Sterling Performance

Gordon Brown is calling for the UK corporate governance code to force companies to state why they have not promoted more females to top jobs. The answers might be too embarrassingly honest.

The under-representation of women on corporate boards is a continuing cause celebre — and remains a perennial problem because the numbers are stubbornly static at their low level. While three-quarters of FTSE 100 companies have a woman on the board it is usually only one, and a mere 15 of the 100 firms have a female executive, according to Cranfield School of Management. 

Just 12 per cent of FTSE directors are women and the prime minister’s letter to the Financial Reporting Council wants the authors of the government code to make directors tell shareholders what they are doing about it. There’s no talk of Norwegian-style boardroom quotas, but the premier threatens that if having to account for a gender imbalance at board level does not work, he will take “more serious action”.  

Don’t expect any of these male-dominated boards to admit to misogyny. It takes a conspiracy theorist to believe nomination committees universally reject women candidates on principle or prejudice. The reality is that the shortlists provided by headhunters are notably short of females and these firms blame the lack of women willing to put themselves forward for advancement. 

Bending over backwards to find female names to fill-out candidates’ lists usually means bending the selection criteria and overpromotion helps neither the individual nor other would-be women directors, but that is the risk, not only as a result of the PM’s pressure, but also from the Equality Bill, which gives employers the sanction to discriminate positively to promote women. 

Politicians must concede that while there should be no barriers to women wanting to climb the corporate ladder, not all women see that as an objective. And if some choose to curtail their careers prematurely to pursue other options leaving many men remaining in the running, then there will be more males than females in top management.   

If the prime minister’s is successful in inserting a new clause into the corporate governance code, there will still be plenty of opportunity for directors to avoid being honest and provide a meaningless paragraph claiming they have done their best and are always open to appointing suitable candidates.

Brown can try to force companies to promote women but he cannot force women to take the jobs. Equality in business is about opportunity, not about equal numbers in the boardroom.

It’s fitting that International Women’s Day should open with news that Kathryn Bigelow has just become the first female to win the best film director Oscar.

Yet today’s World Economic Forum’s Corporate Gender Gap report 2010 makes her achievement look more like the exception than the rule. The report, which surveys the heads of HR at 600 organisations in 20 countries, claims global leaders are failing to engage talented women at work. Hmmm. Still?

A baseline question simply asks what proportion of the overall workforce is female, and even at this most basic level, companies worldwide haven’t made as much progress as you might expect.

The findings show up developed economies badly, too: while companies from the US, Canada and Spain had the highest percentages of female employees at all levels of the workforce, Japan and Austria joined emerging market India at the bottom of the scale.

Likewise, the findings reinforced concerns that “glass walls” still exist in departments and industries, showing a predominance of women in service-related businesses — financial, professionaland media– and at middle management, rather than board-level positions. While the majority of HR heads claimed there were “generally no gaps” between men’s and women’s salaries, only 13 percent tracked and rectified any discrepancies anyway.

But it’s not pay, regulation or parental leave that are the biggest barriers for progress anyway. What’s most stultifying, it turns out, is a country’s culture — surprising in light of the fact that Austria and Japan score so low on the percentage of women employed.

A masculine or “patriarchal” corporate culture is another obstacle, while a lack of role models and and flexible working options are also complaints.

All of this has “huge economic implications for developed economies”, according to the report, which quotes research saying that greater equality could boost US GDP by “as much as nine percent” and eurozone GDP by 13 percent.

The report also again reminds readers of research that links leadership diversity to financial performance and greater innovation. But it doesn’t really get to the bottom of the problem.

Saadia Zahidi, head of the Forum’s Women Leaders and Gender Parity Programme, claims this year’s results are “an alarm bell” for equality at work. But are the findings so very different to those reported by BNETUK last year?

Over at gender consultancy 20-First, CEO Avivah Wittenberg-Cox is more worried about the future prospects for men.

She predicts that “over-feminisation of the education sphere”, married to the “continued over-masculinisation of the business world” will only make for more wasted talent all around.

Her advice to women is to stop seeing themselves as a “maligned minority” and “accept the responsibilities of our newfound power”. Not sure exactly what that means, but it offers a more positive message than another report into the failings of the workplace talent system.

The Equality and Human Rights Commission call for employees to be allowed to continue working after official retirement age is a vital aid to our ability to compete in international markets. Employers who remove more “expensive” older workers and get in cheaper, younger workers and think this gives them an advantage are wrong.

Even if older workers cost more, the evidence shows they often produce a greater return on investment than younger staff. Most current world leaders are over 50, a substantial proportion of CEOs of major organisations are over 50 and many are over retirement age. Why is that acceptable for them but not for others?

