In March 2017, car manufacturer Volkswagen pleaded guilty to three US felony charges for secretly installing defeat devices in its vehicles to evade emissions tests — a scandal that cost it more than US$30b, including a US$2.8b penalty and the recall of an estimated 11 million cars.
But how could this have happened to such a well- known multinational?
Former Deloitte Human Capital partner, current chair of the 30% Club Education Working Group and adjunct professor at the University of NSW’s School of Management and Governance, Juliet Bourke, thinks the answer lies in systemic groupthink throughout the organisation. She says this lasted for at least eight years and possibly longer.
Indeed, Volkswagen’s supervisory board has been described by US academic and consultant Charles Elson as “an echo chamber” and also as an “insider’s” board. Yet, at a glance, it seemed diverse, consisting of 20 people with a mix of family members, representatives of the German government and workers, as well as two individuals from Qatar and an independent member. But all was not as it seemed. Academics who have analysed the scandal note that the board was dominated by a voting block of Porsche and Piëch family members. It had only one female member and most directors were German or Austrian with a technical background in engineering. Plus, successive chairs were reputedly autocratic.
These characteristics are among the many Bourke warns against in a revised version of her book Which Two Heads Are Better Than One.
In the book, she notes that diversity of thinking is being touted as a panacea to improve group, and ultimately organisational, performance and decision-making. This is because of a belief in the inherent value of collective intelligence — that no single person can see it all, know it all or do it all in the volatile, unstable, complex and ambiguous modern world.
But, Bourke argues, that arbitrary diversity in thinking can all too often lead to flawed decisions and compromised organisational performance.
“Generating diversity of thinking requires more diligence than simply assembling a disparate group of people, encouraging random brainstorming and crossing one’s fingers,” she says.
While many agree that diversity enhances performance, Bourke believes very few can put a finger on why it works or how to achieve it with any degree of specificity. “There is no proven, repeatable process to guarantee that groups consistently generate the highest quality of thinking,” she says.
In search of a formula
Bourke’s book chronicles her search for a formula to help groups, particularly boards, make smarter decisions. Here, she says success is all about: Who’s in the group: Paying attention to group composition in terms of “surface level diversity” — race, gender, functional roles and educational disciplines – gives a group a much better chance of seeing a scenario broadly and debating vigorously. Disciplined processes: Individuals differ in their “deep level diversity” — the mental frameworks or models they use to solve problems. Bourke reveals six different problem-solving mental models, all of which are equally valuable. These focus on outcomes, options, people, process, evidence and risk. Individuals, however, tend to use similar models (and just one or two of the potential six), thus narrowing group debate and giving rise to blind spots.
Instead of random brainstorming, Bourke says it’s the combination of these models that creates wise decisions.
Mitigating biases: Unconscious biases can interfere with individual relationships, group behaviours and attention to diverse ideas. Being aware of these, and applying practical mitigation strategies, should help foster diverse thinking.
Leadership: A leader should role-model what it means to behave inclusively and create an environment in which diversity is respected and valued. The six signature traits of an inclusive leader are commitment, courage, cognisance of bias, curiosity, cultural intelligence and collaboration. Expertise and experience: Diversity should be considered only after potential team members have demonstrated their capability in terms of domain knowledge, competence and experience.
New ways of measuring cultural diversity
Failure to fully capitalise on cultural diversity can be a missed business opportunity for Australian organisations. Research shows board-level, leadership team and workforce cultural diversity is linked to enhanced organisational performance and profitability. In addition, the Australian “multicultural market” has an estimated purchasing power of over $75b per year.
But until now, there hasn’t been a meaningful way to measure and benchmark workforce diversity in a respectful, accurate and inclusive way.
Many Australian workplaces have instead relied on simple measures such as asking employees about their country of birth, a method that, in 2021, fails to capture Australia’s diverse cultural fabric.
A new research report by the Diversity Council Australia (DCA) and University of Sydney Business School guides businesses through how best to count cultural background, language, religion — and even global experience.
This is critical in a country where the Australian Bureau of Statistics (ABS) reports nearly half (49 per cent) of Australians have been born overseas, have one or both parents born overseas, where over 300 languages are spoken at home, and where more than 300 ancestries are identified with.
“This research is incredibly important given the diverse and complex fabric of Australian society,” says DCA CEO Lisa Annese. “Many people don’t realise just how many elements cultural diversity covers.
It is so much more than just where people in a workforce were born. For example, an employee may be born in Australia, have Lebanese ancestry, speak English, Arabic and French, and identify as Christian — and all of these have relevance to his or her experience of inclusion at work as well as the cultural capability he or she can bring to the organisation.”
This research report, Counting Culture: Towards a Standardised Approach to Measuring and Reporting on Workforce Cultural Diversity in Australia, explains how ambitious counting culture is and why many organisations struggle.
Australians can find it difficult to nominate just one cultural or ethnic group to which they feel they belong. Indeed, previous DCA research has shown that 30 per cent of Australian workers identify with more than one cultural background.
To be really useful, any culture-counting process also needs to map cultural capability and identify which employees are more or less likely to experience workplace inclusion or exclusion.
Plus, the terminology and language that is used to describe race, ethnicity or cultural backgrounds in Australia and globally is in a constant state of evolution.
Bourke covers various studies that reveal three significant aspects of visible diversity that influence diversity of thinking: race/culture, gender and functional role/educational discipline.
Racial diversity: This trigger creates an expectation of difference. It stimulates people to pay more attention to others, listen more closely, question and speak up — all of which help reduce conformity bias. Gender diversity: Women tend to encourage information sharing and collaborative group behaviours. They also notice more non-verbal cues and monitor conversational turn-taking than men. This can change the conversational dynamics in mixed groups.
Functional roles and educational disciplines:
These provide a group with access to distinct thinking worlds. Multidisciplinary teams outperform single disciplinary teams. “These factors are not substitutes for ability,” says Bourke. “These are value-adds to create diversity of thinking.”
Consciously banning the unconscious
Bourke says biases operate in the background and leave people to the “front-of-mind illusion” that they are dominantly rational decision-makers. Among the many biases she discusses in her book are: Similarity attraction bias: People tend to connect faster and more firmly with those who feel similarly to themselves – “birds of a feather”, so to speak. This can interfere with their ability to connect with diverse others and access diverse perspectives.
“This is a bias which should be of particular concern to leadership groups... given that the potential pool of talent for these roles is already constrained by availability,” says Bourke.
In-group bias: People tend to associate with — and gain their social identity from — groups of people who are more alike than different.
“When one seeks advice, it’s more often from these trusted networks of people who share common experiences, backgrounds and beliefs,” says Bourke. “It’s like an echo chamber.”
Blind spot bias: This is a belief that others are more influenced by biases than oneself. It leads people to be less vigilant about, and to take less accountability for, personal mindsets and behaviours. Confirmation bias: This involves seeking information that supports or confirms an original point of view and ignoring or discrediting information that challenges one’s views.
Bourke says that biases are created and maintained by habits of thinking and behaviour. Consciously creating replacement habits to mitigate unconscious biases is challenging. “Accessing diversity of thinking, and engaging with those diverse ideas, takes deliberate and consistent effort to counter a natural leaning towards similarity and keep people looking for, and open to, difference.”
New edition of Which Two Heads are Better Than One available here: https://bit.ly/3yd5egz