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The Story

February 2011

“Caution - Women on Board. Diversity of Thinking?” 

Vince Cable, the Business Secretary, commissioned a review to investigate why there are so few women on boards of UK companies. He wanted to pre-empt the potential introduction of targets by the EU to include a certain proportion of female members on boards. Lord Davies of Abersoch, former head of Standard Chartered Bank, delivered his report at the end of February. His committee’s work, findings, and recommendations generated considerable media interest and re-ignited the long-running debate on why women are failing to smash ‘glass ceilings’ in theUK.

Key points of the Story 

The report states that only 12.5% of the directors of FTSE-100 companies are women and only five of these companies are headed up by females. Only 7.8% of board places are filled by women in the FTSE-250. The report recommends that over the next four years these companies should overhaul their board composition to have 25% women board directors. If this does not happen, there is a threat of formal quotas being applied. In countries such as France and Australia, where quotas are either threatened or confirmed for the future, there has been a surge of appointments of women to boards (albeit often in non-executive director capacity).

It claims that large companies have failed to tap into the pool of able women who currently work outside the largest stock market-listed organisations, but are likely to be considered good enough for the FTSE-100.

The blind search for a solution

Lord Davies is said to be ‘impatient’ with head-hunters and their ‘reluctance to take a lead’ in this matter. They have been taken to task for not making their shortlists for senior appointments sufficiently diverse, and are being asked to sign up to a voluntary code of conduct governing the gender diversity of the candidates they put forward.

Another suggestion is that head-hunters should offer training to able women candidates who come from non-corporate roles, such as charities and the public sector. However head-hunters argue that the ultimate responsibility for board appointments lies with companies’ nomination committees.

And a recent report on this problem by the CBI, “Room at the top”, points to the need for diversity in boards but makes no direct link between women and diversity. Also, whilst it asks the question “Why aren’t existing initiatives making sufficient progress?”  the report doesn’t provide satisfactory answers.

 

Analysis and Lessons

Analytical Thinking … Root-Cause Analysis … Balance of Thinking Styles …
Leadership Development … Diversity of what? … Reasoning v People Thinking

Two major issues to be addressed

 

First is that, after all these years of discussion, it is clear that we are no nearer to understanding the root causes of the problem. And without knowing these there is little chance of finding lasting solutions.

Secondly, we wonder if the highly emotive issue of top team diversity is focusing on the right aims. We ask what sort of diversity is most needed and who can provide it to maintain a ‘balanced board’?

Root causes of the problem

Various reasons have been offered over years of ‘study’ for the lack of women’s presence at senior level, including the usual ‘domestic responsibilities’ angle, along with perceived feminine personal traits such as modesty and caution. The ‘old boys’ network’ has also been cited.

But the suggestion that head-hunters should ‘train’ women for board vacancies indicates to us that ideas for solutions are being mooted without serious analysis of the underlying causes or even the practicality of the ideas. People can’t just be trained to be leaders. Leadership expertise develops from on-job experience and facing relevant real-life management challenges over a period of time. Also, it is not within the role or skills remit of head-hunters to ‘train’ their candidates.

So what is the answer?

The CBI report “Room at the top” poses some useful observations such as “Female representation starts to fall away at senior management as greater sacrifices are required for progression.” But there is no real analysis provided or concrete ideas put forward for solutions that deal with the root causes.

The answer, we feel, is to perform a detailed cause & effect analysis of the problem. We are convinced that there are many major causes that have not been properly identified, or addressed, or analysed. For example, we should be asking how each gender feels about working with the other. There can be no question that emotions and preconceptions have a major significance in teamwork at any level. It is no accident that many boards of UK companies have no females at all.

Without getting to the root causes of the problem there is very little hope of finding practical solutions. And we’re convinced that the numerous studies performed so far, over many years, have failed to carry out a proper cause analysis. Only a government body, with the CBI, can do this, assisted by research (for example) on women who feel they are being ‘overlooked’ for promotion to the board.

 Women’s development

 

A Causal Analysis must include a review of how women develop the skills and behaviours required for board-level jobs. One key aspect of development that we have observed is some women’s reluctance to take risks when giving controversial opinions in meetings. At Harvard Business School, for example, we observed in a large Case Study class that most of the opinions and questions came from the males in the audience.

 Right sentiment – wrong issue

The focus on getting increased numbers of women onto boards may satisfy those seeking diversity for the sake of equal opportunities, but we believe that this is the wrong diversity issue.

The business objective of diversity in any decision-making team is to obtain a balanced perspective. Having more women on boards doesn’t guarantee this.  The most important measure of balance is in how team members THINK. People have preferred ways of thinking. We believe that the diversity that should be sought is in having a good balance of personal preferred ways of thinking (Thinking Styles) across the four quartiles of Whole Brain Thinking. By taking this approach you will naturally get boards containing a good representation of women.

 Maximise the Value of ‘Thinking Diversity’
to achieve a
'Balanced Board'

Boards will be most successful across a range of business thinking processes (such as strategising, problem solving, and decision making) if they deliberately seek dissenting voices that present alternative viewpoints. That is, they avoid the dangerous situation where everyone thinks in the same way (‘Group-Think’), which our research shows is one of the key causes of business failures/underperformance.

Many people believe that men think in a different way to women. On average, men tend to prefer ‘Reasoning Thinking’ in their decision making, whereas women tend to prefer ‘People Thinking’. At the 7/7 London bombing inquest, the coroner Lady Justice Hallett was praised for her humanity, empathy, and 'off the scale' Emotional Quotient - comments rarely made about men.

We believe that complementary (balanced) thinking style preferences are a sounder rationale for striving for a male-female balance (or at least a female presence) on boards, than insisting upon arbitrary quotas.

What can Happen when People-Thinking is Missing

A powerful illustration of the dangers of the lack of adequate People Thinking is BP’s ex-chief executive Tony Hayward. (See our Clear Thinking Case Story May-June 2010). He could not sufficiently engage People Thinking to respond effectively to US concerns – a missing element that ultimately cost him his job and severely dented BP’s image in America.

The recent SAS ‘visit’ to Libya debacle is another example. This was due to a failure by the planning team to appreciate how people might react/respond, which requires good People Thinking skills. In fact this is one of the key causes of strategy and planning errors – appreciating how people react.

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