Date: 04/08/15 Duration: 00:21:15
Following the Davies review of gender diversity in the boardroom in 2010 the percentage of women with board level positions at FTSE100 companies has risen from 12.5% to 22.8%. Although a marked improvement, many still feel that the pace of change is too slow and the targets too conservative. With several countries already using compulsory quotas should we be moving towards a mandatory quota system too? If not, what can business do to encourage and support boardroom diversity?
In this podcast Kathryn Nawrockyi, Gender Equality Director at Business in the Community offers insight into the current, voluntary approach, its successes and drawbacks, and how businesses can and should continue to drive diversity throughout their organisation; Vilma Nikolaidou, Head of Organisational Development at Tate Gallery shares her experience of changing the organisation both outside and within to ensure a diverse and skilled pipeline of talent; and Margot King, Head of CR, Diversity and Recruitment at Eversheds discusses quotas, targets and the business case for diversity.
What are your views on mandatory quotas? Do they level the playing field or do they simply amount to tokenism? Join in the discussion on Twitter @CIPD using the hashtag #cipdpodcasts.
Philippa Lamb: In July David Cameron announced that the government will now push ahead with plans to make it mandatory for large companies to publish data on the pay gap between male and female employees in their organisations.
Now with the news earlier this year that Lord Davies’ target to secure at least 25% female representation onto FTSE 100 boards has now been largely met this seems a good moment to take a look at where boardroom equality has actually got to and what the latest thinking now is on how best to get the female employee pipeline flowing freely at all levels.
Kathryn Nawrockyi is director at Opportunity Now and for her this is a moment for celebration.
Kathryn Nawrockyi: I think we’re in a very positive position at the moment. I think we have got to a point where we have a lot of public focus on the lack of representation of women and minority groups in leadership across the UK’s public and private sector institutions. It’s an exciting time from a campaigning perspective, this government has been tasked with bringing into force Section 78 of the Equality Act which will see mandatory reporting of the gender pay gap for large employers. And over the past few years the public focus on the issue of women on boards has really galvanised action.
PL: But despite these positive strides 45 years after the 1970 Equal Pay Act women as a group still earn less than men. Measured by median gross hourly pay the overall pay gap currently stands at 19.1% and that gap remains the clearest and most dramatic example of persistent economic inequality for women in Britain today.
KN: There is still a lot of frustration out there and there is still a lot of unrest in UK society that we haven’t progressed as far as we should have.
PL: And when it comes to hitting the Davies target of a quarter of FTSE 100 board positions being filled by women the battle for true parity is far from won.
KN: How do we make sure that everybody keeps focusing, keeps the efforts up? I think 25% isn’t enough: we can't rest on our laurels there we need to keep working at it. And actually the focus on board diversity is just a very small piece of the jigsaw puzzle.
PL: On top of this some women question whether the figures might be misleading and argue that women’s true level of influence is actually smaller than they might suggest. According to online board appointment tracking Boards Watch many of the roles being filled by women are part time or non-executive or NED roles: less than 9% of the more powerful executive directors and only seven women in total were appointed to the top jobs as CEO or chairwoman.
And if you’re still in doubt about the extent of the gender divide in the highest corporate echelons research by The Guardian newspaper found that there are more men named John leading the UK’s biggest companies, than women, and by the way in case you're wondering men called David or Dave also outnumber women chief execs or chairs by 2:1.
Now Margot King is HRD at Eversheds, a major law firm, where there's long been a strong focus on helping more women into senior positions. As a result in the last four years Eversheds has gone from 22 to 30% women on their board. But for Margot who works closely with many client organisations and blue chips in her role it’s clear that the quality and the rank of those male versus female boardroom roles elsewhere still isn’t always entirely equal.
Margot King: So I've seen the tokenism we create a non-exec role that doesn’t really do anything useful, that gives us a better reporting on our stats. I've seen some genuine thought-provoking organisational design to say how do we make these roles suitable for our current cohort of women so that we can get the right people on the table. And then we’ve got some great examples of some fantastic women leaders that are there and leading their organisations or relevant to their organisations on those boards. It’s a journey and some organisations are at different stages of those journeys and the pipeline of women who have got the skills and experience to do those roles is still building.
