The recent Lord Davies report, Women on Boards, encouraged leaders of FTSE 350 companies to include more women on their boards based on the needs and characteristics of their businesses. The report ducked imposing actual quotas and instead considered the factors that might bring about cultural change. On the one hand, there’s an increasing need for organisations to adapt their culture to be more welcoming to all-comers; on the other, perceived outsiders – women included – must demonstrate their willingness to engage with the group.
In the UK, the very idea of quotas is not welcome. This is backed up by discussions from within the Criticaleye Community. Indeed, the consensus is that all the fuss around the Report might end up being counter-productive: not only for women attempting to break the ‘glass ceiling’ (who may feel they are there not by merit but by default), but also for businesses striving for quality without any flexibility to make choices.
Jane Furniss, CEO of Independent Police Complaints Commission, says: “Perception seems to me to be key to all this; how women perceive themselves and whether they see being on the board as something to which they aspire crucially affects their approach. If what we see is largely a white male group we will wonder not only ‘will I fit?’ but also ‘do I want to?’. As more boards reflect the communities they serve, more women will aspire to join them and so talent not gender will be the key criteria for selection. Quotas are helpful in challenging mindsets and status quo but they create another set of problems and can be counter productive. I have always wanted the certainty that I got the job on merit – the challenge is hard enough without the concern that others are wondering – ‘did she get it to improve the gender profile?’”
The gender agenda is clearly part of a wider issue about boardroom quality – ensuring that the best people are reaching the top. But, at a time when boardroom decisions are placed under increased public scrutiny to deliver, does discussion about quotas distract us from the need to focus on quality?
Alysoun Stewart, founder and director of Oxygen8 Solutions Ltd, says: “The impact of the recession cannot be underestimated. Beleaguered companies have realised that they have to do things differently if they are to survive and find competitive edge – having boards that continue to think and act in the same old way will be a high risk strategy and this has, in many companies, put the issue of boardroom diversity and corporate governance into the spotlight.
“But the debate should not be limited to considerations of gender representation and quotas but should focus on diversity in its widest sense. Boardroom representation has been a comparatively narrow club for too long and the accelerating pace of change in the trading environment demands fresh approaches, fresh perspectives and fresh inspiration. That can only come by widening the gene pool to those who can bring new blood, whether that is as a result of gender, background or experience.”
Is there a glass ceiling?
In a survey of members of the Institute of Leadership and Management, 73 per cent of female respondents said they thought there was a glass ceiling for women seeking senior management positions, compared to 38 per cent of male respondents.
CEOs frequently report their inability to find a female candidate of quality to promote or hire, suggesting that the glass ceiling is more than mere perception. Or they might hire women as a last ditch effort to save an underperforming business in order to effect a ‘high risk’ turnaround. Certainly, women shouldn’t be pushed to the edge of a ‘glass cliff’. But, in reality, many women – like many men – flourish when put in this position.
For example, Stevie Spring, CEO of specialist publishing house Future plc, was brought on board after Future had overstretched through a series of print acquisitions to meet the ambitions of the previous chief executive, Greg Ingham, who wanted to double the size of the publishing company. Stevie has exemplified the requirements of the role and has been involved in much of the consultation for the Davies report.
She says: “There’s obviously a big difference between executives and NEDs and I believe it is the former that is the big issue – women that have reached the top and can bring P&L experience. The pipeline of women for executive positions is therefore a bigger issue because too many fall out of the workforce along the executive stream. But on the demand side too, boards still tend unintentionally to recruit in their own image – largely white, middle-aged men. It’s a NED’s job to bring different perspectives to bear on scrutiny and strategy. Diversity encourages these different perspectives. Nobody wants the furtherance of group think.”
V ‘Ram’ Ramakrishnan, Associate Faculty Member at Singapore-based business school MDP and one of Criticaleye’s Thought Leaders, says: “There needs to be a system that nurtures and encourages substantial populations of capable women executives to stay the course once they make it to the top. As with male directors I believe women have to be identified, coached and nurtured to become successful board members. It is strange that we spend twenty odd years training to be general managers but are expected to acquire directorial wisdom by god-given gifts overnight. Direction is a skill very different from general management and need to be cultivated by both men and women potentials.”
Is the talent pipeline open?
