Todays date: 23/04/2012

Taking the board challenge

The issue: How can we encourage more women to take up positions within our boardrooms in Scotland to improve business performance?

TAKING PART: Anne MacColl, chief executive, Scottish Development International Douglas Kinnaird, founder, MacDonald Kinnaird Lady Susan Rice CBE, managing director, Lloyds Banking Group Scotland, and non-executive director of Scottish & Southern Energy, and The Bank of England Lady Elaine Brailsford, partner, Tods Murray LLP Margaret Lang, chief executive, Intelligent Office Sarah Deas, chief executive, Co-operative Development Scotland Susan Deacon, chair, Scottish Power Renewable Energy Deborah Benson, managing director, Benson Portfolio Ltd Janice Anderson, finance director, Seafish Martin Mutch, chief executive, Rocela Paul Brewer, senior partner, PwC Scotland David Watt, director, Institute of Directors, Scotland Kenny Kemp, editor, BQ Scotland In the chair: Caroline Theobald.

The second BQ Scotland Live Debate was held in the elegant setting of The Royal Yacht Britannia, moored in Leith.It is a matter that has gained great attention and comment since Lord Davies’ review of “Women on Boards” in February 2011. And a recent progress report on boardroom diversity by Cranfield School of Management recognised that progress was being made, with more than 100 women appointed onto FTSE boards since the review.

The latest report showed that the number of women on top boards of FTSE 100 companies has risen from 12.5% to 15.6%. From 190 appointments made, 47 of the new appointments were women. Lord Davies recommended that the proportion of women on FTSE boards should be a minimum 25% by 2015. He expressed his concern that it would take 70 years to achieve gender-balanced boardrooms in the UK, on the 2011 trajectory. Against this backdrop, our BQ Live Debate panel were able bring some fresh insights to the discussion.

Lady Susan Rice, herself a board member of a FTSE 35 company, called the gathering an “eclectic group”, while several participants, including Susan Deacon, chairman of Scottish Power Renewables, and Margaret Lang, chief executive of Intelligent Office, said that it was vital to consider the wider position of women in society and the constraints that had prevented more able women from reaching the top in business.

Lady Elaine Brailsford, a partner with Tods Murray, raised the question of why the professions, such as law, accountancy and the health service, had embraced diversity more easily than the corporate sector.

It was argued during the debate that a profile of grey-haired “alpha” males running businesses had to be challenged, and that modern businesses could only thrive if they had better representations of women, although all were opposed to tokenism, and several felt that quotas, such as in Finland, were “counter-productive”.

In the Queen’s Diamond Jubilee Year, the Royal Yacht’s state dining room was an appropriate place for this far-reaching debate – on a Royal Naval vessel where billions of pounds of UK international trade deals have been secured.

Chairman Caroline Theobald set the scene but felt it was clear from the participants’ introductory comments that the scale of the topic needed parameters.

Most felt that the question of women on boards was part of the much wider discussion of women in business, the role of families, and an urgent need for diversity on boards.

All agreed it was genuinely the right thing to do to improve businesses performance, but there were a number of barriers.

The debate was split into three sections; firstly to look at the wider societal issue, then the issue of women’s representation in business, and finally to narrowly focus on what could be done to encourage more women to apply for board positions and become involved.

Caroline Theobald asked if everyone might pledge to take away something new to do from the evening.

Sarah Deas: “There are sectors where women are succeeding, including in law and the public sector, but less so in manufacturing. So it is about understanding these sectoral differences and how we can make better progress in places where progress towards diversity has fallen behind.”

Douglas Kinnaird: “For many, many years we’ve been aware how few women apply for jobs. We created the first Scottish conference on the ‘glass ceiling’ and started monitoring this 24 years ago and the average of women to any job advertised in the newspapers was, and still is, 3%. We did the headhunting for previous Scottish Enterprise chief executives. People, such as Lena Wilson (SE’s current chief executive) have demonstrated that women can do the job, so why when Robert Crawford (one of Wilson’s predecessor) came to the job were there only three female applicants, one of whom was internal, and when Jack Perry (Wilson’s immediate predecessor) did, only five were female, two of them internal? The average number of women we put forward is around 12%.Twenty years ago there was a desire from leading male businessmen to find women candidates to break through the ‘glass ceiling’, yet we still don’t seem to be getting anywhere.”