PL: How to build that diversity pipeline is fundamental to this question but as it stands we still have too little diversity across not just gender, but race, disability and sexuality on the boards of big companies. Here’s Kathryn again.
KN: Very few and actually if we look at the diversity of that female population we don’t have a vast amount of that either. If we look at the numbers of Black, Asian and minority ethnic women sitting on boards it’s an absolute fraction of the FTSE 100. So diversity can't just be about gender actually on the board and talking about women as one homogenous group is a great risk.
PL: In his review Lord Davies expressly did not advise that the UK should adopt legal quotas for gender equality in its boardrooms. Hiring based on gender remains illegal under the Equality Act 2010. Other countries however have taken a different approach. In 2006 Norway introduced a legal quota for women to fill 40% of board positions and since then Germany, France and Belgium have followed suit with quotas of their own. But according to Margot King these quotas have led, in some cases, to tokenism.
MK: Creating a non-exec post that doesn’t actually add any value to the organisation because it means you meet your quota.
PL: Or a few women taking on many roles gives a disproportionate idea that actually women do have a seat at power.
MK: Absolutely and I think the approach that the UK has taken in terms of targets through the Davies report and also the great work that the Equalities Office have done with the likes of Think, Act, Report that have really encouraged organisations to think what’s appropriate to them and to have a view on the numbers, and I'm a great believer that you get what you measure, and if you’re not measuring it you’re not going to be tracking it and you’re not going to have the right activities in place to deliver on it, but I think quotas drive some of the wrong behaviour in a way that targets don’t.
PL: Vilma Nikolaidou is Head of Organisational Development at Tate Gallery and she co-chairs LGBT employee network. Her view on quotas is very different and she described how diversity currently looks across the creative industries here in the UK.
Vilma Nikolaidou: The visual arts sector, also the wider creative industry sector, has done a lot of work around diversity and certainly diversity has been on the agenda for a very long time. The ambition has been there, the objectives have been there, the initiatives have been there. My sense is, and I think evidence shows, that the returns on that investment haven’t quite been there so the sector isn’t as diverse as it ought to be and the audiences aren’t as diverse as they ought to be.
PL: Now I know your ultimate boss Nicholas Serota has been very influential in this area, what’s his thinking about why that hasn’t come to fruition in the way that was hoped?
VN: Tate and Nick in particular has placed a lot of emphasis on the education and what’s happening there. I think we see what we’re seeing in the wider society is it’s a microcosm of the wider society. I firmly believe the pipeline is there. The organisational enablers, the things that would really empower women to reach the top aren’t quite there yet.
PL: So the opportunities, particularly for women just aren’t enhanced enough?
VN: Yes I think we’re doing better on gender, certainly Tate does a lot better on gender at the top but when you look at ethnicity or disability or sexual orientation then the picture is slightly less balanced.
PL: To those opponents of quotas who argue that they encourage tokenism and over-promotion Vilma argues that on the contrary they would simply level what is still a highly uneven playing field.
VN: I remember hearing Professor Linda Scott from Oxford University who does a lot of work on this area and she quite graphically illustrated how the argument around merit is an interesting one because it assumes that everybody else who reaches the top reaches it on something called merit wherein in fact they reach it because there are societal networks or structures that have been in existence for hundreds of years and promote and empower particular types of people to reach there. So in a way quotas shortcut all of this and give an advantage to a different type of person.
PL: She has one caveat though quotas won't work in isolation.
VN: I am overall in favour provided that they’re not the only fix that the organisation brings in, provided that there is a programme of work that supports people who are getting into a position because there is a quota, and provided that the people who work around the women or people from ethnic minorities who get into these positions also buy into the culture change that's necessary to make it work.
PL: So far the UK has avoided quotas and companies must look at other actions to help grow their diversity talent pipeline. Positive action where employers take steps to encourage groups who are disadvantaged in some way is one option.
At Eversheds they have a number of programmes in place that focus on this approach. Here’s Margot King.
