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March 16, 2011

Diversity works: why women must be allowed to lead

Not a single UK science, engineering or technology company is led by a woman. But changing this by easing women's routes to top positions in industry, commerce and academia is not about making concessions to feminists, argues Annette Williams. It's an economic necessity. 

Leadership is in the news. From the lack of women at January's World Economic Forum in Davos to the overwhelming prevalence of male-dominated boardrooms, there is growing agreement that the imbalance is pronounced, counter-productive and needs to be addressed. At the UK Women's Resource Centre (UKRC), the organisation leading the campaign for gender equality in science, engineering and technology (SET) in the UK, we work extensively on this issue.

Our SET focus is particularly important, because women are under-represented at all levels in these sectors. Just 12.3 per cent of the 5.5 million people working in SET occupations are women. Change in the boardroom is essential if we are to build greater gender equality across science, engineering, technology and the built environment. And diversity is increasingly being shown as essential to productivity and successful business and entrepreneurship.

Facing the facts

The latest Female FTSE report shows that the overall representation of women on the boards of the FTSE 100 has remained static at 12.5 per cent in 2010, compared to 12.2 per cent in 2009. UKRC's analysis of the 2010 Female FTSE Report shows that:

• The representation of women on boards of SET FTSE companies is lower than the average of 12.5 per cent: 10.7 per cent in 2010 compared to 10.8 per cent in 2009.

• There are no female chairs in the SET companies and only 10.5 per cent of SET companies have female executive directors, compared with 23.3 per cent of non-SET companies.

• SET FTSE 100 companies have fewer than half the executive directorships of non-SET FTSE 100 companies.

• Almost 30 per cent of SET companies in the FTSE 100 have no female directors on their boards at all, compared with 9 per cent of non-SET companies.This issue is not unique to the UK. For example, in 2009, of the board members of the largest publicly quoted companies in each of the EU member states, fewer than 11 per cent on average were women. In the same year, women only held 15.2 per cent of the board seats in US Fortune 500 companies.

And the lack of women leaders goes beyond the boardroom. UKRC analysis of Higher Education Statistics Agency data shows that, in 2009, only 11.6 per cent of the highest paid category of STEM academic staff were female , and in 2008, women accounted for only 23.7 per cent of all members of SET public bodies .

Exploring the causes

Numerous reports have explored the causes of the marked gender imbalance at the top of organisations. The ‘glass ceiling’ theory, where women progress until they hit a single barrier which prevents them going further, is being replaced by a more complex model which sees a series of imbalances at all levels, in education, organisations and wider society, that make it hard for women to sustain a career and reach the highest levels. Our Good Practice Guide on Women into Leadership, just published, provides a handy summary.

A global study examining the career paths of SET women in the private sector calculated the female drop-out rate at a huge 52 per cent. The main reasons identified by the study are similar to the findings of other reports:

• Hostile and often exclusionary workplace cultures that marginalise women;

• Difficulties in finding support or sponsorship due to being in 'a minority';

• A lack of understanding on how to progress (resulting from the first two points);

• Extreme work pressures such as long working hours and working in multiple time zones, that tend to affect women disproportionately;

• Systems of risk and reward that disadvantage women more than men.

This research also found that women tended to hit serious career hurdles in their mid to late 30s, just as family pressures start to mount, and that the drop-out rate was highest at this point.

Why we need more women leaders

Encouraging more women into leadership is not just a matter of fairness. There is emerging evidence that improving gender balance in leadership improves organisational performance and corporate governance. It provides a greater diversity of backgrounds, skills and perspectives in leadership that in turn, can translate into more balanced decisions, a better understanding of diverse customer needs and greater innovative potential.

This is confirmed by two McKinsey papers [here and reference 1, below] examining performance at top European companies, which has found that organisational performance increases sharply once a threshold of at least three women on management committees is reached (on boards with an average membership of 10 people). Below this threshold, no significant difference in performance was observed. It is thought that once this threshold is reached board dynamics become more collaborative.

Bringing about change

The lack of women in senior positions in SET is unlikely to improve without targeted intervention. In response to the growing concern, last year the coalition government appointed Mervyn Davies to develop a business strategy to increase the number of women on boards of UK listed companies and, in its stated aspiration for women, to form at least half of all new appointees to public boards by the end of the current parliament.

The UKRC and many others have submitted responses and recommendations to the Davies Review, and the report was published last month. As one of a number of practical proposals, we believe that SET companies should be encouraged to make a voluntary but public commitment to achieve a minimum of 30 per cent women board members by 2015.

The issue of quotas has become a thorny one, with the CBI calling for companies to be required to set and report on their own quotas, based in part on the number of women they employ. The Institute of Directors has spoken out against this, arguing that this will not solve underlying problems, places the focus on gender instead of broader diversity, and risks politicising codes of governance.

We know that quota systems have had a beneficial effect in Norway and Australia, and that, after initial opposition and concern, they have gained support. Spain has followed suit, with Germany introducing ‘soft’ quotas. We believe at the UKRC that voluntary participation can help tip the balance, but with clear government endorsement and leadership to sustain forward momentum.

Practical strategies

The UKRC has worked with eight of the companies listed on the FTSE 100 index, including for instance, the global military supplier, BAE Systems, which has signed the UKRC CEO Charter to demonstrate its commitment to gender equality and is carrying out a review of gender equality and current initiatives within different divisions. Our work with organisations enables them to take stock and develop practical strategies to ensure more women achieve responsible positions in management and at director level.

We have also run training days and mentoring programmes to enable women consider leadership issues and skills, and to plan their careers in the light of this. We know that leaders can emerge at any stage, and that leadership can take a variety of forms, and so we champion not only the women who achieved very senior roles as part of their career progression, but also the volunteers and young women who stand out as influencing issues and people, and leading others on the same path.

Our research and experience indicate that organisations must recognise that the lack of women at senior levels can only be addressed if they have suitable talent-retention strategies, to enable them to retain potential leaders further down their hierarchies.

If SET companies recruit for directorships externally they should ensure that the language and framing of their directorships will appeal to women and that search consultants and selection committees have no unconscious bias. To improve their retention statistics, organisations should monitor the balance of women and men at each level of their organisational structure, from entry level upwards, to identify the points at which women either leave or cease to progress. Where appropriate, activities such as mentoring (by women or men who hold board positions), coaching or a women’s network which provides access to female role models should be used to enable talented women to stay on a career track and reach board level.

Organisations such as BAE Systems taking a systemic approach to retaining and increasing their talent pool are the kind of actions needed. Transparency and accountability are key tools to drive change.

The gender imbalance in SET occupations is limiting the potential of the industries as well as women – employers miss opportunities to maximise growth and productivity and women lose by taking roles below their qualification or experience levels and this impacts on their aspirations, contribution to the economy and lifetime earnings.

The UKRC therefore remains committed to working with many organisations and partners to help the SET sectors value and nurture talent, address demographic changes and population ageing, build a more inclusive and diverse workforce, and so improve business performance.

1. McKinsey&Company (2008) “Room at the Top: Women and success in UK business”, Report written by Meaney. M., Devillard-Hoellinger, S., Denari, A.

 


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