In an interview with The Boardroom Report, Dr Soutphommasane discusses the findings from his latest research initiative, why diversity doesn’t just stop at gender and the steps corporate Australia can take to get cultural diversity in leadership right.

Leading for change

The Boardroom Report (BR): Your latest report, Leading for Change: A blueprint for cultural diversity and inclusive leadership, urges Australian businesses to increase the representation of cultural diversity among its leadership teams. What did you find out about the current cultural composition of Australian organisations?

Dr Tim Soutphommasane (TS): Despite being a very proud multicultural society, unfortunately we don’t see cultural diversity being reflected in the most senior echelons of our organisations and institutions. What we found was that while more than 10 per cent of the Australian population has a non-European cultural background, only 5 per cent of ASX 200 CEOs have a non-European cultural background. The number is even lower when we look at our federal parliament, the federal ministry, the heads of federal and state departments, or the vice chancellors of our universities.

These numbers might surprise some because there’s no issue with cultural diversity when we look at the composition of the graduate intakes at our organisations. If we look at our top performing students in high schools or universities there doesn’t seem to be a problem with diversity there either. These findings raise questions about the barriers that exist within our organisation. Why aren’t the young, talented and culturally diverse Australians coming through the ranks? And why aren’t they enjoying the same pathway into leadership as those with Anglo-Celtic or even European backgrounds?

We know that biases – both conscious and unconscious – exist. This is clear. But what we don’t know is where these biases kick in. This is what we hope to answer with future research.

Cultural diversity: the new frontier

BR: There is extensive research showing that diversity is important and that it plays an important role in the performance of our organisations. The case has been made for gender diversity, but why is cultural diversity important?

TS: Getting cultural diversity right is about two things: first, it’s the right thing to do. We are a country that’s defined by a ‘fair go’ and that should be extended to everyone regardless of their cultural background. If we’re serious about having a society that rewards talent, then that should be reflected in the leadership positions that we have in our organisations and institutions.

Second, cultural diversity is the smart thing to do. There is a payoff for organisations that harness their cultural diversity; it’s better for decision-making in the long run. The richer the backgrounds represented in your executive teams or on your board, the sounder your decision-making will be. This is about opening up people’s horizons, examining all options, ensuring that the organisation doesn’t have any blind spots and that you can ask the right questions. Research by McKinsey & Company demonstrates a clear payoff from the gender diversity and also racial-ethnic diversity. And what is most interesting about that research is that the payoff from racial or ethnic diversity might be even greater than the payoff from gender diversity.

I think the case for cultural diversity is very straightforward and it goes to the heart of decision making.

BR: Who is ultimately responsible for driving the cultural diversity agenda within organisations?

TS: Well, everyone’s got a stake with cultural diversity – it’s an issue that implicates organisations as a whole. But there is a special responsibility for senior leadership at the chief executive, executive and indeed board levels to take on here. Leaders need to have skin in the game when it concerns cultural diversity. They need to understand exactly what is at state and they need to have a personal investment in the issue wherever possible.

If you look at what is being done with gender equality, you will find the organisations that are making positive progress often have senior leaders who are very deeply and personally committed to increasing female representation across all levels. And middle management need to be part of this work, too. You can’t affect change unless you can bring the organisation with you. So it is important for senior leadership and management to be aligned and to share the same commitment to change for the better.

On measuring progress and merit

BR: How should organisations go about measuring progress made to increase cultural diversity in their leadership teams? Should we be looking at targets?

TS: If organisations are serious about affecting change, they need to set targets and have a clear line of accountability. This of course follows on from developing a clear understanding of what cultural diversity is like for your organisation and where gaps currently exist.

What gets measured gets done and I would encourage organisations to consider setting targets.

Now there’s the inevitable question about whether targets get in the way of merit, and ideally a meritocracy should exist. But we need to ask ourselves whether there is a level playing field that allows for merit to be assessed. Who defines merit and what does it mean? Once you get into those questions it becomes very quickly apparent that merit can become code for replicating the status quo, or for appointing people who look like us, or who will look like the existing dominant group. This is where targets really help make a difference: they ensure a level playing field over time and a more transparent conception of merit.

On taking action

BR: What are some key ways organisations can go about getting cultural diversity in leadership right?

TS: There are three keys to increasing the cultural diversity of leadership teams. The first is leadership commitment, where the board and executive management should lead by example. There needs to be a strong and emphatic message that the organisation values cultural diversity and most importantly, leaders need to listen.

The second is systems, where data and accountability are developed. This is not an easy task, as cultural identity is fluid, is difficult to measure and can also be ambiguous. To generate lasting change, data on cultural diversity needs to be collected and targets need to be set to openly combat any biases and discrimination.

The third is culture. Promoting inclusive leadership means making a commitment to the professional development of culturally diverse talent. Ensuring that a pipeline exists for cultural diversity and ensuring that you have a population of talent right from the bottom all the way to the very top.