MK: Our research identified that we were promoting disproportionately few women up to partnership and what we have done to try to address that is established a coaching programme for some of our talented women below partnership to help them through that transition, really to kind of help that piece of our pipeline.
As a firm generally below partnership we actually have more women than men so we are in an unusual situation that if we did something for our women we’d potentially be discriminating against a minority so the good news is that we don’t have to and we’ve chosen not to do a lot in terms of positive action in the gender space beyond the coaching programme that we’ve set up.
PL: Isn’t that the norm for law firms that there tends to be a bulge of women?
MK: That has been the norm historically so yes we’ve had over 60% female law graduates for a number of years now and the issue has been that pipeline and the getting up to partnership. I think we are, certainly at Eversheds we’ve been at the forefront of that so we’ve been recruiting 60% trainees as women over a number of years and we have now got to the point that we are in excess of 50% female in every layer below partnership, so we’re 53% in our immediate one below partnership at the moment. And as I said we’re now 25% in our partnership.
So I think because we’ve taken this agenda seriously for a number of years, we were the first firm to implement flexible working for example, what we’ve been able to do is retain some of our female talent over the long run and we’ve got some great examples of women that have been promoted into the partnership in the last two or three years who, ten years ago, would have left an organisation and not actually maintained their career. So we’re starting to see the benefit of a lot of the activities that some other firms are implementing now.
PL: Importantly there remains a debate about whether, because of long-standing underdevelopment and promotion, there is a sufficiently experienced and skilled cohort of women coming through from more junior levels who are properly fit to take on the most senior roles in big organisations.
MK: I think if you take the requirement to have long length of service in line roles then inevitably you are going to exclude a large number of women because of the history of where we are. I think what’s important is that people are open minded about the skills that they need to fulfil any role, whether that be at the junior level of an organisation or at the board and can get the right people into that role and I don't think that several years’ experience is a requirement. If you've done some roles in some fast changing organisations you can have the experience in a very short period of time that would maybe take others years in a more stable one.
So I think it’s around having people with the right skill sets for the roles and what that organisation needs of their board in that period rather than assuming that you've got to have done a line role for ten years to be able to be considered for those jobs.
PL: And it’s an interesting debate isn’t it because there is always the potential danger of undermining the position of professional women if you do over-promote and I absolutely take your point that years of experience generally isn’t considered vital now but there's a balance there isn’t there?
MK: Uh huh yeah and it’s the same with putting together any team that you've got to have the right balance of individuals and it’s certainly something that we’ve really focused on at Eversheds is our partner sponsor for diversity talks about having balanced teams and actually not making any team skewed towards any particular skill set, any particular type, any particular way of thinking, will get you a much better result and certainly the Eversheds’ board report research that we did five years ago now proved statistically that organisations with diverse boards had better outcomes over what was quite a tough period in the recession, there was a really strong correlation between diversity of board and organisational performance.
PL: It’s not enough then to bring in women at the top level, the focus needs to be on women throughout the organisation. How then ought organisations which are just setting on this journey to begin? Well Kathryn Nawrockyi says that the first step is very straightforward: talk to the women you already employ.
KN: I think organisations need to be consulting with the women in their organisation to understand where the barriers may be preventing them from progressing in equal measure to their male counterparts. The challenges are very different across industry, what is true of an engineering organisation is very different from a retailer.
In 2014 Opportunity Now published a piece of research called Project 28-40 that sought to do just that – to ask women about their experiences at work. Women responded overwhelming positively about their ambition and about their confidence. They have a desire to be leaders, they want to lead.
PL: So that's a real step forward isn’t it?
KN: Absolutely so I don't think we lack the talented, ambitious women, what I think happens is that there are structural barriers in organisations that are preventing those women from progressing. And so the solutions can't be about fixing the women, they need to be about culture change.
PL: Legal changes are a good start but our cultural expectations about gender run very deep and they need to be addressed in tandem with any legislation.
KN: Flexible working was one of the biggest barriers identified in Project 28-40 for sure and it’s still hugely stigmatised and unfortunately it is still seen as a bit of a segregated track for working mothers.
