Next year sees a number of significant landmarks in the efforts currently underway to make the UK’s company boards, and workforces, more diverse.
We should finally have clarity on how the EU will handle the issue of female board quotas and February will see the second anniversary of Lord Davies’ report Women on Boards.
EU justice commissioner Viviane Reding was recently dropped her proposal to impose a mandatory quota of 40 per cent women on the boards of Europe’s largest companies from 2020 but she is to resubmit it in mid-November, replacing mandatory quotas by ‘objectives’ and abandoning the stringent sanctions originally envisaged on non-compliant companies.
We believe compulsory quotas are not the way forward. Lord Davies’ report Women on Boards was published in February 2011, and since he made his original recommendations, the number of female directors sitting on the boards of the UK’s FTSE 100 companies has risen from 12.5 per cent in 2010 to 17.3 per cent, and the number of non-executive directors from 15.5 per cent to 21.5 per cent. While this shows improvement, there is clearly still a long way to go.
Both the Davies Report and the EU quota proposal focus the debate on numbers. Yet diversity is about much more than numbers. It is a matter of culture.
The processes required to bring about a truly diverse corporate culture cannot be reduced to a simple binary opposition and expressed by a single number.
To be real and lasting, change must come from within, not be imposed under threat of sanctions.
Our sector’s most forward-looking employers have recognised this and have started working towards it.
We have also recognised that there is little point in setting either targets or quotas for female non-executive board directors without making sustained and active efforts to grow the pipeline of suitably qualified women executive directors, from whose ranks these are recruited.
Such efforts have begun in our sector, with initiatives such as sponsoring and mentoring senior women and ensuring they receive the experience, training and encouragement they require to progress up the corporate ladder.
The Financial Skills Partnership has contributed its Through the Glass Ceiling programme of five one day workshops for senior women looking to develop their personal leadership capability and ‘move up the ladder’. The success of this programme has already led to its being run a third time, and it will be offered again next year.
Encouraging the formation of women’s networks to support their career progression in the same way that male networks have done for many years is another way forward. Flexible working and programmes for those returning from maternity breaks, for example pairing them up with ‘maternity buddies’ to ensure they do not miss company developments while away, are other essential building blocks.
The FSP’s initiative ‘Leadership 21C’ is shortly to be launched. This will support board effectiveness, helping boards examine and improve their own leadership and performance and in doing so restore the reputation of the financial services sector to be the best in the world. It will improve standards and highlight good practice, especially in the areas of board culture and diversity.
An increasing body of research shows that diverse companies tend to be more agile, responsive and responsible than those steeped in a static culture of ‘groupthink’.
This is especially true of service businesses vying for an increasingly diverse customer base and facing constantly changing challenges in our globally connected market-place. Customers are themselves becoming more diverse, and just one of the key changes over recent decades has been an increase in global female spending power and wealth.
Liz Field is CEO of the Financial Skills Partnership