Increasing representation of women on private sector boards in Scotland

Case Study A

Background

This case study is a company in the financial and business services sector. It has just over 3,000 employees including around 200 based in Scotland. The company's workforce is well balanced by gender with 49% male and 51% female although 80% of the senior management team are male. The company‟s board has 10 members, four of whom are women. Nine of the directors are non-executive directors and one is an executive director.

Achieving gender balance and broader diversity at board level is an important issue for the company. They believe diverse boards are more effective because they are more likely to be balanced in terms of skills and experiences and therefore generate a range of perspectives on any issue. "Boards with the necessary balance of skills, experience, opinions and knowledge will be best placed to sound strategic decisions…" The view is that all male boards are unlikely to have that balance and this can reduce their effectiveness: an imbalance at the top creates risk for the business'.

Additionally, the company has a very diverse customer base and it is important that they are able to 'engage, understand and listen to our customers'. They believe this is more likely to happen if they have a diverse board which understands the perspective of their customers. They also believe that having a diverse board makes them more attractive to their customers. More broadly they want their workforce to be diverse and reflective of the society they are hiring people from. If the workforce is also balanced they feel their customers will have better service.

They believe it is the responsibility of companies to tackle this issue. If quotas are imposed there is potential to promote people to roles for which they are not ready and this can lead to career setbacks. Companies themselves need to put the correct support needs in place and to create the right conditions to promote fairness to all groups.

Challenges around Achieving Gender Balance n the Board

The number of women on the board has increased in the last few years due to the policies and practices adopted by the business. One of the directors felt that previous chairs preferred to appoint men and held the perception there were not enough women with the skills and experience the board needed and this created barriers. However, under the steer of the last two chairs there has been conscious effort to try to achieve greater balance in the board. The company felt it is still experiencing some issues around achieving parity and identifies the main barrier is the lack of female candidates for board positions. Furthermore if they receive applications, candidates do not have the industry specific experience they are looking for. The company believes a more proactive approach is needed both internally and across the sector (banking) to help women attain and sustain executive positions so they can develop the necessary experience and to encourage them to seek board positions, especially non-executive positions. Proactive approaches they have implemented or are considering include commitment from the board to seeking diversity and producing a board diversity policy and taking steps to reach potential female applicants through targeted recruitment.

Company Policies and Practices

The company has a number of policies and practices that are relevant to promoting equality and diversity and gender balance including the following.

Promoting Equality and Diversity

Policies and processes to improve board and staff understanding of equality, diversity and potential bias: the company has equality and diversity policies which cover their workforce. They monitor diversity issues on their annual employee survey and find that they get very useful information on the way different groups are affected which helps them identify the areas that they should take action. They have made good progress recently in identifying the issues affecting advancement of LGBTI people and have set up a mentoring scheme with external mentors to support people.

Promoting Equality and Diversity and Increasing Gender Parity in the Board

Commitment by the board and Chief Executive to improving gender parity and broader diversity: There is commitment within the board and from the Chief Executive to improve gender parity on the board. The company believes leadership around this is very important to set the agenda, ensure buy-in from all board members and to set the right direction so all board members have greater commitment to achieving gender balance and broader representation on the board. Leadership is also critical to how the board operates. Board members commented that the chair of the board sets a very good 'tone at board meetings to allow all board members to participate' equally and effectively. A culture is created that is able to accommodate diversity rather than being male dominated, which is often the case within the industry sector.

Policies and processes to improve board and staff understanding of equality, diversity and potential bias: They also have a specific diversity policy for all of the boards in the company group covering gender, age, ethnicity alongside other personal characteristics such as nationality and age. This was first implemented in 2014 and is reviewed annually. This policy sets out the approach to diversity in each of the main boards of the company and outlines the benefits of diversity in relation to increasing the likelihood of good strategic decision making. Diversity is defined broadly in the policy and 'starts with a balance of gender, age, ethnicity and other personal attributes' but they also want to have directors from 'different backgrounds including educational and geographical origin'. The policy prescribes that a committee should oversee the board to see that it is balanced on terms of skills, experience and diversity and should take steps to ensure that barriers and unconscious bias are removed to ensure that they get the best person for each position. This might involve using open advertising, using recruitment agencies that have signed up to a voluntary code of conduct for search firms, considering candidates from a wide range of backgrounds and 'assessing candidates on merit against objective criteria, taking into account the benefits of improving diversity on the board'. It seems that this policy has had some impact as in the last 5 years the company has appointed 3 board members who are all women.

