Imagine this scenario: a problem is brewing somewhere in your department, company or industry — or an opportunity, for that matter. Chances are your team identifies the issue and acts accordingly. But if the team members’ opinions coalesce too closely, there’s a danger that the problem is not fully recognized or addressed.
Injecting diversity of thinking is key to minimizing that challenge.
Just think of the US sub-prime mortgage crisis that ultimately led to the global financial crisis of 2007-2008. In retrospect, the risks linked to piling insufficiently secured cash into real estate for years should have been clear to everyone. But at the time, too many people at too many levels reinforced each other’s beliefs. Few challenged the consensus. And virtually the entire US financial system was left exposed when the country’s housing bubble ultimately burst.
Risk management is business critical…
Managing risk is important at every level — whether it’s in our immediate circle of colleagues, or within an industry, country or society.
Within companies, the ability to see, prevent and/or act on looming problems, can make the difference between success and failure.
It’s key to everything from calling out quality glitches, to avoiding reputational damage, to forestalling or addressing concerns that may arise anywhere across your operations: something that someone like myself — as Chief Financial Officer for a multi-billion-dollar-revenue multinational corporation – is constantly on the look-out for.
…and diversity of thought is key to managing risk
So my passion for diversity is not because I’m a woman in an otherwise relatively male-dominated field. And it’s not just for the reasons that most people cite.
Yes, there are business reasons for fostering diversity in the workplace, and it’s no coincidence that Schneider Electric is committed to diversity and inclusion.
For one thing, there’s a well-established correlation between gender diversity and business performance, not least because diversity helps breed the innovative ideas and approaches that help companies thrive amid constant change.
For another, welcoming more diverse people into your employee base means being able to tap into a wider hiring pool. That’s particularly important in areas like IT, data management, engineering and finance, where there’s fierce competition for talent.
For me, though, there’s an additional reason why we all need to foster diversity: the risk management aspect.
It’s about having teams that don’t fall into the trap of group-think; where team members are empowered to bust looming echo chambers and can bring disruptive or innovative thoughts to the table, even when that means challenging existing hierarchies.
Diversity – and diversity of thought – is a risk management tool.
Diversity and managing risk: It’s about busting echo chambers and silos
So, how to attain that?
Most obviously, it’s about injecting diversity into the teams we build.
And I don’t mean just gender or ethnic diversity. It’s also about not filling your ranks with people who all trained in the same subject, or studied at the same universities, or had the same upbringing, socio-economic exposures and life journey. We all bring the sum total of ourselves to work, not just our work experience — particularly when it comes to diversity of thought.
So bring in different age ranges. Include young parents. Seek out people who’ve lived in multiple countries, or create a team that crosses geographical borders.
Then, it’s about the environment you build. Try holding meetings without a strictly fixed agenda. I often do, and it gets me updates and insights on topics, and from people, that might otherwise not get air-time.
Similarly, encourage everyone present at meetings to contribute, regardless of seniority. Let your colleagues know they can message you or grab you for a quick word in the hallway. Embracing diversity is also about cutting across hierarchies and empowering junior colleagues or new joiners to voice their ideas or concerns.
And foster a collaboration mindset. Ensure your people aren’t motivated just by specific personal or team goals, but that they consider the wider company, and what the broader impacts — on the entire industry and society – mean for the company.
That means holding inter-departmental, silo-busting meetings and projects. Invite diversity of thought by joining up teams and remits and streamlining structures.
At the end of the day, managing risk is about recognizing issues and bringing them to the attention of those who can try to address them. Conformity and unanimity of thought won’t do that.
That’s why diversity and managing risk are linked. It’s not just about fairness. It’s business-critical.
Schneider Electric is frequently recognized for its commitment to diversity, equity and inclusion, including recently being included in the Bloomberg Gender-Equality Index (GEI) for the sixth consecutive year.
Hilary Maxson joined Schneider Electric in 2017 and became the company’s Chief Financial Officer in April 2020. She was named “Best CFO” at the Institutional Investor’s 2022 Developed Europe Executive Team Awards in September 2022.
*This post was originally published on October 6, 2022 and has been updated for comprehensiveness.