Let’s talk about the importance of diversity.
John Naisbitt’s leading research on the “megatrend” futuristic trends of society– the economy, governments, lifestyles, the workplace–over the last three decades has observed and further predicted the seismic global changes in those and other areas of life that have been largely facilitated by technology.
His research, first published in 1982, has also informed and impacted actions across all pillars of societal institutions.
Key to Megatrends is the breakdown of hierarchies. Rigid controls have given rise to pluralism, individuality, and diversity which, when joined with mega-data, has sped the volume and velocity of change, particularly in business. Disruptive technologies have laid way to new consumption patterns, and new enterprises to satisfy them.
For those of us who engage in building and stewarding organizations our objective must be the sustainability of the organization in every way for the benefit of all of its stakeholders. In the for-profit world, this includes the owners/shareholders, customers, employees, suppliers and the communities in which they operate.
For those that are involved in corporate social responsibility, and corporate citizenship (who I would argue includes everyone) this is bedrock in understanding not only the “what” of what must be done, but also the “why” of what must be done. It quickly becomes clear that corporate citizenship isn’t just a “good to do”, but also the right thing to do to ensure an enduring, sustainable organization.
While steady strides have been made in understanding the why about the imperative for workplace diversity ironically, slower pace is being made in corporate governance diversity.
Catalyst’s annual research on the topic found that 19.2% of Board seats on S&P 500 companies are held by women. The U.S. lags European countries, where as many as 35% of corporate board seats are filled by women (Norway leads the way).
Yet, research by Catalyst and other organizations points to better corporate performance with a larger presence of women (including financial, return on equity, return on sales, return on invested capital, increased workplace diversity and overall corporate citizenship).
A study by Credit Suisse last year reconfirms the Catalyst research. As spotlighted by Joseph Keefe, CEO, and Sallie L. Krawcheck, Chair, of Pax Ellevate Management, LLC, another study last year by Thomson Reuters reported that companies with no women in governance perform more poorly and operated at a higher risk compared to peers whose Boards were gender diverse.
Joe (with whom I have had the pleasure of addressing the issue at an annual Johns Hopkins University forum) and Sallie found similar conclusions from McKinsey. The benefits of women in corporate governance accelerate when it reaches 30%–a critical mass.
As business increasingly becomes globalized, the imperative of governance to reflect customers and other stakeholders intensifies. It is a point of competitive differentiation.
At MGM Resorts, we are approaching critical mass with three of 11 Board members female (27%). In the other crucial aspects of diversity, two of our female Board members are African American. Our lead outside director is also Hispanic, further reflecting our customer and employee base.
Among the ten megatrends, the Naisbitt’s highlight the movement from “representational to participatory democracy” which is manifested by ballot measures, engaged employees in the workplace, and activist shareholders.
The outcome of an experience this proxy season with an activist shareholder encouraged me that efforts toward diversity are resonating. I was pleased that shareholders of MGM Resorts rejected efforts to replace our diverse Board members with a slate of non-diverse members.
While MGM is honored to be regarded for efforts in corporate governance diversity by the NY Women’s Forum as a “Corporate Champion” among others, we know that this is a journey–an essential one–to which there is no destination. As Warren Buffett has observed, how can we achieve overall success when we are only operating with 50% of our capacity? Whether in travel, tourism, health care, or other consumption areas, women are dominant.
We’ll never stop working toward being a more diverse organization. As Naisbitt observed initially in 1982, diversity strengthens us. As we say, “we are united–as one–through diversity”.
Success is a team effort, especially when everyone is engaged.