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Female CEOs and board members are a huge step forward, but success now depends on much greater diversity

Over the past decade, Australian companies have done well at increasing the representation of their female leaders.

Women now make up 35.1 per cent of board directors of the ASX 200, up from 20.6 per cent in 2015 and 29 per cent of all executive leadership team roles. According to Chief Executive Women, though, more work needs to be done, as they only hold 7 per cent of CEO positions, up from 5 per cent six years ago.

Stakeholder expectations towards ESG are changing, an example being NASDAQ’s new requirements for disclosure of board diversity beyond gender. As a result, diversity and inclusion have now become part of today’s business vocabulary. 

Forward-looking companies today recognise the growing importance of making progress in diversity and inclusion that support these changing stakeholder views. Many focus on multiple dimensions of diversity. Yet, some leaders still think that the word diversity means gender.

Others believe that one dimension of diversity has not had its national movement even though nearly 28 per cent of Australians were born overseas; cultural diversity.

Australia’s got (diverse) talent

Earlier this month, the Diversity Council of Australia highlighted that 3,000,000 Australians are looking for or want more work. 

Yet, at the same time, 90 per cent of companies say a lack of staff is holding them back, according to the September 2022 NAB quarterly business survey.

Australian companies can be better at leveraging their often-overlooked culturally diverse talent.

Numbers show that people with culturally diverse backgrounds leave their organisations much faster than the majority. For example, estimates in 2018 showed that Asian Australians hold only 3 per cent of senior management roles, even though they now make up close to 18 per cent of Australia’s population. 

Further, according to Watermark, only 7 per cent of directors of the ASX 300 companies come from a non-European background. 

Sadly, many skilled migrants face challenges finding work in sectors such as engineering, so they work in other sectors where their skills are not utilised.

This issue is not new, and “we must avoid the creation of a new class: a class of professional Asian-Australian coolies in the twenty-first century. A class of well-educated, ostensibly over-achieving Asian-Australians, who may nonetheless be permanently locked out from the ranks of their society’s leadership”, warned Tim Soutphommasane, Australia’s former Race Discrimination Commissioner, in 2014.

Further, to succeed in Asia, Australia should focus on rebooting its Asia literacy and championing its rich Asia talent, according to the Asia Taskforce.  

Bringing into senior leadership ranks talent with these skills will be imperative to drive Australia’s future growth. They include Australians with Asian cultural and linguistic skills, Australian diaspora with Asia experience, and skilled migrants from Asia. 

Lead with cultural humility

Australian companies can definitely be better at more inclusive recruitment, attracting people of all backgrounds to stay and providing them with the fair go they deserve. This requires employers to be more open to welcoming people with different backgrounds and perspectives to organisations rather than recruiting based on cultural fit.

However, they must also be better at retaining and supporting their culturally diverse talent. To do this, leaders should go beyond popular diversity initiatives, such as putting targets in place and unconscious bias training. 

Many of these traditional programmes seek to bring to awareness specific behavioural patterns in individuals. However, they don’t deal with sometimes toxic cultures that can lead people to behave in exclusionary ways. For example, companies’ deeply held beliefs, practices and basic assumptions can bond insiders and exclude others. At the same time, they expect new joiners to adapt to the company norms.

For cultural diversity, given many people’s behavioural patterns are developed in them when they are young and are deeply rooted, additional sensitivity is required. A critical way to start the change journey is for leaders to go beyond cultural intelligence and embrace cultural humility. 

This includes permitting people’s anxieties and vulnerabilities to be welcomed in group discussions. Moreover, companies should allow employees the space to be curious and open to learning about each other, including race and ethnicity.

The first step is to create psychologically safe spaces where people don’t feel threatened if they share their views. To find out more on this topic, Karen Loon’s new book Fostering Culturally Diverse Leadership in Organisations provides an essential roadmap of actions for HR Leaders looking to build a more inclusive workplace and is now available to purchase via Routledge. For more information, visit https://karenloon.com/.

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Karen Loon

Karen Loon

Karen Loon is a non-executive director, a former senior Big 4 partner, and the author of Fostering Culturally Diverse Leadership in Organisations: Lessons from Those Who Smashed the Bamboo Ceiling.

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