Insights

Witena Letter 5 / 2020

Diversity – the key element of crisis management.

It is a reassuring sign that the Federal Council tussled and wrangled over the best way forward during lockdown. We accept the curtailment of basic democratic rights at a time of crisis. We nevertheless expect the need to protect physical health and the healthcare system to be comprehensively weighed up against the impact of economic and social collateral damage.

There is often no right or wrong answer when decisions are taken during crisis management. The scant facts available mean careful consideration of opportunities and risks is required with the aim of maintaining room for manoeuvre. As a result, heterogeneity in the management team is vitally important.

Boards of directors and executive boards appointed with homogeneity in mind which have failed to exercise their core responsibility of constructive debate and challenging one another are now paying the price. The past decade of economic prosperity has harboured the risk of individuals being excessively polite, not stepping on others’ toes, shortening decision-making processes and joining the chorus of support for an opinion leader or the mainstream view. Generally speaking, things turned out well with favourable markets. However, the time of management free-riding is over. Bold decisions now need to be taken. This calls for heterogeneous management teams that are able to assess a situation from various perspectives, determine the strategic options, weigh them up, decide on a strategic direction and systematically implement it together.

BoD chairpersons and CEOs who have not promoted diversity on managing bodies or who have systematically discarded alternative views now feel out in the cold. It is a very different story for the CEO of an international industrial group who has consistently focused on fostering diversity in the past. The management board took the decision as to whether employees at the subsidiaries abroad – where the short-time working model is unfamiliar – should be permanently laid off or furloughed on a broad and nuanced basis.

Genuine heterogeneity in the management team is the foundation for effective decision-making and successful corporate development

Diversity is not achieved by incorporating a quota person into a homogeneous management team as they either become part of this homogeneity or remain an outsider. The key factor is the mindset or management culture that purposefully fosters heterogeneity. Some very positive examples of this exist.

  • The CEO of a component manufacturer tasked us with finding a CTO with the specific intention of complementing the management team. During the assessment phase we focused on identifying the candidate who would provide added value during decision-making processes and actually drive the company forward.
  • The CEO of an energy supply company commissioned us to find an executive board member who was not to come from the sector if possible and who would challenge the CEO and management team.
  • The chairman of the board, owner and CEO of a global electronic components group asked us to search for a COO who would critically evaluate the production and organisational structure worldwide, eliminate outdated practices and bring a more global outlook and approach to the ownership and board of directors.
  • The chairman of the board of a technology company instructed us to search for a board member who not only came from a completely different sector, but would also not be afraid to speak their mind and adopt different viewpoints.
  • The board of an insurance company assigned us the task of finding a CEO capable of managing a heterogeneous management team and encouraging objective debate.
  • The owner of an international electronic components group recruited a lateral-thinking board member and explained: “She questions everything and challenges me. It’s very demanding and arduous but it helps me to evolve and drives the company forward, for which I’m extremely grateful.”

Personality traits such as the ability to integrate and work as part of a team are taking on a new dimension. Soft skills do not equate to being a “softie” but instead indicate a firm but cooperative approach.

A more homogeneous management team does not necessarily need to be reappointed overnight to achieve the desired heterogeneity. Significant progress can be made by allocating and more clearly defining the roles of individual management team members – like players in a game. While the head of marketing and sales takes on the role of optimist and the COO is the realist who applies the brakes, the CFO can be assigned the role of sceptic and the head of human resources that of advocate.

Heterogeneity is proving a competitive advantage in dealing with the current economic crisis. Heterogeneous management teams are also valuable in times of economic upturn in view of opportunity-cost considerations. Diversity is the future!

«Business Transformation» and «Diversity» are core issues for us: as a versatile, dynamic Swiss Executive Search Boutique, with added leadership consultancy, we want to take our share of responsibility for the successful development of companies in the digital age. Witena can be your sparring partner and has the enthusiasm and skills to support you in the further development of your company.


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