Policies and or processes to encourage female applicants: There have been 3 appointments to the board in the last 5 years and they have all been female. This is a result of proactively looking for female candidates. New appointments are made when specific expertise is needed but when appointments are made checks are carried out to ensure that the board is balanced. A committee oversees the boards to see that they are balanced on terms of skills, experience and diversity and takes steps to ensure that barriers and unconscious bias are removed to ensure that they get the best person for each position. This might involve using open advertising, using recruitment agencies that have signed up to a voluntary code of conduct for search firms, considering candidates from a wide range of backgrounds and 'assessing candidates on merit against objective criteria, taking into account the benefits of improving diversity on the board'. A recently recruited female board member felt that the process worked very well and that it was thorough, well structured and clear. When she applied for a board position it was arranged that she was interviewed by two women. The main factors that helped her attain a board position were her experience, skills, abilities, values and people's belief in her when she was recruited. However, knowing that the CEO and MD were women made the idea of joining the company attractive to her.

Developing the talent pipeline: In response to the difficulty of finding female candidates with enough industry experience, they have taken steps to develop their own pipeline. Approaches include training and mentoring. They feel this commitment to development will pay off in the longer term as more women will move into senior management positions enabling them to develop the experience they will need to move onto the board. One interviewee with experience of the pipeline saw no barriers to board membership due to her gender within the company, but did recognise that her company was exceptional in its industrial sector and there were barriers more generally for women. Additionally, as they have a female CEO, 'it has been a natural progression to work towards achieving balance'. Other factors that help women progress within the company include having good female role models. 'if women see the top team is 50% female they believe this is important to the company.'

They also looked carefully at what stage women tended to 'step back' from wanting promotion and found this was linked to maternity leave. They are investigating whether there is anything that they can do to improve this, for example by offering mentoring to women on maternity leave to help them keep engaged and help their return as well as training mangers to better manage maternity leave. They feel this will help retain women in the company and encourage them to progress to higher management levels.

Introducing flexible working: Some approaches to recruitment have helped attract more women to the company at a senior level. For example, when making new senior appointments they replicate any flexible working arrangements the candidate had in previous employment. This is because many women in senior positions feel tied to employers which have allowed them flexible working. They hope that this may promote more movement of women in the industry and help more women progress to senior levels to get the industry experience they need to progress onto boards.

Setting targets for gender parity on the board: Annual reviews on the composition of boards are carried out. The Davies Report has been a strong influence on target setting as it has generated debate and increased attention on the issue. This helped to strengthen their resolve to do more about gender equality. This also led them to set an aspiration of ensuring the under-represented gender makes up at least 25% of each of their boards. However they would like to achieve 50:50 and would like to achieve this representation at all levels of the business in the longer term. Progress on this is reported to the board on a biannual basis and there is also commitment to report on board diversity in the Annual Report.

Interventions and Supports

The company has accessed some external support to address some of their diversity issues. For example the mentoring for LGBTI employees is offered in partnership with an external company and they use external trainers to provide training on unconscious bias.

Key Points

1. Achieving gender parity and broader diversity at all levels including the board is viewed as very important to this company as it brings a number of business benefits including making better business decisions and providing better service to customers.

2. The company is close to having gender parity on the board and is taking a proactive approach to achieve this.

3. The main barriers are not enough female candidates coming forward to apply to join boards and not enough females with the industry experience they need.

4. The company has taken a number of steps to increase female representation on the board including recruitment processes to attract more female candidates, developing their own talent pipeline and setting targets for board representation. They also have a specific diversity policy for all of the company‟s boards.

5. The case study indicates that strong leadership and commitment by the board to achieve parity are also critical to successful approaches.