Deborah Benson said that leadership was the key and that “under-representation is very significant and very concerning”. It was pointed out that companies with more women on boards were found to outperform their rivals with a 42% higher return in sales, 66% higher return on invested capital, and 53% higher return on equity. Without doubt, women on boards led to better business performance.

Margaret Lang: “I would like to start by making a point about women in general. Here are a few facts: women do 66% of the world’s work; they produce 50% of the world’s food; but they only earn 10% of the world’s income and own 1% of the world’s wealth, including property. When you look at third world countries where the woman is in charge of the home’s finances, it’s a happier home, the children do better and, economically, the family do better with what they have rather than when the man is in charge of the finances. If you look at these stats, you’ll see that women globally are a huge resource that is being underutilised.When you bring that back to the UK and the boardroom, until we can start to capitalise on the attributes, skills and abilities at primary school level in terms of confidence and entrepreneurship then we will never make a huge difference.”

Martin Mutch had been discussing with one of his managers why his company didn’t have any women on the board, despite having a 30-70 ratio female to male in his IT company, which services banks and financial institutions. “I was beginning to think that our composition was something Alpha Male, and in a start-up that’s not necessarily a bad position.” But in the last six years he feels that the company probably would have benefited from a more balanced perspective.

“Whether that comes from a gender balance, I don’t actually know. I don’t know how to test that.”

Lady Susan Rice: “Boards are boards but they come in various shapes and serve various types of business, from plcs and private companies, through to trusts and charities. For each board, there are a number of responsibilities that go with the territory. For example, I’m a non-executive and chair the audit and risk committee of the Bank of England, a major national responsibility in the public sector. And I chair the board of a major not-for-profit organisation. I’m also interested in social finance and was a founding non-executive director of Charity Bank and now a founding director of Big Society Capital plc, which is about to be launched and under the auspices of a charitable trust. I also sit on the board of a FTSE 35 company. There are lots of different models for boards. I’ve been involved with nomination committees looking for people to go onto boards. And, in many cases, I’ve been the only woman on these boards, so yards of experience. And then there are the women I mentor. The things that really dwell in my mind relate to our culture. I start with ‘aspiration’ – why it is that only 3% of women aspire, or are willing, to reach out and apply for these roles? Is there something about the aspiration that women have that is different? Why do they not see the value they can add? Is there something about the culture? I don’t have the answers but I’m really interested.I’m a huge believer that diversity is not about the numbers or the legal position.It’s simply good to have people around the table with diverse backgrounds who can ask off-thewall questions.” Lady Rice said she has been focused – post Davies report – on how to help capable women rise up through the executive ranks to be prepared for future board positions. She asked whether there was a tone at the top which might put people off.

Elaine Brailsford, as a partner with Tods Murray, and member of the management board, says that she has a slightly different perspective because the legal profession in Scotland is “streets ahead” of the corporate sector in relation to the advancement of women. “I’m one of eight female partners in a partnership of 25, that’s a third, that’s where Norway is at, and that’s where the UK government wants us to be. In the next 20-30 years, many of our male partners will retire, so where will we find our new partners? Below our partners we have senior associates and associates and 60% of them are women; below them are solicitors and senior solicitors and 70% of women. Currently in Scotland there are twice the number of female to male trainees. I’m asking what is it about the profession, is this just law, accountancy and medicine? Why have the professions been able to attract women and to advance them, that the corporate sector seems unable to do?”

