ESG Clarity is delighted to support the City Hive campaign celebrating 50 years of women investing in the UK. In this piece, the organisation takes a look at the importance of cognitive diversity on the workplace.
Not having fearless women in your workforce can lead to epic fails. You don’t need to believe us, just read Invisible Women by Caroline Criado Perez for the many, many examples of where only the male perspective and assumptions are taken on board.
Not having woman proportionally represented across the investment industry means we are doing a real disservice to the consumer.
As Christine Lagarde, currently president of the European Central Bank and ex-IMF head, famously said: “If it was Lehman Sisters, it would be a different world.”
Lagarde said the collapse of Lehman brothers was a “sobering lesson in groupthink” and the male domination in banking is what led us to the collapse and will, ultimately, lead to other financial crises.
“Greater diversity always sharpens thinking, reducing the potential for groupthink,” she said, adding: “This very diversity also leads to more prudence, and less of reckless decision-making that provoked the crisis.”
For the ideas factory that is the investment industry, we should be aiming for cognitive diversity. This can only happen when you have holistically diverse teams, thought processes and decision-making. It cannot be achieved with diversity garnish – that sprinkling of surface level diversity that does nothing to actually change the fundamentals of how a business works.
Having genuine cognitive diversity within a team or organisation means having people who process information, problem solve, and generally think differently all being given the space to share their perspectives, and even challenge to the status quo, existing approaches and decision-making processes.
The ‘diversity of thought’ label is sometimes used by those who argue they do not necessarily need to look different to bring varying perspectives and viewpoints to the table. A team made up of those with only male life experiences who introject only male assumptions cannot say they are cognitively diverse. Having a high number of ‘fearless women‘ in your organisation is a major step toward this.
Measuring the successes of cognitive diversity perhaps can only be done in hindsight when compared to the failures of others rather than by looking at your results today.