Working towards diverse and highly effective leadership teams, at Board and executive level, is what we do at Fidelio. Our tools are Search and Development. While diversity is hardwired into the way we operate and the service we provide clients, in the last month we have also engaged in a very public debate. This includes hosting a Board breakfast with Dame Alison Carnwath, who is currently the only female FTSE 100 Chairman, and attending an industry breakfast with the Secretary of State for Business, Innovation and Skills in the UK. We are delighted that diversity is firmly on the public agenda; we are concerned that the quest for easy answers may lead to lazy solutions.
Why diversity matters
In the past week David Cameron, the UK Prime Minister, led a much publicised Cabinet shuffle which increased the number of female ministers and in the words of the UK press reduced the “male, pale and stale” quotient. Along with many pundits, we worry that a focus on the headline can distract from the difficult and tenacious work that still needs to be done to achieve meaningful diversity at leadership level.
A second, much less heralded but certainly momentous, breakthrough was achieved in the same week. The General Synod of the Church of England finally approved the consecration of women bishops after the shock narrow defeat by lay members in the 2012 Synod.
I think it’s going to change our society as well because it’s one more step in accepting that women are really and truly in spiritual authority, as well as in leadership in society.
– The Dean of Salisbury, the Very Reverend June Osborne, BBC interview, 14th July 2014
A large body of published research, and a deep fund of common sense, makes the case for diversity of the leadership team. Clearly an organisation is empowered by drawing upon the perspectives, insights and experiences of effective and capable leaders from very different backgrounds.
Therefore on a daily basis Fidelio works hard to deliver Search solutions that provide our clients with long and short lists of diverse and highly capable candidates. We also ensure that our Development programmes at Board and Executive level challenge stereotypical and narrow thinking.
Fidelio and the public debate
Above and beyond our daily business, Fidelio has also been pleased to participate in an increasingly public debate. How best to move towards greater diversity and thereby increase corporate effectiveness and competitiveness?
- In late June Fidelio hosted a Board breakfast at which Dame Alison Carnwath explored the role of the Chairman in promoting diversity at Board level and throughout the organisation. The importance of developing the pipeline was recognised by all. Specific industry challenges were flagged by Chairmen and CEOs from the technology and real estate sectors, but as the investment committee Chairman for a leading investor argued enhancing diversity is inextricably linked with creating a sustainable and robust business model.
- In early July I was delighted to deliver a key note address at the EFFAS Summer school in Madrid for the European asset management industry. Building on a McKinsey prognostication of the asset management industry moving centre stage in the next five years, I explored with a multinational audience the skill sets they would need to remain relevant and competitive. The question of diversity absolutely raised its head. But this time it was age diversity. A huge fear was articulated that the financial services industry is not good at embracing more experienced and mature investment skills.
- Continuing the theme of education, I was also pleased to support RADA in Business as part of one of the world’s finest drama schools, which is developing a programme for female leaders looking to move to the Board table. Drawing upon my experience as the most senior woman globally of one of Europe’s greatest industrial companies in an archetypally male sector, I was able to shed light on the opportunities and hidden pitfalls of being a solitary woman at the top.
- And last but absolutely not least, Vince Cable addressed the Search industry on moving to the next level where Board diversity is concerned. On the back of the 2011 Davies Report much progress has been made towards greater diversity at Board level in the UK. This has been achieved through combined efforts of stakeholders including the Government, Chairmen, HR Directors, Investors and Search firms. It will certainly be testament to the UK approach to governance if meaningful diversity can be achieved within UK plc at executive and non-executive level without resorting to the quota, as we are seeing in Germany for example.
So momentum in favour of diversity is gathering and the political and business establishment is embracing change. A word of warning, however.
The caveat
By definition diversity is not easy. Nor should it be easy. Much work has been done on unconscious bias. There is an inherent tendency at all levels to recruit in one’s own image. Correcting this tendency is something we all periodically need help with. Smart organisations are very alert to the challenge.
A major step towards greater diversity is building a pipeline. This is imperative and good work is being done including at a very young age, for example looking at why science and technology still fails to attract enough female students. Greater gender diversity will certainly be advanced by a strong pipeline of highly qualified female engineers.
But building a pipeline it is not a quick fix. Moreover, it cannot fully address one of the major obstacles in achieving meaningful and effective diversity.
Fidelio has publicly stated before that “there are absolutely enough good women” to create substantially greater diversity at Board level be it in Germany or the UK. However, if companies and Search firms continue to seek that talent in the same place that they have looked for the past decade, they may well be disappointed.
An effective board should not necessarily be a comfortable place. Challenge, as well as teamwork, is an essential feature. Diversity in board composition is an important driver of a board’s effectiveness, creating a breadth of perspective among directors, and breaking down a tendency towards ‘group think’.
– Guidance on Board Effectiveness, March 2011, Financial Reporting Council
The benefit of diversity at Board and senior executive level is bringing in highly competent but different perspectives. The companies that address this issue best will not be reliant upon a streamlined and comfortable hiring system. They will be characterised by Chairmen and senior executives who are consciously challenging their own pre-conceived notions and actively looking for exceptional talent that is not delivered through a narrow range of channels.
In conclusion, Fidelio is delighted to deliver innovative solutions to our clients as they strive towards greater diversity. And we are very pleased that there is now a mainstream recognition of the benefits of diversity. But we caution against accepting simple solutions. The winners here will clearly be companies who are able to source talented executives and non-executives from very different sources.
The road to diversity is by definition varied, innovative and sometimes uncomfortable. Falling back on a narrow and streamlined range of solutions and providers may achieve short term targets or quotas. It will not deliver the prize that diversity offers – robust and highly effective leadership capable of delivering meaningful competitive advantage.
Fidelio High Notes – July 2014
- The “licence to operate” is a major theme in our Executive Search practice; focus on new senior roles in Communications, Public Affairs, Governance and Compliance
- Fidelio supports clients internationally with Board and Executive Committee Development programmes
- Fidelio delivered keynote speech at the EFFAS Conference, Madrid, on “The Necessary Skills and Profiles for Investment Professionals in Financial Markets”
- Fidelio moderated the CFO Panel with CFOs from Sainsbury’s and Santander UK for the 2014 UK IR Society Conference
- Fidelio delighted to engage in diversity debate and make solid contribution through Search and Development at leadership level and in building the pipeline
Please contact us with comments or for more information at info@fideliopartners.com