Each year, Warren Partners holds senior cross-sector HR Leaders dinners across the country. In the spring of 2019, amongst others topics, we explored how HRDs can support their NomCo Chairs to facilitate further progress around diversity and inclusion. Given the most recent Hampton Alexander Review statistics, we also discussed how businesses across sectors are addressing the challenges and what new approaches will help unblock the pipeline more quickly. We have captured here the key takeaways...
QUOTED vs PRIVATE COMPANIES: CEO/Board support for the inclusion & diversity agenda varies significantly depending on the company and its ownership structure. Investor focus is making a difference for companies that are listed however the story is very different in privately owned companies where the position will be largely influenced by the beliefs of the founders/owners.
SELF-SELECTION: For those Boards who recognise neither the business case for diversity nor the cultural benefits, forward thinking HRDs may vote with their feet choosing instead to work with companies who fully embrace and support inclusive cultures and diverse teams.
TRANSPARENCY: Social media and feedback loops such as Glassdoor play an increasingly important role in helping move the diversity agenda forward; new generations want to join companies with strong ethical values and people policies. Although…beware of ex-employees ‘throwing back missiles’.
PACE OF CHANGE: For those of us who grew up in the 80s believing that equality had arrived, the ‘WORKING GIRLS’ generation, there is significant disappointment that at EXCO level, not that much has actually changed.
POINT OF NO RETURN: It is nevertheless encouraging to see widespread action in raising more awareness and to see more proactive support of other ‘forms of difference’ such as LGBT Groups and mental health awareness.
NEW AGE: Age considerations are beginning to take more prominence as changing demographics take hold; people living longer and wanting to work longer and/or pursuing diverse careers to finance longer life expectancies… whilst at the other of the ‘spectrum’, Boards are having to look at younger generations so as to broaden their pools and avoid group think. (With a knock on effect on the need for proper on-boarding, coaching and mentoring as well as new board leadership challenges for Chairs).
GO BEYOND: Whilst it was agreed that redressing the gender balance matters a great deal, there were mixed views about the benefit of focusing on this specifically. Some felt that we must deliver on gender targets as progress is so slow, that we will never be a true meritocracy until this is tackled, that gender balance needs positive action, targets, even quotas. Others felt that we need to take a broader approach at creating and celebrating inclusive cultures and the rest will follow.
DATA WORKS: What gets measured gets done. The focus on gender pay gap and diversity reporting is having an impact. Boards are now asking for the data and this is, for some, for the first time, making it a Board conversation.
THE STATS: Hampton Alexander statistics show 40% of FTSE100 appointments need to be women and 45% of appointments need to be women for FTSE250, to hit their Board target by 2020. As for FTSE350 Board, ExCo and Direct Reports, 50 % of appointments will need to go to women if they are to hit their target.
INVESTOR COMMUNITY: The investor community at last, is now looking at diversity numbers and embracing both the business and moral case for diversity. Investors are ‘red topping’ companies which are not doing enough to encourage diversity and will more often vote against the Chair of the Remuneration and/ or the Chair of the Nominations Committee, if the business is ‘not doing the right thing’.
HUMAN RESOURCES / THE PEOPLE OFFICER
THE CATALYST: Talent pipelines and succession planning have an important place in any organisation in securing diversity and helping to populate the next generation of diverse boards. HRDs have a critical role to play in supporting their RemCo and NomCo Chair, gathering the data and insight, influencing culture and having ‘the ear’ of the CEO so as to understand his/ her thinking, what motivates them, what values they believe in and the challenges they are tackling - not to mention the HRD’s unique ability to assess the mood more widely in the business.
POLE POSITION: HRDs can now see a clearer route through to the Board through a NomCo or RemCo appointment. Whilst these roles are coming under increased pressure they provide unique opportunities to shape and support true diversity. RemCos should be a good route through for women given the spotlight on the subject.
MIND THE GAP: At the same time HRDs do need to be better at understanding the critical KPIs of a business and, on an ongoing basis, seek to understand what really drives revenues, margins and profits so as to finesse their understanding of all business levers, help shape remuneration more appropriately and mould the company’s values.
DIVERSE TALENT ACQUISITION
RECRUITMENT: Having recently surveyed the signatories to the Women in Finance Charter, the feedback was clear: recruitment is seen as the single most important driver in shifting diversity targets together with a focus on diverse longlists and shortlists, gender neutral adverts, diverse interview panels and ‘diverse’ recruiters. The excuse that it is still too difficult is simply no longer acceptable.
SOCIAL MOBILITY: Many spoke about the importance of social mobility in the diversity debate. They voiced the need to raise the bar continuously when it comes to “looking beyond the obvious top tier university track records” for tomorrow’s leaders. Boards need to be challenged “not to play it safe.”
BLIND DATE: Many have explored and tried ‘neutral’ CVs with no reference to education nor gender resulting in a highly diverse candidate pool.
LANGUAGE: Finding the right language to discuss ethnic diversity is proving challenging; there were different views on the right way to address people from ethnic backgrounds.