Thursday, 28 May 2015

The diversity dividend

By Rowena Ironside, Chair of Women on Boards UK and speaker at RI's Diversity in Recruitment Conference
 Diversity, in particular the subject of women on boards, has received a lot of press coverage over the past few years.  The good news also is that we have seen the percentage of women on the boards of FTSE listed companies double between 2011 and 2015 under this attention (from 12.5% to 23% in the FTSE 100 and from 7.8% to 17.7% in the FTSE 250).  There was even good news in the recent election, with the percentage of female MPs increasing from 22% to 29% (thanks mainly to the SNP) and the new cabinet including significantly more women than the last.

Why is this important?

When it comes to the Public sector, the argument for the governance of public bodies to be more representative of the society they are serving is strong. From sport to academies to the NHS, Women on Boards (WOB) is helping to build both the supply and demand for female directors.  Currently around 29% across all public bodies, we are advocating for 40:40:20 (40% men, 40% women, 20% either).
For private companies the arguments are different.  The good news for those of us who believe instinctively that diversity pays dividends is that academic and scientific research are producing increasing evidence for these dividends. Digging into what might be behind the improved financial results of organisations with well gender-balanced boards, (as reported by research from organisations including Pimco and Goldman Sachs Investment Research), McKinsey and Company has proposed a few key drivers.
1.      Number one is talent: the recruitment and retention of the best people is crucial to surviving in a globally competitive economy.  This is linked with increased employee satisfaction in organisations where role models exist for everyone and promotion decisions are widely perceived as fair.
2.      Understanding your customers (80% of consumer purchasing decisions are made by women) is another driver of profit
3.      But probably the most interesting research has been around the impact of diversity on the quality of decision making.  There are several elements to this.  One is as simple as the fact that we all prepare more thoroughly for meetings when we know there will be people present who may disagree with us or simply bring a different perspective.  More fascinating are the findings around how the collective IQ of a group is increased by the inclusion of 2 or 3 women.  Having the six highest IQ individuals doesn’t lead to the highest IQ group; it is the group that combines high IQ with some women that wins the collective IQ prize.

What part can the recruitment industry play in building more diverse leadership teams?

One important aspect is turning off the spotlight and turning on the floodlights when creating a pool of candidates.  It may be quicker, easier and safer to return regularly to “the usual suspects” – and if you know one or two who seem to fit the spec, a quick placement is definitely more profitable in the short term.  But if you are searching for future stars, WOB UK now has 12,000 women in our network who have self-identified as having board-level ambitions.
A second aspect is being aware of the myths of merit and being ready to guide / challenge clients on them.  To name just three:
1.      Merit is not an objective standard; it lies in the eyes of the beholder and is often highly self-referential.
2.      Men and women do not compete on a level playing field in many organisations.  Organisational cultures and norms (built up in the days when women were excluded from many aspects of the workforce), coupled with the stereotypes and biases each of us hold, influence who gets to the top.  Women do not lack merit or even confidence in many cases – they lack a close enough resemblance to the current leadership norm.
3.      “There aren’t enough women”.  Have you asked them and encouraged them to apply?  WOB UK is doing both and we can help you find them!

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