Board Diversity, Inclusion Boosts Business Resilience

Business research has suggested that diversity among board directors is of utmost importance to guarantee that the decision-making body has a variety of perspectives, skills, ages, genders, cultures, and ethnicities. Today, there is no dispute about the essential nature of diversity on boards.

The roundtable was broadcast as a live webinar on May 23. Citing an EY publication from 2020, discussion moderator Mandy Fertetics, sustainability and ESG expert and organization developer at Alternate Consulting, noted that those companies who rate high on diversity and inclusion on their board harness better team collaboration. Retention rates are also better, and their potential to increase market share, or break into new markets, is greater.

Petra Pataki, counsel at Queritius, a Central and Eastern European law firm specializing in international dispute resolution, elaborated on the practical side of diversity in the legislative system.

“State court and arbitration tribunals are very specific decision-making bodies, but at the end of the day, they are also groups that are trying to reach a decision. It is true that groups usually outperform sole decision-makers, and it is also true that cognitively diverse groups make better decisions,” Pataki said.

Why? Research supports the idea that if more discussion occurs before a decision is made, taking in an abundance of points of view, participants will have explored a more comprehensive range of ideas and possible solutions, ensuring that they arrive at the most suitable way forward.

Why Female Judges?

“Why is it so important to have female judges? Do they make different decisions? Research says not really,” Pataki said. “So why is it important then? Because of their attitude, style, communication and reasoning, there is a difference in the process itself, and the way a dispute is discussed is all the difference that can be made,” she adds.

János Strohmayer, office leader in Hungary for the global management consulting and executive search firm Egon Zehnder, agreed with this point. He argued that the more diverse the board, the more skill sets and knowledge it possesses. He added that an abundance of these is imperative in the current economic conditions for a business to flourish.

In a quickly changing environment, businesses are advised to get ahead of the curve, review their decision-making club, and fine-tune it along the lines of real commitment toward diversity, equity, and inclusion.

Moderator Fertetics noted that today’s business ecosystem might actually favor diverse decision-making bodies, adding that in a business landscape that is being swiftly remolded, one of the most critical factors for successful corporate operations is resilience.

Andrea Solti Istenes, country chair at Shell Hungary, addressed how vital resilience is today. She reminded the audience that with COVID, leaders have learned that markets are currently dominated by volatility. In this light, building strength in her organization has been a priority.

She said that she experienced the benefit of inclusion in leadership discussions during the pandemic, which resulted in better decisions. She also emphasized that in working life, mistakes take place and must be regarded as learning opportunities so the whole organization can improve.

Assembling the Board

As the directors in a business play a critical role in making decisions, any company that wants to be successful must be mindful of assembling its board in such a way to ensure that the professionals making the calls are up-to-date on the most recent trends and tendencies.

“Since the mid-2010s, we have reached 50% equality on the board, which is an important milestone,” Shell’s Istenes noted. Reaching such a threshold requires thorough work and outstanding commitment from a company. However, she adds: “I also believe in merit-based decisions, but we do not want to close recruitment while there is no diversity in the shortlist, both in gender and nationality.”

But how can gender equality be increased in the corporate environment? “The change needs to be joint. In gender equality especially, we need a firm commitment from the leadership, as well as the whole company. Everyone must act in partnership,” Istenes said.

She added that if a business aspires to understand the needs of its female customers, it also needs to ensure that the gender distribution is reflected in the board and leadership.

According to the leader at Shell Hungary, one of the causes of gender imbalance in the workplace today is that the workload is not shared at home. However, flexible and hybrid working scenarios, which have been popular since the pandemic rewired how business is done, greatly support women in performing their extra-professional duties. That, in turn, allows them to progress in their careers, she argued.

“We need male partners in this. It must be a joint effort. When we talk about diversity, especially gender diversity, it cannot be done all alone by women. It needs to be done together as a joint effort. We women must advocate for ourselves, and we must join forces, as apparently, no one else will do it for us,” Queritius’ Pataki agreed.

The Budapest Business Journal was an official media sponsor of EU Diversity Month in Hungary.

This article was first published in the Budapest Business Journal print issue of June 3, 2022.