 

Susan Deacon was concerned that the evening debate would end up in “silothinking”. “I think narrow discussions about why we aren’t getting women on boards is real ‘silo-thinking’. What would I like to see? There are two things that define us as human beings and a society; that’s work and family. I don’t see how you can talk about women in work without talking about women in the workplace, and I don’t think you can talk about that unless you talk about families and the way that we live.” She said we have gone through enormous shifts in the way women have been economically active in the last 50-60 years, yet we haven’t seen a rebalancing of roles, responsibilities and practices in the home on the same scale, that should go alongside this shift. The issue of children was important in that women had disproportionate responsibility for child care and looking after elderly relatives.

“There is a whole complex mix in there about the combination of things that we do – as men and women – that span across work and family. There is not enough joined-up thinking, in my view, and it’s taken us to quite a bad place in our society. Whether it is tonight, or beyond, I’d like us to connect up our thinking.”

Paul Brewer said his position in PwC restricts him from holding board positions, but his personal experience of working on a school board, comprised of a majority of females, was that the diversity of people, gender and skill-set meant it gelled. He said that within PwC the key has been to make sure that the very best talent gets to the top. They see the same demographic trend as the legal profession, a 50-50 ratio, yet at the top two levels of director and partner, the proportion of women tails off quite dramatically. Nationally, 25% of partners and 15% of directors are women, although in Edinburgh, it’s nearer a third. The starting point is realising there is an issue and recognising it. He said strong women’s networks and mentoring was vital.

Janice Anderson is the only female executive director at Seafish, a government body. She raised the issue of the difficulties of a woman with children trying to undertake an executive job.

“I think women are much more maternal, than men are paternal … the issues about going out and doing a day-job and being a professional person. Any problems with the kids, the tugs are much stronger on a woman than on a guy.” She felt that support from a partner was important for a woman to succeed in business.

“I think women bear the burden of raising children and looking after elderly parents much more than men do.” David Watt said that along with the Scottish referendum, women in the boardroom was a major topic for discussion among senior business figures, and the IoD was 100% committed to increasing diversity.

“There is no doubt – and the research shows this – that the most successful boardrooms are the diverse ones. This is not just about gender, it is about balance, age, ethnicity. It’s a fact.” He cites M&S with a board of 14 people, which recently had very few women on the board, yet the majority of customers were women. (It now has five women on the board, two non-executives, and two executives and a company secretary.) He said that time was often a factor.

“If you want an NXD in a boardroom you are not going to look for a 35-year-old, whether male or female, you are going to look for older people – and people who have the time and expertise are currently grey-haired men, but it will change.

But it is not changing fast enough. Time and generation will help it.” He said men were good at superficially gliding over matters and that women could ask the “daft lassie” question, demanding a proper answer. He said that it is up to women to do something about the boardroom situation by “confronting” the men who are still holding the power.

Anne MacColl, who leads the Scottish international development arm of Scottish Enterprise, has spent the last 10 years living and working outside Scotland. “Looking at Scotland and the UK from the outside in, at what we do well and less well, the debate about women in the boardroom is important not just from a Scottish perspective, but from an international perspective.” She is keen for more international benchmarking, particularly with Nordic countries, such as Finland, where the quota system has been imposed in boardrooms, and “the outcomes have not been spectacular at all, indeed they have been counter-productive in many ways. I’m not a believer in quotas.” There has been dearth of information about what has worked, and it is not about quotas. She sits on Scottish Enterprise’s executive leadership team that has a 50-50 ratio and “it is a really healthy mix. I know there are areas where this is not the same”. She said the mindset issue of maternal guilt or feelings, over caring for children and the nurture of families, shouldn’t be ignored, but “should this be a barrier to women being all they can be and giving all they can back to corporate life, social life and boardrooms?” She said it is important to talk to younger women who are now entering their careers, and how we define “work-life” balance. It is not about the time spent on boards but the quality of the inputs.

Caroline Theobald: “Let’s start wide, Margaret, I was really taken by those facts that you introduced. You talked about the world and internationalism, which is interesting because a lot of our companies are global.”

Margaret Lang: “The numbers came from a micro-finance charity that makes very small loans in 22 countries to improve education, employment and improve the economic position.” She explained that 90% of loans were to women, and 98% were paid back. It was important that young people began to aspire. She cited Micro-Tyco, a charity in Scotland, encouraging entrepreneurship, becoming givers, rather than takers from society. It has to happen naturally and this will make a huge difference over time.

