Egon Zehnder
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Step into the mind of a first-time CEO and you’d probably find bold ideas and the intent to create unique teams — maybe even the will to disrupt. Fast forward to after the first quarterly call, and long-term visions of building a different type of organization are often replaced by the demand for short-term returns. Suddenly, new CEOs faced with new levels of complex problems to solve, a lack of knowledge in certain areas, maybe even having entered a new industry, can feel quite vulnerable. They then seek comfort in the familiar which usually means surrounding themselves with people of similar backgrounds and like ways of thinking. Different quickly becomes perceived as risky. But when it comes to building high-performing teams, diversity is proven to lead to better outcomes — successes which can make or break new leaders.

The higher the level, the riskier the risk

The irony is — at the very time they’re in a position to take a risk, the risk seems too great. In my executive search work, I often hear about these kinds of situations, when new executives do a 180 under internal scrutiny and external pressure. This happens not just at the CEO level, though being at the top without a peer compounds the sense of exposure; it happens from the VP level on up.

People ascend because they are changemakers, and their risks have paid off for the business. But as expectations grow, their boldness can shrink. The excitement of leadership gives way to a fear of breaking ground. Free thinking shifts to conservatism, and the idea of hiring a mix of talent is abandoned for the status quo.

The cycle of sameness

The result? Group think, less innovation — the same old, same old. Avoiding personal risk winds up creating business risk. Not only that, it perpetuates a homogenous talent pipeline. We’ve seen this cycle of sameness playing out repeatedly over the last 14 years in our annual Global Board Diversity Study.

With no clear path, diverse candidates never come close to the highest levels in business. Our 2018 research shows that women make up just 3.7 percent of worldwide CEO positions. Only 19 of the 44 countries we studied have at least one female director, and 25 countries have none.

Instead of taking the chance to build a team of people with different genders, ages, experience and backgrounds — a team more certain to produce positive results — risk-averse leaders will hire as they’ve always hired. It’s a human tendency to seek out what’s known.
 

Avoiding personal risk winds up creating business risk and perpetuates a homogenous talent pipeline.


We realize, however, that playing it safe and recruiting only those that reflect one’s own skills and competencies does nothing to generate the big ideas that produce business value. In fact, homogeneous teams miss the perspective of a business’ diverse stakeholders and customers. That’s a far bigger risk than doing something different.

Redefine risk

It’s not to say an all or nothing stance is the right approach when taking chance. Instead, new leaders should take smart risks. In terms of talent, this means focusing on diverse, high-potential individuals. Leaders should seek engaging people who exhibit curiosity, determination and insightfulness — qualities we consistently see in successful executives.

For companies aiming for parity and diversity, fostering high-potential talent should start at the junior level. Promising talent can be put in less risky positions at the beginning of their careers and gradually given stretch assignments. This purposeful progression helps make them agile and quick learners.

Surrounding people with support as they grow their careers also lessens risk and is a fundamental part of grooming diverse talent. It’s often overlooked, however, especially as people rise through the ranks. As it happens, when one gets to a place of influence — in a position where mentorship is more critical than ever — coaching stops, and the pressure test starts.

When people are supported, they feel safer. From this safe place, smart risks are more likely; anxious leaders simply won’t build diverse teams. That brings us back to an empty pipeline and an environment in which group think rules. This assistance is, again, especially important at the CEO level where an equal to debate with helps vet a risky idea. On the other hand, risk avoidance keeps the cycle playing out over and over again.

Make the riskiest hires

We know that successful businesses mirror the communities they serve. Building diverse teams creates that reflection, and research definitely shows diverse teams are higher-performing. Companies that fashion their cultures to embrace the daring will create leaders who are willing to take chances and fail intelligently. Such cultures must be inclusive where women and other groups can thrive and ascend.

The “riskiest” hires don’t have to be risky at all if they’re chosen on potential. And a gutsy leader who takes risks begets a risk-taking team, which will break the cycle of sameness, fill the pipeline and deliver results.

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