Gospel According to GaaS (10/25): Governing Through Diversity

The fairness of the voice in any room is based on the diversity of the people in the room.

We are all human, but we are all unique. We are distinct in numerous subtle yet significant ways. While our individuality is the foundation of our differences, it is only the beginning. Gender and ethnic distinctions, as well as psychological and philosophical imprints, shape how we act and pursue our goals in life.

In a business environment, acknowledging our differences (“diversity”) signifies a company’s potential in several ways:

1. Attracting Remarkable Leaders: Aspiring leaders are drawn to organisations where they see individuals from their communities represented at the top. This representation assures them that no barriers will impede their ascent.
2. Building a Positive Brand: A diverse organisation enables different people to see themselves represented, fostering a natural connection with the broader community. For instance, my brief period as a football fan was inspired by the prominence of many Black players at Chelsea, excelling in top-tier football. I am sure I wasn’t alone.
3. Enhancing Market Insights: A diverse leadership team can evaluate market opportunities through multiple perspectives. For example, an all-male board may struggle to fully grasp the evolving needs of the female healthcare industry, falling behind competitors with more diverse boards. Numerous examples illustrate this point.

A few years ago, we tweeted a photo of VFD Group Plc’s Board of Directors after our first AGM as a public company. Social media followers, particularly female observers, criticised the image for featuring an all-male board — a composition I hadn’t considered problematic until that moment. You see, we were created by an all-male group, and the board reflected that, understandably, but it doesn’t matter in the court of public opinion. It also demonstrates the importance of being mindful of diversity, as our natural tendency is to bond with the familiar, “our kind”.

The warmth and safety of the company of “our kind” is natural and quite compelling. It is less complicated and avoids the difficulty of balancing the multidimensional interest that diversity brings, but the benefits are too compelling to ignore. Every community has benefits and potentials that businesses can draw from, and it’s only members of such communities that can help your company make the requisite connections. One good way of tracking your degree of diversity is a simple “diversity index” that can be run on the top levels of governance. Getting it right at such levels will ensure the diversity trickles down.

The three top levels of governance are members or shareholders, Board of Directors and Executive Management/Senior Staff. The objective of the diversity index is to prevent constancy and promote inclusion.

• Constancy is the state of homogeneity within a group (e.g., all male, all female, all queer, all Black). A low diversity index indicates high constancy.
• Inclusion measures the range of people represented at all levels, especially seniors. Higher inclusion levels correlate with a higher diversity index.

Diversity Index Calculations

Constancy [C]= (CM/SC)
Inclusion [I] = (1 — C) / (TN — 1), or 0 when TN equals 2
Diversity [D] = 1 — (C + I)

• CM: Constancy Majority — the most recurring type (e.g., male, female).
• SC: Sample Count — the total number of individuals considered.
• TN: Total Number of “kinds.”

Using VFD Group as an example, here are our data points:

We have 15 board members (SC), with the following diversity breakdown:

• Gender: Female — 4, Male — 11
• Ethnicity: Yoruba — 7, Igbo — 5, Hausa — 1, Urhobo — 1, Ashanti (Ghana) — 1
• Age: Under 35–0, 35 to 60–11, Above 60–4

Ethnicity Diversity Index

C = (7/15) = 0.467
I = (1–0.467) / (5–1) = 0.133
D = 1 — (0.467 + 0.1777) = 0.4

A diversity score of 0.4 is low, as positive scores begin at 0.5 or higher. While our Yoruba and Igbo representation is improving, there is room for growth. The score is based on the constancy of the sample size around Yorubas and Igbos. If we reduce the constancy, then our score will significantly improve.

Gender Diversity Index

C = (11/15) = 0.733
I = 0 (since TN equals 2)
D = 1 — (0.733 + 0) = 0.267

A gender diversity index of 0.267 indicates significant progress from an all-male board two years ago but highlights the work still needed.

Age Diversity Index

C = (11/15) = 0.733
I = 0 (since TN equals 2)
D = 1 — (0.733 + 0) = 0.267

For VFD Group, our diversity journey continues. Like many Nigerian companies, even regulated boards, such as those in commercial banks, score below 0.3 on ethnic diversity, with some as low as 0.2. This is a significant challenge we must address.

I particularly appreciate the diversity pillars of GaaS because they reinforce a trinity that inspires trust in a company. A diversified board is assumed, often rightly, to exhibit greater accountability, fairness, and transparency than a less diverse counterpart. Ultimately, a company’s objective should be to serve humanity sustainably. This mission is best achieved through a diverse governance structure that considers broader societal interests on their merit.

As with previous articles, this discussion only scratches the surface. The goal is to spark broader conversations that emphasise these issues’ importance and encourage behaviour that benefits the community.

Happy New Year and happy reading.