Increasing representation of women on private sector boards in Scotland

Case Study J

Background

Case study J is a recruitment company that specialises in international placements in financial roles. It has 22 staff - all based in Edinburgh. There are currently two directors - one female and one male - who own the company. A senior (male) member of staff also has share options in the company (that would become shares at the time of a management buy-out or sale of the business) and is being supported to progress towards a board level position. This individual currently attends senior management meetings (where the majority of strategic decisions are made). This indivdiual is currently under 30 - making him relatively young for a potential board member.

The company was founded in 2000 by one of its two current directors. Prior to starting the business, she had run a division of a large recruitment consultancy firm. This was going through a management buy-out and as part of this process, senior management were put through an assessment process. She was identified as the most entrepreneurial of the senior managers and this, coupled with the success of her division, led to her being asked if she would consider becoming a director of the company. Having considered the offer, she decided that whilst she was ambitious to move into this kind of role, that she would rather do this by setting up and growing her own firm. The second director became a minor shareholder in 2001 through an investment in the business and acted as a "silent partner‟. In 2005, he began to work in the company on a full-time basis and to attend board meetings. They believe that part of their success lies in them having very different skills and expertise.

Prior to the recession, the company's workforce was almost 80% female. However, staff turnover has lead to a more equal gender balance now - the workforce is currently 50% female and 50% male. Whilst the company has not actively sought to influence the ratio, they feel the current balance works well. Reflecting the nature of their work, a number of current and previous staff members are non- UK citizens or have previously lived abroad. Whilst this is not a protected characteristic, the diversity that this creates helps support a culture of openness. A range of staff members were interviewed as part of the case study and most highlighted the diversity of backgrounds of staff as being beneficial to the organisation as a whole, with this being seen as helping to bring different perspectives and skills to the company. It is seen as being particularly helpful given the diversity of the clients they work with internationally.

Challenges arund Achieving Gender Balance on the Board

The board currently has gender parity - with two board members, one female and one male. However, this is not something they have explicitly sought to achieve and instead reflects the ownership of the business.

Over the medium to long-term, the current owners would like to be able to exit the business - ideally through a management buy-out. To help facilitate this:

• All staff members have a career progression pathway - and the potential for them to progress into any job within the organisation is communicated by the Managing Director on a regular basis. Staff are encouraged to take part in training and development activities, with time scheduled weekly for staff to review internal training materials (including manuals, DVDs, presentations, etc.). In addition, the company makes use of external training with staff members encouraged to identify training that meets their needs and ambitions.
• A current senior member of the team is being supported to develop his skills and expertise as a senior manager so that he has the skills required to take up a board position in the event of a management buy-out. He has been awarded share options for achievement of targets - and is working towards securing additional share options. Similar opportunities to gain share options and receive support will be available to other staff once they reach a similar stage.

Over the medium to long-term this will affect the composition of the board. As the founder and a female, the Managing Director would like the company to have good gender representation at the management and board level in the future - but this will depend on:

• Aspirations of staff to reach senior management or board positions and the progress they make towards achieving the targets and goals they are set.
• Wider societal issues - for example, how willing men are to take parental leave and/or to take on caring responsibilities.

A number of staff - considered by the Managing Director to have the potential to reach board level - were also interviewed. As well as including women, these included a number with other protected characteristics.

• In general, they felt that there were no or limited barriers to them reaching board level - either with the company or the sector more generally. The recruitment sector was generally felt to be one that rewarded achievement - making it easier to progress regardless of personal characteristics.
• However, many felt that they were only at an early stage in developing their career and recognised that their progression may be constrained by other factors - including their own ambitions.

Company Policies and Practices

The company does not have any formal equality or diversity policies. However, they feel that as a recruitment agency working for large multinational firms, staff have a good understanding of equality legislation and requirements, with their understanding supported by regular attendance at 'cultural briefings' hosted by clients and from having experience of working with a diverse pool of candidates. The Managing Director was able to highlight two specific examples where they had recruited and supported staff with a protected characteristic (other than gender). In both cases, they had recruited this candidate because they were the best person for the job.

Poromting Equality and Diversity and Increasing Gender Parity on the Board

The company examines what supports each staff member needs on an individual-by-individual basis. As such, there are no standard processes or procedures in place to:

• Prepare staff to take on more senior management or board positions.
• To promote equality and diversity of board membership. As outlined earlier, the opportunities to progress to senior management and board roles (in the event of a management buyout) are open to all staff. This, combined with being a small company, means they feel they do not need specific policies in this area.

At the moment, one (male) member of staff is being supported to take up a more senior management role - and to be ready to take up a board role in the event of a management buy-out. The supports offered to this individual help illustrate the types of support the company is willing to offer. The supports include:

• Appointing an external mentor to support their development. The mentor is highly respected within their industry. They are contracted to support the company one day a month - with half of this dedicated to mentoring and the other half to attending senior management meetings and supporting the directors.
• On-going mentoring from the Managing Director on a day-to-day basis.
• Accessing a range of training - including from the Recruitment Employment Confederation ( REC) and APSC, professional bodies for the recruitment sector.

When this member of staff initially joined the company, they had no previous experience in the sector and have worked their way up from an entry-level role. Through the company‟s structured career progression pathways, other members of staff also have the possibility of reaching senior management and board level in the same way.

This individual felt that the mentoring in particular had helped him develop his management and leadership capabilities. The value of mentoring had been to:

• Give him an opportunity to "step back‟ from their day-to-day role and reflect on how he can make his most effective contribution to the business.
• Offer development that is tailored to him as an individual.
• Get a wider perspective. As it can be difficult to 'know what you do not know', the external mentor has helped him identify areas where he needed to develop his skills that he would not otherwise have considered.

A number of staff members highlighted that the organisation often took on young people (often into their first job) and trained them up. Given that all staff have the potential to reach senior management and board level, this company‟s approach is very open to relatively young professionals reaching these levels - and potentially provides lessons for improving diversity on the 'age' protected characteristic.

Interventions and Supports

Whilst neither of the current board member has ever received any formal support for becoming board members, they engage in a wide range of networks and have accessed relevant training through these bodies (for example, IoD, REC and APSCo) and business support services through organisations such as Scottish Enterprise and Scottish Development International. In particular, as owner/managers of a small business they feel that networks (such as Enterpreneurial Scotland) can be useful in getting peer support.

In relation to support from Scottish Government, they felt that the priority should not be in relation to board composition but in supporting companies to be successful and in minimising the legislative burden on them.

Key Points

1. This business has a gender balanced board - reflecting the ownership of the business. This highlights the importance of encouraging female entrepreneurship, with female ownermanagers playing an important role in increasing the visibility of female board members.

2. Management buy-outs provide an opportunity to increase the number of women on boards.

3. Mentoring has proved to be effective in developing the skills and capabilities of a senior manager within this company to take up a board role at the management buy-out stage. This has been organised by the company itself - rather than through a programme or project. Whilst this candidate is male, this approach could be adopted by other companies in helping improve their gender balance.