One outcome of the downturn has been to drive boards towards recruiting experience; non-executives that can bring value to the table based on the challenges they have encountered in the past. But are there enough women of quality in the pipeline to fill the quota?
Peter Waine, Partner at Hanson Green, says: “There is a general shortage of suitable NED candidates – men or women – and even that pipeline will soon dry up. I don’t believe that this is down to the perceived downside of the appointment-salary gap widening between executives and non-executives or because demands are increasing and the legal liability is being highlighted. Plc boards have become progressively smaller with the executive element, in particular, contracting. The result of this is that there will not be enough candidates who are current executive main board directors to go round. Hence, the chances for women and others to join these boards are likely to present themselves more frequently. But, how far do we need to stray from business in order to find those candidates?”
Perhaps the focus needs to shift from getting more women into the boardroom as NEDs to encouraging and empowering more women to aspire to the top? A female CEO – a leader – is inspiring for female staff: does a female NED have the same impact?
Tony Cowling, Criticaleye Associate and President of Taylor Nelson Sofres, says: “The cause of the problem lies with a serious shortage of women with upper middle and senior management experience, hence the proper solution to this problem lies with increasing the number of women who achieve middle and senior management roles and so gain experience to prepare them for board positions. The shortage of women on plc boards, both exec and non-exec, is only a symptom of the problem and not the cause. We have heard a lot about ‘equal pay’ and we know that problem is not yet solved. We have heard less about ‘equal promotion prospects’, but I am sure it is a root cause of the shortage of women in senior and upper middle management. If we want to solve the problem we have to address its root cause.”
Of course, there are cultural issues to address. As Gary Kildare, VP, Human Resources, Americas, Europe, Asia Pacific at IBM, explains: “Companies need to create an environment where employees feel they are being treated equally with access to opportunities, without the need to be treated as an exception. Success is about creating the right business environment rather than targets and quotas. I am not convinced there is an appetite for this approach.
“We absolutely need more women in senior roles: their skills, experiences and characteristics. Certainly there is a need to do more to facilitate talented women coming through organisations, to build a talent pipeline that enables quality people to compete alongside their peers for promotions, regardless of gender.”
What needs to change?
Jacqui Grey, Managing Director of Transition Ltd, a transformational change management, leadership, executive coaching and coach-training business, believes that there aren’t enough women on boards because, on the one hand, they haven’t been encouraged to get there by organisations and, on the other, they “get in their own way”, meaning a lack of confidence holds them back.
“Of course, government has a duty to encourage organisations to change and to hire and promote more women onto boards, as do organisations in taking steps to ensure the recruitment, development and promotion of women,” says Jacqui. “But women themselves must also step up to the plate. They must focus on an immediate and visible improvement in their confidence and networking skills and activities. The fear of ‘not being good enough’ must be overcome.”
Noreen Doyle, NED at Rexam plc and executive director at Newmont Mining Corp, says: “While women may be just as competent – sometimes more so – as men, they are not so good at profiling themselves among their peers. Many women are still of the mindset that networking is what you do once your day job has finished; men have long seen it as an integral part of their job. This needs to change and there’s a role to be played by senior women, like me, in mentoring emerging talent and conveying this issue to them.”
The issue of boardroom gender diversity should be embraced as a force for fresh thinking at the highest level, not as a compromise over quotas. But getting to the top table and influencing decision-making takes high-level networking – something that goes to the very heart of Criticaleye. Entry to the party doesn’t stipulate gender or race, only a willingness to engage in the debate and contribute.
Denise Jagger, Partner at Eversheds, says: “Women are recognising the need to help themselves and a number of networks are providing mutual support for their members and, at the same time, providing recruiters with a source of potential candidates. Rather than quotas, I believe informed encouragement by respected business leaders from, for example, the Members of Criticaleye is the best route to a sustainable shift in the composition of this country’s boardrooms.”
Ultimately, a diverse, balanced board will bring the right experience to bear on issues that require fresh impetus and a balanced opinion. Everyone must bring something to the table, but the route to getting there must be from a level playing field. In the end, a diverse group can only be good for decision-making and business in general.
The upcoming Criticaleye Discussion Group, Women on Boards, will examine many of the questions posed by the recommendations of the Lord Davies report and further discuss the points covered in this blog.
Please get in touch if you have any comments about the issues raised here.
I hope to see you soon