Diversity is a big issue for big business – and it is only growing more important. Increasingly, firms large and small around the world are recognising the importance – and the benefits – of reflecting the views and needs of minority groups when it comes to their operations and strategies. All strategic choices at the apex of a corporation – and thus a company’s performance – result from how managers filter and use information. To do this, they use their cognitive bases and value sets, and if you have a homogeneous group with similar characteristics making these decisions, you are missing out on different perspectives and potential choices. There are recognised benefits to diversifying boards, and there is already evidence that increased gender diversity delivers better firm performance. Studies have shown that more diverse boards are less prone to financial restatements and fraud, and that female board representation is linked to improved governance, environmental sustainability and corporate social responsibility, though it needs to be more than a token presence. Further research shows that Fortune 500 boards with female directors have higher returns on sales and invested capital than their all-male counterparts; and Goldman Sachs CEO David Solomon has announced his firm would not take a company public unless it has at least one ‘diverse’ board member. The Alternative Investment (AI) industry is one area where diversity is much needed. The industry, including hedge funds, private equity funds (PE) and venture capital, is a cornerstone of global wealth management, with around $12tn in assets under management (AuM), 16% of global AuM. Yet it is dominated by a homogeneous group of people – white men who attended elite business schools and came from investment banking or consulting. Women make up only 20% of AI professionals, represent less than 12% of senior positions globally, and in the USA own only 5% of PE firms, 18 |
RkJQdWJsaXNoZXIy NTI5NzM=