Accountability Counts! 2014
This year’s enei conference, held on 13 March, encompassed two broad themes:
- to examine whether quotas or targets were the more appropriate way of delivering improvement in workplace diversity; and
- to explore the approaches taken by leading employers to deliver measurable improvement in diversity and inclusion by embedding accountability for action into organisational culture.
The event had some major press coverage:
The conference was hosted by the Bank of England whose COO, Charlotte Hogg, welcomed delegates.
The Rt Hon David Blunkett MP
Patron of enei, gave a short introductory address in which he shared his views on the progress that has been made towards greater diversity in Parliament and public life, and in the corporate world over recent years. He nonetheless expressed his disappointment that a significant number of women, including some of those first taking their seat in 2010, had announced their intention not to stand for re-election.
Professor Morten Huse
Professor of Organization and Management BI Norwegian Business School, Norway and Reinhard-Mohn-Endowed-Chair of Management and Governance, University of Witten-Herdecke, an expert on boards of directors and women on boards, then presented the Norwegian experience of quotas for women on corporate boards.
Professor Huse opened by reflecting on the background to the introduction in Norway in 2003 of a legal requirement for the boards of publicly listed companies to comprise at least 40 per cent women by 2008. He noted that throughout the preceding decade the percentage of women on boards had stagnated at around 5-7 percent, beginning to climb only once the law was announced.
He examined the widespread perception that the increase was principally due to a proliferation of “golden skirts” holding multiple, mostly non-executive, board positions, highlighting that in reality there were few women holding more than 2 directorships.
He characterised the “golden skirts” into aspiring and more experienced groups, with further classification determined primarily by age, differentiating between those with a orientation towards principle/facts and those with a pragmatic business orientation.
On balance he regards the Norwegian experience as successful, but does not assume that the UK will follow suit on quotas because of differences in the legal system, the structure of boards and assumptions made about women in leadership.
Finally, he reflected on the differences in the model for corporate governance underpinning a voluntary approach and a quota-based approach.
CEO of Newton Investment Management, responded to Professor Huse by describing the work of the 30% Club – which she chairs – in driving for voluntary business-led change towards better gender balance at all levels.
The 30% Club launched in late 2010 with 7 founding Chair supporters, when only 12.5% of FTSE 100 board directors were women and 21 FTSE 100 boards had no female directors. The Club now has 76 Chair supporters and 20.4% of FTSE board directors are women, with the number of male-only boards having dropped to 2.
She said that women on boards is now seen as a business issue, not a women’sissue, because of the leadership shown by top business people, the clear roadmap laid down by the Davies Report, broad political support and continuous media attention. Over a third of FTSE 100 companies have already met the 25% Davies target, with 13 having reached 30%. From a low base, the rate of change in the FTSE 250 is now matching or exceeding that of the FTSE 100.
A factor reinforcing the UK’s preference for a voluntary approach is our strong “comply or explain” culture, strengthened by the revised corporate governance code.
The 30% Club’s mission extends to gender balance at all levels, and the targeted initial focus on women on boards has opened up the issue of diversity in a broader sense – including age, background and international experience – the value of “diversity of thought”.
Partner in EY’s Fraud Investigation and Dispute Services Group and People Partner/Leadership Team Member for EY’s Assurance Business, outlined the approach the firm takes to diversity and inclusiveness, and how it has changed over time to better address specific challenges and embed accountability for results.
EY have identified gender and BME representation as two key areas for improvement – the percentage of women and BME groups reducing progressively in higher grades in the firm.
EY originally adopted a centralized approach, where D&I initiatives were developed and owned by the D&I team with a focus on “fixing” women/BME issues with some notable successes including targeted leadership programmes, networks, mentoring and coaching.
But a deep dive into corporate values uncovered some uncomfortable truths and dissonance between espoused values and the reality, with further detailed data analysis showing that in fact women on the whole are less likely to leave than men (although BME groups were still exiting early). The issue for both women and BME groups seems to be more about promotion than retention and there is a marked trend for experienced leavers to be replaced by white men.
This led EY to reconsider its approach, switching from a centralised approach to one where accountability was firmly assigned to business leaders, with clear targets for 30% of new partners to be female and 10% from BME background. These have been underlined by visible leadership from the Chairman and a strong focus on inclusive leadership principles.
Early indications are that this change of emphasis is bearing fruit, with improving outcomes for both women and BME groups.
Company Secretary and General Counsel of Santander UK plc, described the approach being taken by the Bank to align its diversity and inclusion strategy with its business strategy and its increasingly diverse customer base.
As an example, the data show that Santander UK has a 62:38 ratio for overall female:male workforce representation, which aligns well with a marketplace in which women are responsible for the majority of purchasing decisions and an increasing share of personal wealth. But within the Bank a 70:30 female:male split for entry level roles progressively declines to a 20:80 split at director level.
In determining its people and talent strategy the Bank has become increasingly sensitive to cultural issues and the need to accommodate the a diverse workforce, focusing on valuing individuals and structuring policies and programmes to enable all employees to flourish and develop.
This has led to significant change in the approach taken in areas such as:
- Management and leadership development
- The definition of the Branch Director role
- Flexible job design
- Succession planning and the talent pipeline
- The development of networks to share experience and provide support
Shadow Minister for Women and Equalities in the Lords, illuminated the debate on quotas and noted that while they can be helpful they can also be a hindrance.
She commented: “The issue of women and other minority groups will partly be addressed by setting targets, but also by ensuring the pipeline is there.”
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