisions and must be equipped for
those critical responsibilities.
HOMOGENEITY IS AN ILLUSION
Understanding our family isn't easy.
How could the siblings I grew up with
be so different? What does this new
generation really think, believe and
want from life? Add to that the need
to understand the optimal composition
of family governing bodies
that will best serve the collective, the
community, that is our family. What
we know is that homogeneity will not
accomplish that goal. We also know
that a governing body that is made
up of members who bring diverse
philosophies, experiences, education
and opinions will likely, in the long
run, equip us with true representation,
with recommendations and decisions
that can be made with confidence on
behalf of the people we love.
LeCouvie is a senior
consultant at The Family
Business Consulting Group.
This is an excerpt from an article
with the same title that was originally
published on The Family
Business Consulting Group's website.
It has been edited according
to Compoundings style.
37

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