Goldman Sachs has announced that it will no longer facilitate initial public offerings in the US for companies that lack diverse directors. The Goldman Sachs’ policy initiative, along with new legislation in the State of California, is growing evidence that board diversity is gaining momentum as a License to Operate (LTO) issue (and opportunity) for publicly traded companies. LTO is defined as the sanction by shareholders, governments, organizations, and communities under which a company has permission to operate. It can be legally enforced or socially imposed based on the norms and expectations of a community.

Goldman Sachs is imposing a quota (at least one diverse board member) which is an example of affirmative action, an anti-discrimination remedy that dates back to the passage of the Civil Rights Act of 1964. It’s a remedy aimed at achieving social change through enforced demographic diversity. Over 50 years of learning has taught us that quotas alone will not unleash the full potential of diversity unless the culture of an organization encourages the expression of differing observations, viewpoints, processing and problems solving styles, feelings, and emotions.

It’s just a numbers game unless leaders’ behavior encourages the full expression of preference among people. Cultures can’t be lopsided by biases (explicit or implicit) that cause people to feel pressured to conform to whatever preference that they think will be tolerated. Leaders of organizations must nurture an environment of psychological safety where uniqueness is celebrated, valued and utilized; risk-taking is allowed, supported and managed; mistakes are acknowledged but not held against people, and people are encouraged to bring up problems and tough issues.

It’s critical to understand the role of conversations and behaviors in terms of shaping an organization’s culture that unleashes the full potential of demographic diversity.

Conversations are composed of words and sentences in talking-listening exchanges involving two or more people. Within an organization, conversations are a tool to interact with others. We instruct, convey, manage, direct, and coach through conversations. People link together through conversations and share information. Through conversations, connections are made internally and externally to markets, technologies, and opportunities. What people talk about in an organization becomes what they believe over time about the organization, and how they experience the working environment. The physical environment of Apple in Cupertino, CA, for example, is defined by two campuses with 3.3 million square feet of space for offices, conference rooms, cafés, and health centers. However, the effective environment of Apple is defined by what the 16000 employees in Cupertino talk about. These conversations create the context that is socialized within the organization and become, at a macro level, its effective culture.

There’s another aspect of conversations that’s even more important. Within talking and listening exchanges, there is a neurological phenomenon occurring. One neuroscientist describes it as a “verbal massage” of the brain that results in the sharing of energy and information. It’s called an “attuned relating” process, and it’s how an infant’s brain develops and how attachment is formed among adults. This process is almost entirely driven by emotions which become socialized in conversations. Unconsciously, the brain will “mirror” the emotions expressed by others during conversations. Thus, psychological safety as described above is a neurological phenomenon largely but not entirely driven by conversation.

To make sense of this, let’s take a moment to focus on two parts of a conversation talking and listening, to illustrate four types of relationship patterns that could exist in an organization:

• 1. Toxic Relationships. Talkers are cautious, polite or argumentative, and the listening by most parties is confined to the reconfirming of judgments, facts, and concepts.
• 2. Frustrating Relationships. Talkers are cautious, polite or argumentative, but the listening of some, but not all, participants shifts to a person’s feelings, sense of caring and openheartedness.
• 3. Challenging Relationships. Some, but not all talkers, are reflective and seek common ground, and the listening by most parties is confined to the reconfirming of judgments and facts and concepts.
• 4. Healthy Relationships. All talkers are reflective and seek common ground, and all listeners focus on each other’s feelings and sense of caring.

For healthy relationships, and therefore, a healthy culture, to exist in an organization, people within the organization must at least be reflective in their conversations and open to others’ feelings. At the healthiest organizations, people seek common ground during conversations, and they listen to others with a sense of caring and understanding. In a recent training program, an attendee remarked, “So, when I’m at my best, I’ve suspended judgment and instead I’m listening to understand why a person is saying (or doing) something and then I see what I can do to help them achieve their goal.” That’s it!

Appropriate behavior is also required to support a healthy culture that enables diversity to flourish. The funny thing about behavior is that it is never neutral in its effect. It’s always observable by others, and that makes its interpretation critical. Behaviors spark emotions, and either takes others up by igniting their passion, trust, and happiness, or takes them down through sadness, shame, fear, and disgust.

Behavior is always causing a reaction. As a result, it’s more of an input to what occurs than the consequence of any specific occurrence. When we observe the behaviors of others that are consistent with our beliefs about what is good in people, we will tend to trust them. The opposite is also true. Without trust in an organization, a healthy culture can’t exist. In fact, trust breeds success for individuals as well as vibrancy and viability for an organization.

Among the many behaviors manifested in an organization, there are three that can have a profoundly positive effect on culture: self-awareness, compassion, and versatility. These are described below:

• Self-awareness is the ability to understand your moods and emotions and recognize the impact that these have on others. Self-aware people listen to others objectively and suspend judgment tied to their own values and beliefs. They are conscious of verbal and non-verbal influencers and are less likely to fall victim to confirmation bias and cognitive dissonance.
• Compassion is the ability to understand the emotional makeup of others and to treat them according to their emotional needs. It’s actually a rational decision-making process that considers happiness, thriving, and suffering. Compassionate people “feel for” others but do not necessarily experience their emotions.
• Versatility is the ability to leverage both masculine and feminine thinking. It’s a concept advocated by leadership trainer, Patty Beach. Most people tend to sense and solve problems from either an archetypally masculine or feminine frame of mind. Masculine sensibility is objective and emphasizes facts and logic, while feminine sensibility emphasizes feelings and intuition. Masculine and feminine perspectives are both useful regardless of our gender; however, unconscious bias often leads to one point of view being overlooked. Versatile leaders transcend stereotypes and unconscious biases by considering facts and feelings into deliberations. Versatility improves cross-gender communication and results in more balanced, inclusive, and satisfying solutions.

It’s the amalgamation of these three behaviors that creates an invisible force in an organization that shapes a healthy and diverse culture. For many people, these three behaviors do not come naturally or were not nurtured over a lifetime of experiences. We have learned from research in neuroscience that a person can use the deliberative part of the brain to rewire the parts that are reflexive – it’s called Long-Term Potentiation. In other words, a person can train themselves to make these behaviors occur automatically. It takes a lot of practice, a belief in one’s potential, a broad focus on all aspects of life, and a willingness to take ownership of your behaviors.