Caroline Theobald: “So it is that A-word – ambition – and you have to start early. Susan, this is a report that you did for the Scottish Government on early years?

Susan Deacon: “I did a particular piece of work on early years in Scotland. If you drill down to what makes a difference, so many roads lead to early childhood. We kind of know this. A lot of public money is in remedial action, there is a huge issue there. A game changer in Scotland is that we have to get better at raising our kids; this includes introducing enterprise at an early stage. There is a need for this to be joined-up in a grounded and practical sense which gives a better balance of how you achieve all these things.”

Deborah Benson: “It is about ambition, and getting girls focused on a career when they are young is important. I want to take the myth of the ‘alpha’ male and smash it with the biggest hammer on the planet. Most socially dwelling animals are led by a matriarch, if at all. If there is a group of socially dominant individuals, one goes off and others choose to follow, and girls grow up with this myth of the alpha male – and it is a fundamentally flawed concept. Girls see tough, aggressive people in business as horrible and say they don’t want to be part of that.This aggression-based dominance is wrong, and it’s not how it works in nature. I interviewed someone in the health services who said, ‘It’s bloody at the top’ – this just puts women off.”

Douglas Kinnaird: “Picking up on Elaine’s point, is the law profession is so much better? 55% of qualified lawyers are women and there is not a single managing partner of any law practice in Scotland; 52% of accountants are female and there has never been a single managing partner of a CA practice of any size in Scotland. Why is it that we all meet fabulous kids who are wonderful, and do great degrees, and do international work, but why does it fizzle out?”

Caroline Theobald: “So you are saying that the ambition and aspiration for many women in Scotland just seems to fizzle out? But then Deborah’s point about alpha males might be contributing to this?”

Martin Mutch: “I think the alpha male thing starts at kindergarten and is bred into young males, with wrestling, fighting and guns and all that kind of stuff. But they are trying to knock this out because they don’t like competing and winners – but that’s wrong too because much of life is a battle, not just about strength but ambitions and being part of a team. Winning values should be the values of our future and what is going to make us successful, and future boardrooms should be composed of people who will make a difference, such as resilience, determination, empathy and teamwork. Winning is a good thing.”

Susan Rice: “A lot of this is about ‘power’. If women don’t want ‘power’ and are told, ‘It’s bloody at the top’ and feel they have to face alpha males, then isn’t this all about perception, and the perception of what power is? In fact, women have lots of ‘power’ and, while they may display it differently, there is no reason why they can’t do this at the top. I think this is all about the view of power – about how you take it and what you do with it.”

David Watt: “Perhaps women are a lot smarter! They have seen their male colleagues and the extra hours they have put in, and they don’t want to do that. Of course, it is obvious but having children has an impact, there is the time delay for a woman’s career, which needs to work itself out, and it does change life priorities.”

Sarah Deas: “I have a very supportive husband and that’s been an enabling factor in everything I want to achieve, but I also think it is important for my children to see that I operate the way I am, and I try to be as natural as possible, but to instil the ambition and the ability for a mother to succeed.”

Anne MacColl: “Is the reason it fizzles out is that there is a perception of what the boardroom looks and feels like? Is there a scariness that frightens women away and is there something we can do to demystify sitting on a board and contributing at that level? Is there more we can do to get talented women to aspire to that goal?”

Susan Rice: “Ten years ago we were speaking about attracting the next generation of women and what we are going to do for them. I think we need to get all of us – here tonight – sitting in the boardroom now. That’s the big thing to do, to show people it works.”

Paul Brewer: “We were talking about winning. But it is a personal thing; it comes down to individual’s goals and concept of work-life balance.It’s a very personal thing indeed. Picking up on Susan’s point: it’s our generation that shouldn’t worry about the next generation, but demonstrate that it is something we should strive to do. You have to help people understand how the opportunities relate to their personal goal. Let’s bust some of the myths and the fear factor.”

