Podcast 8: #BalanceforBetter – the right approach to D&I in the workplace

International Women’s Day is a celebration of the social, economic, cultural, and political achievements of women and marks a call-to-action for accelerating gender parity. The 2019 theme of the year is Balance for Better, focusing on the importance of building a gender-balanced world, and while gender equality is an important strategic aim for many businesses, diversity is far wider than just gender.

It is equally important for leaders to build a working environment where everyone feels included and respected regardless of gender, race, ethnicity, age, religion, or a visible disability, but also less visible traits such as sexual orientation, hidden disability, personality type, background, and education.

Never has there been so much pressure on businesses to introduce positive change and progress in this area and to do it in a transparent, measurable way and whilst some businesses have powered ahead, setting ambitious targets and telling the world about them, others have struggled to even get past building the initial business case for the changes required to improve balance.

Today, we’re joined by Professor Ruth Sealy to discuss how leaders can take a practical and realistic approach to building a more balanced, sustainable, diverse workforce and inclusive workplace.

1. To kick things off, it’d be helpful for our listeners if you could share a little bit about yourself and your background, and the research and studies you’ve been involved with which advocates so strongly for positive change in this area.

Thank you for inviting me. So I’m an associate professor in management at the University of Exeter Business School and my research focus broadly is women in leadership. But I have an eclectic background, I was an entrepreneur for ten years, I sold my company and then worked as a consultant management psychologist for five years before realising that something was wrong in the workplaces that I was entering. All of my senior clients were male, and I was often the only woman in the room. One day when I was sitting on a train, the person opposite me was reading a book entitled “Why Doesn’t Work Work for Women?” and that question really stuck in my mind until eventually, it became an itch I had to scratch, and I decided to go and do a PhD to investigate this.

I was fortunate to join a small research group at Cranfield School of Management in 2004, who had recently started investigating the lack of women on corporate boards for the UK government. I quickly got involved and ended up becoming the lead researcher on what became known as the Annual Female FTSE Board Report, looking at the top three hundred and fifty largest companies listed on the London Stock Exchange. So, I worked on that from 2007 until 2018 and we produced the official UK figures for women on boards and conducted similar reports in India and Hong Kong.

And then in 2010, the UK government pulled together the Lord Davies Review, which not only examined the obstacles that prevent more women from reaching senior positions in business, but more importantly, made very clear recommendations as to what should be done to address and change the situation. We supplied all the data for the multiple reports over the next five years and my colleague was on the Davies Steering Committee.

Our data was crucial in shaping the UK government’s policy towards addressing gender diversity in leadership and we provided evidence, for example, that for women on boards in the UK, we didn’t have a supply problem, but a demand problem and these problems require very different solutions. It wasn’t about needing to fix the women but needing to engage with all the other stakeholders involved in the processes of board composition. So, for example, chairs, CEO’s, head-hunters, regulators, investors and even the media.

It was very exciting to be an integral part of the substantial change period of the Davies Review with multiple stakeholders. In just five years, we took the percentage of women on FTSE 100 boards from 12.5% to 26%. I had multiple roles, so I was the bean counter, producing figures and the trajectories of where we were and where we needed to get to and how. But I was also a myth-buster, which as an academic is a great role to play because we have the data to understand what is going on rather than what people assume is going on.

More recently, my research is interested in the process of what’s going on in the boardroom. So, the dynamics that impact on decision making and how that’s influenced by diversity, on-board evaluation and how that can support and be used by the chair to improve these dynamics and decision-making. I also focus on diversity reporting, so the role of the regulator, the code of governance, and what this tells institutional investors, so what information are they paying attention to, for example, when they’re making their voting decisions.

2. The theme of this year’s International Women’s Day is Balance for Better and whilst gender equality is hugely important, it is only one of many ways in which diversity presents itself and therefore, a wider, more balanced approach needs to be taken. Do you have any examples of businesses who you feel have enacted change in this area successfully?

People often now ask why we focus so much on gender diversity and not other dimensions of diversity, and I think there’s several ways to look at this. The lack of gender diversity is the most obvious deficit, given that women make up 51% of the population, 48% of the working population and have been the majority of graduates in some professions like law and medicine since 1992, so that’s over twenty-five years. The lack of gender diversity in corporate leadership is a symptom of a bigger problem, that of the persistence of homogeneity. So, unless you truly believe that talent, intellect, initiative, capability, brilliant ideas, et cetera, is really distributed 90% to men and 10% to women, then we really are still a long way off optimising our talent and potential in business.

And people often say, well, it’s not that bad anymore and we’ve made great progress. And yes, we have made some progress in some areas, but in some other areas, the numbers just really aren’t shifting. I know these figures have been cited quite a bit recently, but I wanted to check them out for myself. If we look at the top three hundred and fifty companies on the London Stock Exchange, of those three hundred and fifty current CEO’s, eighteen of them are called David, thirteen of them are called Andrew and twelve are called John—and twelve are women. So statistically, you’re more likely to be called Andrew, David or John than to be a female in that role and those twelve women make up just 3.4% of all the FTSE CEO’s. So, this is poor resource management and from an institution investors’ perspective, looking at an organisation, they might think that if a firm is managing its human resources so badly, what else is poorly managed?