Research shows older workers – anyone over 50 – are often more flexible than younger ones, better with customers and capable of developing the skills of others, thus increasing the performance of all. Their valuable organisational experience also keeps the organisation running well from day to day.

 Many have been through difficult experiences, which increases their determination to succeed and survive the present difficult economic conditions. So if older workers are also less likely to give up on their organisation why should some organisations give up on them? (more…)

News that the French parliament has voted to regulate businesses in the country, forcing them to fill 40 per cent of board positions with female candidates, will be welcomed by many women around the world.

France has followed in the footsteps of Holland and Spain and the move strengthens the case for similar laws in other countries, including the UK.

At the moment, only 10 per cent of FTSE 100 company board positions are held by women and it may be this same old-boys-club mentality in British boards keeping women out that is in part responsible for the private sector’s current economic woes. (more…)

Legislation on equal opportunities in business, going through the House of Lords next week could increase procurers’ – especially in the public sector — powers and obligations to demand diversity strategies from suppliers.

The UK legislation over the past 40 years, designed to tackle discrimination has created a confusing legal landscape but, more importantly, there is evidence that this legislation is simply not working.

Discrimination remains a significant problem and people from some disadvantaged groups still find it harder to find employment:

• Despite progress since 1997 to reduce the gender pay gap, women still earn, on average, 22.6 per cent less per hour than men, if the current trend continues, the pay gap between men and women will not close until 2085,
• The gap between the employment rate of disabled people and the overall employment rate has decreased from 34.5 per cent to 26.3 per cent since 1998, but disabled people are still more than twice as likely to be out of work than non-disabled people,
• If you are from an ethnic minority, you were 17.9 per cent less likely to find work in 1997 than a white person. The difference is still 13 per cent

This data has been taken from the UK Parliament website.

The new single Equality Bill tackles these issues by bringing together a number of requirements under a single act. It is intended to strengthen the current legislation by: (more…)

Just like anyone else, business leaders can be put under enormous stress and can exhibit aberrant behaviour as a result, which if left unchecked could do serious harm to the companies they lead.

We’ve seen the effects of this in the banking and automotive sectors, where organisation’s leadership teams made decisions characterised by a culture of risk-taking and short-term gain.

According to Dr Alan Bourne, professional services director of psychometric testing specialist Talent Q, the trouble often starts in an individual’s development as a business leader. If a candidate progresses up the hierarchy through focusing on a few core strengths, they risk failing to develop a wider base of skills and expose themselves to the possibility of being confronted by a problem that requires broader capabilities - and ultimately failing sometime in the future. If that happens to be when they are leading the company, chances are they will bring the company down with them.

Bourne says there are three ways a business leader can mistakenly focus on too few strengths as they develop:

1. Growth Focus: They may thrive on risk and be decisive, helping to grow the company by taking opportunities quickly. But, they may at the same time be cavalier about risk and fail to plan for contingencies. They may be over-confident about their abilities to keep that growth at a pace when the wider market starts to contract. Sales and general management teams are the most likely company department to suffer from this dysfunction.
2. (more…)

Nick Hine, partner at law firm Thomas Eggar, responds to your employment law questions:

We’re preparing to have our Christmas office party, which I expect to be a lively affair, as we’ve all worked very hard to stay afloat for the last 12 months and this is the first chance staff have had to let their hair down at the company’s expense. I’m worried that things may get out of hand and people might be offended by a few likely suspects’ behaviour. As a manager, what should I do to protect my company from any potential legal action?

– Name witheld

It is likely that your firm has an Equal Opportunities and Anti-Harassment Policy. This will usually set out phrases and explanations of what behaviour is and is not acceptable so that everyone is treated equally and to state that discriminatory behaviour will not be tolerated. 

The problem is it is not what those discriminating think, it is actually the person on the receiving end of the joke or unpolitically correct activity or antic which is important.

If they find such antics offensive, then it may well be possible that discriminatory activity is taking place, for which the employer may be responsible.

An employer is vicariously liable for the acts of its employees and therefore may be liable for permitting the discriminatory action unless they can demonstrate they took all reasonable steps to prevent the activity from taking place. 

This is normally dealt with through policies, training and it is not just having a policy which will meet the defence, but also demonstrating that this is proactively enforced within the organisation.

 Therefore as a manger if you are aware of such activity taking place then employees need to be reminded of the equal opportunities policies and the fact that such activities should not take place and that anyone found to be acting in such a manner will face disciplinary action. 

If there are certain individuals whom the employer knows are conducting this sort of activity, then in addition to reminding all employees of the policies, they should be spoken to in no uncertain terms.

If you have any questions you’d like to put to Nick, email us at editorial@bnet.co.uk

As the party season kicks off and staff spend time together socially, probably with a drink or two, the risks of legal action over offensive behaviour at work will increase.

