More diversity needed across the board
This year celebrates the 111th International Women’s Day, first held in New York on the 8th of March, 1909. Over the years, the global event has proven controversial, causing societal backlash that led to the creation of an International Men’s Day in 1992. However, when viewed from a business perspective, the need for greater recognition of women is clear.
Despite repeated calls for more gender diversity in C-suite roles, the majority of companies seem to be possessed by the patriarchy. Back in 2011, the UK government called for FTSE companies to ensure that at least 25 per cent of their board members were women. Last year, however, a study published on International Women’s Day claimed that there are fewer female CEOs in the FTSE 100 than there are men called David. Now, a new initiative by the Investment Association could force much needed change. But are women in senior leadership positions on board?
The matriarchal minority
Women are grossly underrepresented in senior leadership – fact. In an attempt to change this, the Investment Association (IA) has announced an expansion of its red, amber, and green traffic light system. Currently, the system uses the traffic light system to judge the compliance of top 350 listed companies on important issues like executive pay. Now, the system will include levels of female inclusion in senior leadership. Companies in which women make up more than 25 per cent of the board will receive a ‘green top’, while any less will lead to an ‘amber top’. The ultimate ‘red top’ falls upon businesses who have only one, or zero, female senior leaders. So, what do women in leading business positions think of the initiative?
Mary Mosope Adeyemi, Executive Director at Goldman Sachs, believes the IA’s red warning is necessary.
“Until it is ‘normal’, actions like these are not only useful but necessary in challenging the hiring and governance practices of companies that are commercial leaders of our economy,” she says. “It is about accountability and anything that puts the spotlight on these issues and gets people to talk about them and take action is a positive step in the right direction.”
Helene Panzarino, MD of Global FinTech at Rainmaking, also believes that the quota system is necessary due to a lack of industry initiatives.
“Reluctantly, I think I now agree with the quota system because industry doesn’t seem to be taking up the mantle itself. We know that women in these roles make a very positive impact – also on the bottom line – but we don’t seem to see genuine change.”
Diversity: the domino effect
Barbara Bates, Global CEO of Hotwire, supports the IA’s focus on female inclusion because as more women take on senior leadership roles, it will inspire others to do the same.
“More women on boards and in leadership positions are essential to inspiring change in business. If young women don’t see women as leaders, they won’t picture themselves in those roles, so we have to take these steps to make change happen,” notes Bates. “Something I am passionate about is getting more women on company boards, so it is an initiative I support and one that I believe will encourage diversity in business.”
Female inclusion makes business sense
Supporting diversity in whatever form isn’t just about doing the right thing. Tania Duarte, Chief Marketing Officer at D/SRUPTION, explains why.
“I think raising red flags for companies with male dominated boards can only be a positive move, because it seems to acknowledge that companies that do not have good gender diversity and board level are statistically less profitable according to a number of studies,” she says. “Companies which do not reflect the diversity of their markets lose touch with their consumer behaviour more easily, and are shown to be less innovative. Innovation is crucial and customer is everything in today’s supercharged business landscape. Looking beyond financial indicators is a good way of evaluating stability of investment and probable long term performance.”
“There is a saying that ‘you cannot understand what you cannot measure’. Identifying which companies are investing in diversity and which are not is a good place to start. The alternative is ‘to do nothing’, which will result in the ‘status quo’. In the US, at least, there is a bigger conversation around diversity as well as social impact. People are looking more towards companies that are making a societal impact as well as ones which are known for being diverse and inclusive.”
Hopefully, the IA’s initiative will spur businesses to look carefully at their leadership diversity, and may encourage other bodies to implement similar quotas. This is already happening to an extent – the 30% Club, for example, advocates that there should be 30 per cent board representation for women in all UK companies. And, this time last year, the UK government reported a record number of women on FTSE 100 boards. But is this something that the IA’s red top will help or hinder?
A regulatory battering ram
Although the IA’s quota isn’t mandatory, company image is so important that it may as well be. While there is merit to forcing change, the initiative could be criticised as a regulatory battering ram. There is also a danger of tokenism when promoting minority groups to tick a box. This, explains D/SRUPTION’s Tania Duarte, creates another barrier to understanding the benefits of diversity.
“The promotion of any minority group to fulfil quotas can lead to a perception that minority hires are intrinsically less qualified for the role,” she says, adding, “but in my view this should not be an issue with the Investor Association’s red warning system, because one or zero women on the board of a large company is well below the level where tokenism should even be an issue.”
Mary Mosope Adeyemi shares a similar view…
“It’s important to stress that this is not about giving women an unjust leg up. It is about acknowledging that there is unconscious bias whether we like it or not and educating people to therefore be more conscious and intentional about countering its effects.”
Another potential problem is corporate backlash. In other words, companies may dismiss the quota as dictatorial, or even unnecessary. Some businesses may choose to ignore it altogether.
“I don’t think corporate backlash is a concern. If companies are defensive, at worst, they will remain static. But, if this initiative is not implemented, then their corporate environments will not change, so technically, we don’t have that much to lose,” says Reshama Shaikh.
The question of retention
“One thing that concerns me,” comments Helene Panzarino, “is what happens when women are in their roles. How do you then combat any lingering discrimination? We need to also provide support and monitoring.”
Panzarino has a point – businesses who actively seek to include more women also have to create a culture that welcomes diversity. This includes stamping out workplace sexism, and providing considerate hours for women who may have family responsibilities. If companies fail to provide this, then they will continue to attract the same employees as they always have, and little will change.
Moving beyond the dominance of the ‘great white male’ is easier said than done. But based on the above opinions, the Investment Association’s hard line against corporate sexism is seen as a step in the right direction. It may also spur other regulators to include quotas for female inclusion, ultimately encouraging companies to ‘do the right thing’ as well as reap the rewards of gender diversity. In the run up to this year’s International Women’s Day, perhaps there will be more women than Davids in the UK’s boardrooms.
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