We really have a long way to go on this, but your question asks for some good examples and I have to say there are quite a few out there, some of which are better than others. For example, if we take Unilever, the international consumer goods company, they get that women’s empowerment both within their organisation and in society is central to their business growth and social impact. So, building a gender-balanced organisation with an inclusive workforce for them is a strategic priority and it has been for several years. They have consistently had a more gender-balanced board and senior management for much of the last decade. Their former CEO, Paul Polman, was very vociferous about this and diversity and inclusion was clearly part of his company’s values and purpose and it was very much embedded in their culture.

We look at Lloyds Banking Group, for example. They were the first FTSE 100 company to announce publicly that gender targets went beyond the board. So, in 2014, they committed that 40% of their top five thousand senior management roles, globally, would be held by women by 2020 and more recently, they are also the first to introduce ethnicity targets.

Other pockets of excellence, for example, a company with great policies that make sure they are enacted is Aviva, the insurance company where job share directorships have been role modelled by two fathers and equal paternity pay packages help to seriously push shared parental leave.

And it’s not just the big companies. Smaller companies often have the advantage of starting from a completely different way of working. For example, at Tapestry, an award-winning global compliance law firm. Everyone works flexibly, and they have amazing retention rates, off the scale, because it’s such a good place to work. Now, isn’t that something that most firms would love to boast and how much money and disruption does that save?

3. In your experience, are there any common mistakes businesses make? And what can be done to take stock, research, and move forward if challenges and roadblocks aren’t faced along the way?

Yes, so companies often start this journey in response to some external stimulus’s, pressures or to avoid some sort of negative consequence. The natural reaction is to get busy around diversity, get an HR manager to look into some training, which often ends up being some sort of sheep dip approach, for example, providing unconscious bias for all managers or setting up a network for an underrepresented group.

Now, I’m not saying those things are not good things to be doing, but this rather tactical approach can end up with multiple well-intended, but disjointed initiatives with no real clear ‘SMART’ objectives. The thinking about diversity is not integrated into broader aspects of management and culture. So, this leads to a sort of busyness around the issue, but not much in the way of results and then there’s often backlash, which is followed by fatigue. “Well, we tried that, and it just didn’t work.”

So, the next stage of that diversity journey is often focused on the business case becoming the main driver, where the starting point is the assumption of trying to attain some sort of benefit of diversity rather than the avoidance of a negative. Barriers are identified, and HR strategies are developed to support a more diverse workforce. There may be a focus on attracting and retaining diverse talent and learning about bench-marking and best practice, and the numbers may well start to shift in a positive direction, but it’s still operational.

4. Most of our leaders know about the positive ways building diverse workforce, inclusive workplace impacts many aspects of the business. However, many can struggle to get past the initial first step of translating these into a business case. What do you think are the main obstacles here and what next steps would you recommend listeners take if they found themselves in the same position?

So, to move towards more integrated diversity, the company needs to internalise diversity as part of a culture. It needs to become a value, something that is a given and core to the way we do things around here. It’s when the value of diversity is no longer debated but presumed and there’s a genuine commitment to real merits. So, continuing to break down barriers, understanding what they are, and both financial and the non-financial benefits start to be experienced.

Targets are very good, but they need to be owned by the executive, so diversity becomes embedded in culture programs and products, and then it also can be fostered beyond the organisational boundaries. This may involve holding your supply chain accountable as well. So, for example, Aviva wrote to its one hundred top suppliers and said they could no longer be suppliers to Aviva unless they could show Aviva what they were doing to increase diversity within their organisation.

So, diversity then becomes a strategic imperative rather than a tactical response, but this must be led from the top. If you are a leader and you don’t get it, go and educate yourself because in today’s age of ubiquitous information, ignorance is no longer an excuse because what this really is about is three core things: good talent management, inclusive cultures and good leadership. To quote a certain sports company, “Just do it.”

5. Numerical targets are used in many elements of business and diversity and equality are no different. What’s your opinion on targets and how does a balanced approach apply here?

As you say, numerical targets are used across businesses and we wouldn’t try to make any other substantive business change without some sort of measurable objectives. So why would this be any different? In 2010, when Lord Davies suggested the moderate target of 25% women on boards, there was uproar in the business community. But today, nine years later, we look at how many companies; all the big banks, the professional service firms, many of the corporates, have various diversity targets, publicly stated, not just at board level, but for senior management and often throughout their organisation and targets for different things. So, it’s not just looking at the percentage of individuals at a certain level, but it’s other aspects like targets of a percentage of people who get put up for promotion.

In 2016, the UK Treasury produced the Women in Finance Charter where financial companies agreed to set internal targets and have a named executive responsible and accountable for them and that accountability is also really important. In a report Exeter University conducted for the Financial Reporting Council in 2018, we revealed that the finance charter signatories have a significantly higher adherence to the corporate code of governance even though those two codes were not addressing the same items. So, there’s a spill-over effect for better governance.