But cultures were such a significant barrier for many women. Women are far more likely to perceive the barriers in work than their male counterparts. They have far less confidence that their employers are offering equal reward, so equal pay for equal work, but we also heard some very worrying evidence about experience of bullying and harassment still happening in the workforce. Even today 52% of respondents said that they'd experienced some form of bullying and harassment at work in the past three years which is such a problem and it’s something that we as leaders, we as employers, really need to root out.
PL: The Tate in an attempt to generate a boarder cohort of potentially top performing employees has embarked on an organisation-wide diversity review.
VN: We just looked at every area of the organisation from attraction and recruitment, so we’d do things like guaranteed interview schemes for people with disabilities, right all the way up to inclusive leadership training: unconscious bias training is something that we’re introducing now, to the programming aspects of Tate. So things like what type of art do we buy; what type of artists do we exhibit; is our art collection balanced in terms of gender? So we’re looking at all of these things.
PL: And you’re doing that with a view to advertising the culture of the organisation to all and sundry and not just possible recruits but to your audiences as well?
VN: Yes absolutely the message to our audience is that this is a place for everyone. I mean it is funded by the taxpayer: we are the custodians of the collection, of the public’s collection of artworks and therefore it’s important that everybody feels that they have a stake. So the organisation must be relevant to the people who pay for it which are the British taxpayers.
PL: The strategy here is to make this objective part of normal business rather than a niche activity so not a drive or an initiative but part of the organisation’s DNA and the Tate’s internship programme is an excellent example.
VN: Three years ago we stopped the unregulated system of unpaid internships and friends…
PL: Siblings, friends of friends…
VN: …and daughters and all those kind of things and we professionalised the system. We decided to pay for these development opportunities and we’re very proud that we took that decision and it has completely changed the demographic of people who come to these internships. The other thing is that we now work with community partners and community organisations to attract people rather than just rely on word of mouth.
So just on ethnicity for example where our BME representation for our general workforce is somewhere between 8% and 10%, on our internship intake it’s close to 35%. So you see there tangible results of where you change your approach, you change the way you do things and the results come.
PL: As for the business case for diversity well that's crystal clear. Here’s Margot.
MK: I've never had to write a business case for diversity and put pounds and pennies against it because it is just good common sense from our clients saying, “I want a diverse group of people working on this matter.” And back in 2009 one of our clients actually put some money on the table and said, “If you deliver against some of your diversity objectives we’ll give you a bonus payment dependent on that.”
And that is amazingly clarifying in the minds of your leadership team about how important something is.
PL: According to Kathryn there's an attitude shift taking place around talent and success that goes hand in hand with raising diversity.
KN: We need to think differently about what talent is, what is required on our boards, and actually look at measures of performance and measures of success. So on the one hand it’s very positive that there's a lot of research, for example research from Credit Suisse, research from McKinsey that demonstrates that those boards with more women on do perform better and they can directly tie that to the bottom line.
But actually if the bottom line is our only focus we’re not looking at the other aspects of business that makes a successful business, you know, what are we doing about employee engagement? What are we doing about the environmental sustainability of our businesses? There are other measurements by which we gauge that. And so I think to tie diversity only to financial performance is a great risk because as soon as we ever see that reverse you can start to bring the whole thing into question.
PL: Gender equality is the government’s current focus but the wider diversity drive is also set to continue.
MK: Race is probably going to be the next one that will have the same level of focus with the requirement to report the racial make-up of boards coming through very soon and I hope that the sponsorship that the gender agenda received with the Davies report will get the same kind of focus in terms of the race agenda.
What we have found in Eversheds is that having a greater focus on inclusion and open-mindedness as part of your focus on diversity inevitably makes you a better employer for everyone, whether you be a white male father or an LGBT Asian Mum. And I think that's the important thing that we need to broaden out further as we get beyond gender is not just be ticking another box but actually be opening our minds into being genuinely inclusive organisations.
PL: Ask a room full of people if diversity quotas are a good idea and you are guaranteed a lively debate but what do you think should we or shouldn’t we? And is pay gap reporting the right policy to tackle gender inequality? Join the discussion at #cipd.
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