The UK Financial Reporting Council (FRC) updated its Corporate Governance Code last week and made a clear link between good governance and Board diversity. In the context of composition, succession and evaluation, the Code makes explicit and repeated reference to diversity:
- “Both appointments and succession plans should be based on merit and objective criteria and, within this context, should promote diversity of gender, social and ethnic backgrounds, cognitive and personal strengths.”
- “Annual evaluation of the Board should consider its composition, diversity and how effectively members work together to achieve objectives.”
- “The Board should establish a nomination committee to lead the process for appointments, ensure plans are in place for orderly succession to both the Board and senior management positions, and oversee the development of a diverse pipeline for succession.”
The new Code also clearly reinforces its commitment to gender diversity in the Boardroom by referring to the Chair rather than the Chairman.
Moreover, the insistence of the FRC on the importance of diversity and its link with Board effectiveness is also being built into Corporate Governance codes globally.
Although Fidelio now finds that the principle and benefits of diversity are broadly accepted, and indeed underpinned by an increasing body of research, such as, McKinsey’s ‘Delivering through diversity’, progress towards diverse Boards is slower than many had originally hoped for.
Latest statistics from the Hampton Alexander Review and the Cranfield FTSE Report highlight the work that needs to be done:
- There remain very few female Chairs. The Hampton Alexander Review cites only 20 female Chairs across the FTSE 350 with 6 female Chairs across the FTSE 100.
- The Cranfield Report shows that while the percentage of female Non-Executives in the FTSE 100 is at an all-time high of 35.4%, the percentage of women on FTSE 100 Boards is still under 30%, as of June 2018.
- At Executive level, the situation is stark. The number of female Executive positions have flat-lined for a fourth consecutive year at 9.7% across the FTSE 100. For the FTSE 250, the number of female Executive directorships dropped from 38 to 30 between October 2017 to June 2018.
Indeed, in frustration the BEIS website posted latest research by the team behind the Hampton-Alexander Review revealing the “shocking explanations” from a selection of FTSE 350 Chairs and CEOs about lack of progress towards Boardroom gender balance. Fidelio also set out our own responses to these “shocking excuses”.
Fidelio agrees with the FRC that there are a number of measures that Chairs can use to close this gender gap in the Boardroom including:
(i) a well-structured Search process;
(ii) independent and practical Evaluations and recommendations and;
(iii) an empowered Nomination Committee.
But for many companies these measures have not yet made the desired impact.
Fidelio supports Chairs with all the above measures and recognises their value. But critically, in addition, to the above Fidelio is making an important contribution through our “A Seat at the Table” Programme to:
- Effective Board learning
- Increasing the Board and Executive committee diversity
- Strengthening the pipeline of female CEOs and Chairs
In this Overture we set out the philosophy, history and track record behind “A Seat at the Table”, as well as our ongoing commitment to contributing to highly effective and diverse Boards.
Closing the Gap – The Programme and its History
The Davies Review in 2011 identified that there were too few women on corporate boards in the UK. In 2010, only 12.5% of FTSE 100 Board roles were held by women. The Review, therefore, threw down the gauntlet to companies and their advisers to do all in their power to close this gap.
Originally established in response to this clarion call to ensure that more women succeed to the top table, Fidelio’s bespoke “A Seat at the Table” Programme continues to fulfil its original purpose and retains a strong public company focus. Above and beyond this, the Programme also enables talented women to be firmly in the driving seat of their own Boardroom careers extending to quoted, privately held, non-profit and government Boards.
We were delighted to be accredited by the Hampton-Alexander Review for our contribution to increasing gender diversity on Boards and leadership teams in the category ‘Beyond FTSE 350’. This reflects not only our international track record in Search, but also the impact of the “A Seat at the Table” Programme, which supports senior female Executives and Directors in their Board appointments and at the Boardroom table.
A Research Based Approach to Increasing Board Effectiveness and Diversity – The Five Attributes of Leadership
In order to ensure that the “A Seat at the Table” Programme empowers women to succeed, Fidelio undertook extensive research into the attributes of effective Board Directors. We interviewed a number of our clients and leading corporates across a range of sectors and geographies, including in the DAX 30 and FTSE 10, as well as fast-growing tech companies.
We conducted our research with Chairmen, Non-Executive Directors and Group HR Directors and explored what enables senior Executives to succeed to the top table, and what are the obstacles that prevent female executives from reaching the top table in the same percentage as men. Based on this research, we identified the following five attributes of successful Board Directors:
- Understanding the complexity of shareholder and stakeholder expectations for the leadership team
Effective Board Directors are good at interpreting what key stakeholders want, skilled at aligning expectations, constantly horizon-scanning and sensitive to mood changes.
- A firm grasp of governance, including formal and informal power structures
It’s important to understand the formal aspects of governance, but successful Directors can also read how power flows around the boardroom table.
- Presence and authority; personal impact; the ability to influence
Personal impact and the ability to influence are considered soft skills, but the importance of conveying confidence and commanding respect should not be underestimated. Mastering the art of being heard and, when necessary, interrupting without giving offence, are also critical.