6. People across an organisation play a huge part in success. What balance do you think leaders should aim to strike in terms of the C-suite and leadership setting the strategy and the wider business of adopting and driving it forward?

Yes, that’s a really interesting question. So excessive homogeneity is a problem that needs to be addressed at all levels of most organisations. The popular phrase regarding culture being set by the tone from the top is just as relevant here. It doesn’t work if it’s just given to an HR manager to sort out. Major cultural change needs to be led from the top. For something to have a value in an organisation, that needs to be espoused from the top and measured and rewarded because only then will people pay attention and understand that it’s important.

But then it also must have buy-in at the middle level and today it’s often the middle management layers that a number of organisations are struggling with. More junior members tend to get it to the point that sometimes they don’t even get why it’s a conversation. And the penny has often dropped at leadership and strategic level, but often it’s the middle management that needs a reason to be convinced. So, if it’s your job to fix this, then you need to find out what it is that will convince them. So, is it the productivity figures? Is it better team dynamics? Is it a moral argument or wider stakeholder perspective? But we need to allow discussion and allow dissent and fall back on evidence to persuade.

It’s important to understand that it won’t just happen naturally. We have two decades of data to know that’s not the case and it does need to be proactively managed because at every level, the forces of inertia are very great indeed.

7. What impact do you think an imbalanced approach to diversity inclusion can have on employees and customers?

We have so much evidence around this now. Low productivity, high attrition rates, poor well-being, disengagement, that’s all at the individual level and there are papers about the negative impacts of barriers.

Ten years ago, my own PhD looked at the impact of the demographic context on work identity development for senior women in investment banks. I conducted interviews with thirty-four female managing directors. When I went back six months later—to share some of the somewhat depressing findings—one-third of them had left. That was over two hundred years of talent and experience that had walked out the door in six months. So what organisation would willingly let that happen?

And at national and supranational levels, some clever people at the likes of Goldman Sachs, Credit Suisse and McKinsey have calculated phenomenal figures that will be added to our GDP’s if we just managed our female talent better and optimised it’s working. This really for me, illustrates what an emotive subject this is because if companies were entirely rational economic entities, we would have sorted this out a very long time ago.

8. And finally, this is a question we ask all our podcast guests. What do you think are the top three qualities that make a good leader?

A leader’s values really need to underpin the purpose of the organisation. She or he really needs to model and live these. There needs to be a good understanding of the purpose behind the profit and that also requires really good communication. For me obviously, one of those values should be inclusivity. So, what does that mean? Well, it means that anyone, regardless of demographic or any other characteristic, should be welcomed to the organisation for the diversity of thought and perspective that they bring, that the organisation wants to integrate and that they should have the opportunity to fully contribute and prosper without limits.

And finally, I think courage and compassion. It’s not easy to change the culture of an established business, even when it is clearly the right and the best thing to do, and I’m sure more than one excellent leader has failed trying to do so, but that doesn’t mean they shouldn’t try. So, know your values, be courageous, and communicate the greater purpose of the organisation.

• 3 reasons you should want to work for a diverse and inclusive employer
• 3 recommendations for narrowing the gender divide
• Four ways women can be braver, bolder and more successful
• Leaders, to really #pressforprogress, let’s think beyond gender
• Men apply for jobs on Mars, women on Venus
• Tales from the top: gender diversity
• What can you do to narrow the gender divide?
• When applying for a job, who are more confident – men or women?

Author

Ruth Sealy

Associate Professor of Organisation Studies, Director of Impact, University of Exeter

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Ruth Sealy is an Associate Professor in Management and Director of Impact at University of Exeter Business School. With global expertise on women on corporate boards, Ruth’s research areas include women in leadership; board composition; role models; board evaluation and various aspects of corporate governance. Prior to joining Exeter, she was Programme Director of the MSc Organisational Psychology, City University of London. Ruth is a member of the Division of Occupational Psychology Board Effectiveness Group and was the academic for the NHS on the Women on Boards Advisory Board (NHS 50:50 by 2020 Board Report). Previously at Cranfield School of Management she was lead researcher on the government’s annual Female FTSE Report 2007-2018. She has co-authored similar reports in Hong Kong and India, advised the European Commission, in the area of women on boards, and presented report findings to academic and practitioner audiences, globally. She has co-authored Best Papers at British Academy of Management and American Academy of Management conferences and published in journals such as Business Ethics Quarterly, Human Resource Management Journal, International Journal of Management Reviews, Corporate Governance International Review, Gender Work & Organisation. She is a Chartered Member of CIPD, a member of the British Psychological Society Division of Occupational Psychology and the British & American Academy of Management. She lectures on Doctoral, MBA and MSc courses and has written a number of book chapters and journal articles. Prior to becoming an academic, Ruth was managing director of a specialist holiday company, which she sold to a larger tour operator. She then worked for a number of years as an organisational psychology consultant, before starting a PhD.