As the COVID-19 public health crisis and the consequent lockdown continues to ravage economies and financial markets, businesses across the world are working against the clock to make fast, difficult decisions, often serving highly diverse customer bases, with no time to spare. Having a diverse leadership may be the key.
In this unprecedented context, diverse leadership has quickly proved to be essential for successful management in times of crisis, and the lack of it is a disaster with dire consequences. This is due to three key reasons
Why diverse leadership matters
First, diverse leadership is best placed to grasp the various impacts the COVID-19 crisis is having on the company’s employees and customers, because let’s face it, one of the greatest challenges is actually understanding the needs and circumstances of individuals.
As we navigate the current crisis, the transition to a new way of working presents both challenges and opportunities. A diverse leadership will be able to better assess the needs and circumstances of staff and clients who themselves are diverse in all of the traditional measures, and affected by widely varying life, work and family conditions.
A recent report by the Institute of Fiscal Studies shows that the crisis will harder hit women: in the UK they are one-third more likely than men to work in sectors that have shut due to the crisis. Therefore, a company with the presence of female leadership will naturally be more inclined to recognise the unique challenges faced by women and implement contingency planning accordingly.
Second, the current environment forces businesses to adapt and requires operational models to change drastically in a relatively short period of time to face the new realities. Assembly lines across various industries are being transformed to produce goods that are in short supply and shops are being altered to offer a wider range of first need goods. As we face such exceptional challenges, the management in charge of changing course, their life and career experiences can be as important as the course itself.
Third, the presence of diversity and the practice of inclusion is crucial to challenge organisations to look at problems differently and consider a wider range of issues and impacts that they might otherwise miss. This, of course, is essential at any time but becomes critical in times of crisis.
A study by the Harvard Business Review shows that teams can solve problems much faster when they are more cognitively diverse. This analysis found that cognitive diversity in teams, defined as differences in perspective or information processing styles, showed a high correlation with high performance.
Furthermore, in times like these, a perceived lack of control at the highest organisational levels, and the spread of misinformation, increases risks of bias, xenophobia and racism that impact both employees and customers.
The business benefits
Once the dust has settled on the current public health crisis, businesses will need to re-emerge, often transformed, to face the new realities. And here again, a diverse leadership is best placed to help businesses succeed.
According to an analysis by the Wall Street Journal, the 20 most diverse companies in the US — dominated by banks and insurers — had an annual stock return of 10% over five years, compared to 4.2% for the 20 least diverse companies.
The UK government’s commitment to supporting start-ups, as reflected in the recently announced £1.25 billion start-up support package, is a clear recognition of the vital role innovation has to play as we emerge from this crisis. Yet we must ensure that we don’t let our guard down when it comes to championing inclusive growth and diversity of leadership across our start-up ecosystem.
In this period of heightened uncertainty, more than ever before, it is the time for businesses to focus on promoting diversity and fostering inclusion. Women’s and other minorities are important seats at the table right now.
Roxana Mohammadian-Molina is Chief Strategy Officer and Board Member at London-based P2P lending platform Blend Network and sits on the Advisory Board of Women in Finance UK.