- Reinforcing networks; networks of support and networks of reciprocity
Networks of support and networks of reciprocity are essential, and success at Board level requires strong networks within the organisation and externally. Some leading companies noted that senior women were excellent networkers but often had a different approach to networking from male colleagues and were frequently reluctant to make the business ask. A successful Director will typically be effective at “networking” with purpose.
- Resilience under extreme pressure
As scrutiny of Boards increases, so does the likelihood of negative publicity. Clearly a major issue for executive directors, non-executives can also find themselves in the public glare or hauled before a Select Committee. Those who have experience of pressure and have developed resilience in the public eye are better placed for high-profile board roles.
Male or female? Clearly these attributes apply to male and female directors, but as with networking, women may have a different approach. There are no rights and wrongs and diversity would suggest we don’t want Board Members with remarkably similar backgrounds and personalities. But those keen to develop a successful Board career – whether male or female – would do well to consider the conclusions of this research.
Drawing on Practical Expertise and Global Insight – A Well-Rounded View
One of the strengths of the “A Seat at the Table” Programme is the quality and calibre of the contributors. Each Programme is highly topical and reflects the personal goals and ambitions of the participants.
At Fidelio, we understand that there is no one route to the Boardroom and every Board career is bespoke. We encourage participants to think where they add value and where their values lie. There is no one size that fits all.
Therefore we welcome different contributors to every Programme, who provide practical support and insight into making effective Board and career decisions. For September these contributors include:
- Margaret Casely-Hayford CBE, Chair, Shakespeare’s Globe; Chancellor, Coventry University; Member Nominated Director, Co-op will join Fidelio again in September. Margaret will explore how to build a Board portfolio with purpose, reflecting one’s own personal values.
- Steve Holliday, Chairman of Supervisory Board, Senvion SA; Senior Independent Director, ConvaTec; former CEO, National Grid will share his insights on what the Chairman is looking for in building a Board.
- Professor Bob Garratt, Visiting Professor, Cass Business School; Chairman Centre for Corporate Governance in Africa, University of Stellenbosch Business School will challenge our grasp of both formal and informal governance at the Boardroom table.
- Chris Heimann, Head of Improvisation, Royal Academy of Dramatic Art (RADA) will hold a mirror to participants’ presence and authority around the Boardroom table.
- Ann Francke, CEO, Chartered Management Institute will bring her keen insight to the value of professional management and the imperative for effective – and diverse – Boards.
- Cas Sydorowitz, CEO, Georgeson Corporate Advisory will again challenge participants to prepare for an activist investor.
- Susan Sternglass Noble, Senior Advisor, The Investor Forum; Non-Executive Director, Unity Trust Bank will frame out thinking on what shareholders want from a public company Board and individual Directors.
- Anne de Kerckhove, CEO, Freespee; CEO, Iron Capital; Non-Executive Director, 7Digital brings the perspective of fast-growing technology to the September Programme. Anne brings agility, innovation and track record of fast growth and scaling to our Board discussion.
Ongoing Board Learning and Powerful Network
In our daily work building Boards fit for the future, Fidelio increasingly sees the importance and power of networks.
Fidelio is committed to our global “A Seat at the Table” Alumni network and Alumni participate in ongoing dedicated Board learning in the form of seminars and breakfasts and the opportunity to connect with highly experienced and globally recognised Chairs and Board Directors. Upcoming dedicated Board learning breakfasts for “A Seat at the Table” alumni include:
- “Building a Board Portfolio with Purpose” with Lord Gus O’Donnell, Chairman of Frontier Economics, Chair of Trustees at Pro Bono Economics and former Head of the Civil Service – Tuesday 11th September 2018
- “Audit Committee & Board Diversity” with Jan Babiak, Chair of the Audit Committee at Walgreens Boots Alliance, Bank of Montreal and Board Member at Euromoney Institutional Investors – Thursday 11th October 2018
Benefits for Boards; Benefits for Alumni
Now in its sixth iteration, the Programme is recognised for its contribution to Board learning and to increasing diversity to corporate and non-profit Boardrooms in the UK and internationally.
Effectiveness at the Board/Executive Committee table is the focal point of the “A Seat at the Table”. Following the Programme, participants acquire practical tools to help them succeed:
- A framework for understanding leadership structures and styles;
- A mirror for personal presence including within a group dynamic;
- A road map of critical networks and milestones for professional and personal objectives.
Chairmen recommend the Programme for its contribution to continuous Board learning and its palpable track record.
33% of participants moving to more senior Executive positions within their organisations and/or Non-Executive roles within 12 months, and this figure almost doubles within 24 months.
The next “A Seat at the Table” Programme will be held 4th-5th September 2018 at Leeds Castle, Kent, UK. We are also preparing from our 2019 Programme which will be held on 27th-28th March 2019.
To find out more about the Programme, please contact Olivia on ojenkins@fideliopartners.com.