Read Lubna’s blog insights where she takes a fresh look at governance to create stronger countries and business
International Women’s Day – best practice in gender diversity #beboldforchange
We have all been talking about this for a long time – so many women I know said they thought by the time they got to leadership positions they thought this topic would no longer be relevant. But despite the real commitment from many organisations, progress is still slow. I have been looking at what can we learn from best practice around the world, and in this blog I want to share what I have found.
An article on Fortune, last year, said it will take another 40 years to achieve gender parity at the current rate of change. This is a governance issue for us all – we have to speed up progress? This is the scale of the problem highlighted in the US report
“If women continue to join corporate boards at their current rate, it will take more than four decades for boards to reach a 50-50 gender split, according to a government report. To put it another way: Even if there was a way to start filling every single open board seat with a woman, according to the Government Accountability Office, it would still take until 2024 to reach parity.”
The US Government Accountability Office interviewed 19 stakeholders, to identify what they thought should change – among these were Ariel Investments president Mellody Hobson, Macy’s chairman and CEO Terry Lundgren, and BlackRock global head of corporate governance and responsible investment Michelle Edkins. Their recommendations form my first three best practice approaches.
1. The Rooney Rule
Those interviewed said too much recruitment is still done by turning to those you know to fill positions – and for men this means turning to other men. To achieve a shift change, the group said boards should apply the Rooney Rule. This rule was brought in by the National Football League and requires every franchise to interview at least one minority candidate for head coaching positions. The issue here was that American football did not have enough black coaches.
By insisting on a diverse slate of candidates, this forces those recruiting to look outside of their networks and consider women and others who may never have been on their radar.
2. Look beyond CEOs
The group said that because there are so few female chief executives, recruiters should open up the brief and consider women in senior management jobs for a board seat.
I heard the story recently of a leading global banker who wanted more diversity on his leadership team. He had spotted a bright woman who, in theory, did not tick all the criteria they wanted for the Head of a division – but he insisted on interviewing her and she got the job. Apparently he was challenged by colleagues for giving a woman such a step up but he was unapologetic and adamant that a few brave moves will have to be made to achieve change. And that is what this year is all about #beboldforchange.
3. Tougher disclosure requirements
The group said that although there are disclosure requirements – this was in the US – they were too vague to have much impact. 15 of the 19 interviewed supported changing SEC rules to require companies to provide more specific diversity information. I was amused that they also said that when a board appoints one woman, there is a tendency to sit back and say ‘job done’!
4. Increase turnover of directors on boards
One of the other barriers cited was the low turnover of board appointments generally – since 1998, an average 4% of board seats in the S&P 1500 turn over each year.
While most boards have a three year appointment, it is very normal to extend this to a second term and sometimes to a third term – taking a director up to nine years on a board. While continuity is a good thing to understand a company and its history, perhaps boards need to consider only allowing one in two directors to extend their terms of service?
5. Set out clear steps to improve board diversity
The UK’s Equality and Human Rights Commission has created a very clear guide on How to Improve Board Diversity. They set out six steps – which are all about having a clear plan to improve diversity generally, including more women. These steps are
Making an appointment
- Define the selection criteria in terms of measurable skills, experience, knowledge and personal qualities
- Reach the widest possible candidate pool by using a range of recruitment methods and positive action
- Provide a clear brief, including diversity targets, to your executive search firm
- Assess candidates against the role specification in a consistent way throughout the process
Ongoing action to improve diversity
- Establish clear board accountability for diversity
- Widen diversity in your senior leadership talent pool to ensure future diversity in succession planning
6. Change the culture in the boardroom
I was interested to find the Deloitte report Women in the Boardroom: A global perspective packed with statistics on the number of women in boards in Asia Pacific, Americas and Europe, Middle East and Africa.
Betty Yuen, vice chairman of CLP Power Hong Kong Limited, is quoted in the report saying: “We need to do two things to achieve real and meaningful results. First, we need to create an environment that would enable our women to break the glass ceiling. Stereotyping, bias, and brutally long working hours are discouraging women executives from reaching for the top. Second, we need to provide enough positive reinforcement so that more women will find it rewarding to make sacrifices for advancement in their careers. These are often tough personal choices, and smart companies would use them as opportunities to attract and retain the right professionals instead of driving them away.”
This sounds simple, but I know few corporates who have really achieved this culture change – I would welcome hearing more about those who have.
7. Measure baselines and progress
For this blog, I contacted a few people to ask them to point me to best practice on getting more women into board roles. A friend of mine in the UK mentioned the WISE campaign which is helping companies to recruit, retain and promote women in science, technology, engineering and maths (STEM).
I really like a poster they have produced with input from the likes of Arup, BBC, Sky, Shell and Airbus.
They came up with ten steps, see below. The ones that have not been mentioned above include: know your baseline and set targets; educate leaders and make them accountable; make flexible working a reality; mentor women to the same extent as men; share and learn from best practice and treat this just the way you would any other business improvement project.
I am looking forward to joining Clifford Chance to discuss this important governance issue and hear what others have found works in practice. Please do contact me if you have stories to share or insights to add to this blog.