According to insurance company Hiscox, small and medium-sized enterprises (SMEs) are especially vulnerable because more often than not, they lack a formal code for behaviour.

Plus, managers may be less sensitive to banter and over-familiarity at work than their big business peers.

Its latest survey of 248 SMEs revealed:

• Over two-thirds of SME bosses are unconcerned about the threat of legal action for offensive behaviour.
• Half of them find it acceptable to display celebrity calendars or rate the relative attractiveness of colleagues.
• Almost nine out of 10 bosses say staff need to be ‘grown up’ over office antics.
• Eight out of 10 believe there is nothing wrong with edgy banter.
• Two in five bosses believe it is not their role to regulate it.
• Half of UK employees disagree and believe their boss should do more to rein in unacceptable behaviour.
• More than half of the 1,000 workers surveyed claim they would consider legal action if office behaviour crossed the line.

The report’s authors at Hiscox pointed out that many businesses will be holding Christmas parties at the office to save money. Two thirds of workers believe their colleagues behave worse if parties are held in the office, out of the public gaze.

Clearly, offensive behaviour of a sexist, sectarian or racist nature within a company is not only illegal, but can do serious damage for that company to compete in the market. How can it service outsiders if the organisation within is dysfunctional?

Based on advice from a CMI 2008 report on bullying (a type of misconduct seen at work by 15 per cent of the report’s respondents), here’s some tips on what you can do to protect yourself and your employees in the run up to Christmas:

• If you don’t have a formal policy that protects employees from behaviour they deem to be offensive, draft one.
• Let everyone know you have drafted such a policy. If possible, include them in the draft process, so that they buy into the police and everyone is made aware of it, without you having to deliver an ultimatum out of the blue.
• Do it in plenty of time. It’s no good coming down on people who are acting inappropriately if they don’t know it’s against the rules — you will appear heavy-handed and kill-joy to those who think offensive behaviour is acceptable.
• Lead by example. Often bad behaviour springs from old-school managers pretending it’s still 1973, who are copied by their employees. If managers put their own house in order, employees won’t feel like this is just another Big Brother policy to spoil their fun at work.
• If anyone is offended by office antics, do something about it and be seen to do so. Any attempt to sweep the issue under the carpet will be seen as complicity with the perpetrators.

(Pic: mrsmargret cc2.0)

Oddly enough, in many large companies, managers don’t have a clear idea of their people’s strengths and capabilities.

The resulting lack of awareness of in-house skills and experience often makes it a lottery when a company is looking for leaders or experts.

This is when effective personal branding becomes a big opportunity for individuals to differentiate themselves.

This is important for companies to nurture, if we consider the concept of ‘hypercompetition’ — a concept formulated by Richard A. D’Aveni which frankly states that advantages don’t last very long before competition, imitation and matching erodes any competitive advantage. Rivals become more efficient, but don’t increase their profitability. 

(more…)

As the UK finance industry ponders the repercussions of Sir David Walker’s report on the banking sector, much has been made of proposals to declare the number of employees paid 1m or above. While this is an emotive issue that provides for great headlines, it’s likely this measure will have little impact on the growth or collapse of the UK financial sector.

Speaking to Chizu Nakajima, director for finance regulation and crime at Cass Business School and Charles Cotton, performance and rewards advisor for the CIPD, it’s plain they are worried the Walker report concentrates too heavily on remuneration and does little to address the underlying problems with the sector. These problems, they maintain, are around corporate culture and talent management.

One of the main recommendations of the report is a requirement for Non Executive Directors (NEDs) to have direct banking experience. Nakajima points out how limiting this could be for board selection committees.

She said: “If you have that degree of relevant experience, surely you would rather be working for the organisation, not an NED for it.”

Certainly, it’s likely that a requirement of a high degree of relevant finance experience will reduce the pool of potential NEDs that selectors can recruit from. Pundits have often lamented the amount of NEDs companies across UK plc have on their boards and the risk that puts on good corporate governance.

Reducing that pool by upping the qualification requirement is going to increase that risk, not reduce it.

The call for Banking NEDs to have a long track-record in the sector also undermines their role as a balance and complement to the executive directors. It takes a sense of perspective gained by experience out of the sector to be able to pick out the anomalies in banking. A board made up of people who have accepted and profited from the conventions of the industry is less likely to identify their weaknesses.

However, no-one is suggesting NEDs don’t need an understanding of the industry they are employed in. As financial sectors have become more complex, it’s as critical as ever for banking business leaders to have a firm grasp on the business models they are employing - including the ones who have backgrounds in that sector.

Cotton said: “The review ramps up the responsibilities on NEDs. It is essential that significant effort is put into learning and development programmes for NEDs, so they acquire and maintain the skills, knowledge and attitudes required to fulfil their expanded roles effectively.”

(Pic: luxamart cc2.0)