Kylteri 01/24

Unveiling the homogeneity of senior leadership in the Nordics

How do we prepare businesses for future challenges? The answer is diversity. It's not just about fairness; it's a must-have for innovation and success. Yet, progress in diversifying leadership in Nordic companies has been slow, even with new regulations on the horizon.

Nordic Business Diversity Index

The 2024 edition of the Nordic Business Diversity Index (NBDI) by Impaktly aims to paint a picture of what senior leadership looks like in the Nordics. The index also raises discussion, encourages us to ask questions and pushes us to find ways in which companies can tackle the issue of homogenous leadership. The top leadership of over 600 listed companies in Finland, Sweden, Denmark, and Iceland was scored based on public information according to their diversity in terms of binary gender, age, nationality, and education. These four metrics are based on the principles of diversity in the Corporate Governance Code of the Securities Market Association.

The research from the Nordic Business Diversity Index paints a common picture of CEOs and board chairs in Finnish listed companies as predominantly being Finnish males, over 50 years old, with a background in business studies. This trend extends across the Nordic region, indicating a broader pattern of homogeneity in corporate leadership.

“Among the companies listed in the Nasdaq Copenhagen, it is more probable for a CEO to be named Lars than to be a woman.”

In Finnish listed companies, women hold 29% of leadership roles, with only 65 out of 631 companies having a female CEO and 63 having a female Chair of the Board. Among the companies listed in the Nasdaq Copenhagen, it is more probable for a CEO to be named Lars than to be a woman. Leadership includes under 25% non-domestic nationals, highlighting a lack of international diversity. The majority of top leaders, 57% on boards and 51% in executive management, possess business degrees. Additionally, only 11% of leaders were born in the 1980s and 1990s, indicating a generational gap. Particularly, smaller companies in Finland show significant room for improvement in diversifying their executive teams.

The metrics of the Nordic Business Diversity Index only scratch the surface of the multidimensional nature of diversity. Questions remain about the opportunities for leadership roles in Finland for ethnic minorities, individuals with disabilities, or members of the LGBTQ+ community. The recent presidential elections have shown that a candidate's sexual identity can generate significant discussion alongside debates on competence and capability, and that this cultural challenge is far from resolved.

“This is not about questioning the competence of current leaders but about ensuring equal opportunities for diverse talents to join decision-making tables.”

The lack of diversity in corporate leadership is problematic. Ensuring equal opportunities in the workplace should be a foundational pillar of our society. This is not about questioning the competence of current leaders, but about ensuring equal opportunities for diverse talents to join decision-making tables. While Finland is often considered as one of the most equal countries in the world, it's hard to accept that not everyone has equal career advancement opportunities. The labor market faces shortages, yet a portion of the skilled workforce remains unemployed. This discrepancy becomes more visible with the rapid demographic changes in our society.

The competitive advantage of diversity

If equal opportunities are not a compelling reason, numerous studies indicate that diversity is also a competitive advantage. Diverse teams excel in international competition and innovation. Companies with diverse leadership were even found to recover from shocks of the COVID-19 crisis more swiftly. Why, then, does corporate leadership remain so homogenous? 

Goals for ensuring diversity are increasing within companies, but concrete actions across the organizations often fall short. Achieving seemingly simple goals requires a brutally honest examination of organizational practices as it is critical to understand the complex structures and thought patterns that define the daily reality of a company. Focused actions at all levels of the organization are key to achieving diversity goals, although such actions rarely accelerate diversity overnight.

What's a competent leader?

It's also vital to question whether our perception of a competent leader is too narrow. What qualities, capabilities, or educational and experiential backgrounds do we value? How many people making top leadership decisions are educated on the significance of unconscious biases in recruitment or consider diversity in succession planning? Expertise in the business benefits of diversity and an understanding of the structural barriers to career progression in our workplaces should play a decisive role in defining competency requirements and recruiting company leaders. To ensure competitive edge, it's crucial to consider what capabilities we need to navigate an ever-changing operational environment. Could broadening our search for top talent enhance our success against global challenges?

What are the needed skill sets to navigate in a constantly changing landscape? The climate crisis, increasing inequality and global conflicts, to mention a few, are topics that require competencies that are not traditionally found in leadership teams. Should senior leadership groups be fighting for biologists and sociologists to ensure crucial competencies, or will the dominance of business and engineering continue? Especially in homogenous industries we need courage to break the pattern and take deliberate steps to expand our traditional talent pool. In some cases, this might mean that we don’t necessarily hire the “best talent”, but instead the “best potential”.

“When leadership in our societies and companies reflects diverse backgrounds, we send the message that opportunity and success are not limited to a closed, homogenous group.”

Companies are encouraged to examine their practices and thought patterns affecting leadership selections honestly and to ask themselves a sincere question: Do we opt for a clone of the previous leader? Why? Will traditional capabilities suffice for future success, or do we also need fresh and unconventional perspectives on our world? Where can these perspectives be found?

When leadership in our societies and companies reflects diverse backgrounds, we send the message that opportunity and success are not limited to a closed, homogenous group. Representation empowers those who have traditionally been left voiceless, and it encourages all of us to encounter our unconscious biases and learn about people who are different from us. Our modern societal challenges require modern, innovative solutions, and only through adequate diversity and inclusion can those solutions be found.