Elaine Brailsford: “I think work-life balance is a very personal thing. I think the long hours, particularly in the professional life I’m in, are not particularly attractive to many women, and I don’t think they are wrong to think that. We have a real problem with part-time working and it can be difficult in a business to accommodate that. But I’m not sure how we tackle that, because unless we can be flexible, we’re not going to have the women coming through. It’s a conundrum.”

Susan Rice: “I absolutely endorse what you say, because I also work long hours. There is something about the messages that women get in society. Women’s magazines paint a picture about what it is to be a mother, yet life changes for both parents once you have kids. It doesn’t mean you can’t have work and work is second, it is part of who you are. There are different ways to run families. We all get told there is one way and that’s wrong.”

Susan Deacon: “I think it is about what we spend our time on and what we value. Women still think that merit alone is enough to get you to the top. But there is another strand of ‘presentee-ism’, the sense of having to be seen to be at work. You are not necessarily achieving anything or productive, but you are seen to be there. That militates against the work-life balance and some of the motivational issues that we’ve talked about.The flip side of this is what do boards spend their time on – and what should they be doing? Is it useful and meaningful? It’s about what boards are there to do and achieve and work back on the skills and attributes you need, you end up with more diverse boards. It’s not about window-dressing, it’s about achievement.”

Anne MacColl: “I think it is an important point about working backwards to what you want to achieve, how we demystify boards and how we encourage more talented women to go for it, it is tremendously important.“

 

Douglas Kinnaird, talking about the recruitment requirements for boards, said: “It has changed dramatically in the last three or four years. Up until the credit crunch everything was booming and there was an enormous propensity to do the right thing and I cannot think of an employer who did not say, ‘Give me two equal people and I will take the female’, and they were actively looking for females. For every NXD appointment we do there is a marked and strong preference to recruit a female. But if you can’t find them, you can’t find them.”

Caroline Theobald said the meat of this debate then is how do we get more women on boards now.

Margaret Lang, Sarah Deas and Elaine Brailsford all explained their board structures and situations and their issues of finding the right mix of people, while David Watt talked about what the IoD in Scotland was doing to encourage and mentor more women.

Douglas Kinnaird admitted there was still chauvinism in business; males not wanting to recruit females, and even females not wanting to recruit females too. But the issue was that women simply didn’t apply. The issue of mentoring was raised and while it was felt inappropriate for older men to take younger women under their wing, more senior women should be helping other females coming through.

The participants agreed that the word gender should really be replaced by the idea of diversity because it was this that was likely to make boards perform better.

Anne MacColl said, for example, Scottish businesses trading internationally had a mix of experiences through such trading which help them prosper. This was about diversity and the need to encourage it. Everyone had a different suitcase that they bring to the boardroom table, if they are all the same suitcases you’re going to get a carbon copy.

David Watt, Paul Brewer, and Janice Anderson agreed that this issue of diversity was central to the debate, and a massive issue for all companies.

On a call to action, Sarah Deas, Lady Susan Rice and Deborah Benson all felt that mentoring was the way ahead and that is helped talented individuals develop, although Susan Rice suggested “championing” by a senior person in the business was even more important.

She explained that Lloyds Banking Group has recently launched a programme at work called “Mentoring Circles” with the highest ranking women and the level below in the business. This is a different approach with six or seven women around the table, rather than one-to-one. It was also looking at how to tackle “unconscious bias”.

Paul Brewer said that sometimes businesses just did not bring the best talent through and the rate of erosion from females is high because they don’t set as their personal goal to reach the next level. In summing up, the participants all felt it was now a case of building the scale of women on all types of boards, and forcing the shift in culture in Scotland. It was about confidence for women, challenging conformity and chauvinism, and defying the “tall poppy syndrome” which deterred both males and females from trying to achieve in Scotland.

However, the gathering concluded there was a clear case of “just going out and doing it”. It was clearly a case for the women present at the BQ Live Debate – as role models – “walking the talk” and “doing it” rather than talking about it! ■