In the week that Sherwood Consulting presented our findings on women in leadership roles in law firms there was an interesting Schumpeter column in The Economist. If you’re interested in gender balance and diversity in firms, read on…

The column opens: ‘RONALD REAGAN once said that “The nine most terrifying words in the English language are, ‘I’m from the government and I’m here to help’.” Today they are run a close second by 12 words: “I’m from human resources and I’m here to organise a diversity workshop.” Most people pay lip service to diversity in public. But what they think in private can be very different. Some HR consultants have even started to worry about “diversity fatigue”.

The arguments in favour of diversity are powerful. The most obvious is that diversity is simply a fact about the modern world. Women have entered the workforce in huge numbers. Mass immigration has transformed Western societies: even in once-homogeneous countries such as Sweden, foreign-born people make up 14% of the population. Gay men and women increasingly feel no need to stay closeted, in or out of the workplace. Companies that ignore this may starve themselves of talent, as well as be out of touch with their customers. ‘

Adding to the evidence for diversity’s benefits, Schumpeter sites studies by the Peterson Institute, the University of Chicago, MIT and internal surveys at Google that have found that diverse teams achieve better results and are often the most innovative.

David Livermore comments in his new book, “Driven by Difference: How Great Companies Fuel Innovation through Diversity” that many firms are complaining that they are not getting much return for their investment in diversity. “Tomorrow I have to go to a diversity-training workshop,” he heard one man say to another in the gym. “Oh God!” came the reply. “That’s right up there with getting a root canal.” At a Sherwood lunch this week, many firms admitted that progress at getting more women into senior positions seems to have plateaued.

Schumpeter adds: Executives feel they are dragooned into sitting through lengthy seminars on equal opportunities. They are fearful of saying anything that departs from the “correct” line on any diversity-related matter. And they feel under pressure to hit their recruitment quotas. The more important reason however is that the proponents of diversity often fail to acknowledge that there can be a trade-off: to get the benefits, firms must be prepared for and deal with, some problems. Diversity does not produce better results automatically, through a sort of multicultural magic. It does so only if it is managed well.

Sherwood would add that all the interventions made, whether it is coaching for maternity leave returners, agile working, unconscious bias training etc need to be joined up to achieve the results firms are looking for. For example, is the BD function on board and looking to put more women on pitch teams?

Sherwood and Schumpeter agree that the biggest challenge is to do with trust. Employees need to trust the system (eg that staff are evaluated fairly and the right people will be promoted etc) and trust each other if they are to be fully motivated and produce their best work. But it is easier to establish trust with those you have a lot in common with. Mr Livermore notes that diverse teams are more likely to produce truly innovative ideas, but they are also more likely to fail completely. He suggests that managers of diverse teams need o set lots of short-term goals so that teams can see the benefits of working together. They also need to recognise that Westerners tend to think that getting straight down to the task at hand is the best way to do this, whereas South Asians believe in establishing rapport over cups of tea first.

Are firms yet aware enough of these cultural differences? One Western firm urged its employees to “act like an owner” without realising that, in some cultures, acting like an owner means playing golf all day.

On gender balance, there is increasing evidence that men’s and women’s brains are wired differently with women being able to assess risk more accurately. This means they might not put themselves forward so readily and may miss out on being selected for the bigger ticket and riskier projects.

Managers (with their unconscious biases) evaluate people on their willingness to speak up without realising that some people—women especially, in many countries—are brought up to hold their tongues and defer to authority. Livermore argues that managers need to work harder at getting members of silent minorities to speak up.

If law firms are struggling to make progress on gender balance, what about looking for success stories from other sectors? Can the big firms learn anything from the Big 4? What about the Civil Service?

The War for Talent is back. Surely this creates a burning platform to get more partners on board and committed to diversity and gender balance issues?

See also: https://tonyreiss.com/2016/02/16/the-drain-of-female-talent-in-firms/