Why we should all promote and celebrate diversity
Stephen Haddrill, Chief Executive, Financial Reporting Council
International Women’s Day has greater significance this year given that it is 100 years since women won the right to vote, although it took a further 10 years for all women to get the full franchise. A century on from that historic achievement the issue of female representation is still not fully resolved. In business today, we still too often see mainly male dominated upper echelons. This is despite pushes from government, policymakers and the FRC’s Corporate Governance Code to encourage greater diversity at senior level.
This needs to change. The Hampton Alexander Review, the successor to the original Women on Boards report by Lord Davies, helped make important gains. The 30% Club is vocal about propelling more women into senior roles. The current FRC review of the Corporate Governance Code has a stronger focus on diversity in business. There is momentum but it needs to keep rolling.
The social arguments for greater diversity within organisations are obvious. The economic arguments are powerful.
Women make up half of the world’s population according to 2015 data from the World Bank, but gender equality across the globe is far from being reflective of this. The Centre for Economics and Business Research said that the most diverse workplaces, in terms of gender, ethnicity and sexual orientation, are 12% more likely to outperform industry averages than the least diverse businesses.
Bridging the gender representation gap in business would have significant impacts on GDP; McKinsey has estimated it could add £150 billion to the UK economy by 2025.
The employment of women in senior roles on a more equal basis would allow companies to make use of a wider pool of talent. There is evidence of a positive impact from women’s presence on boards and in senior management on companies’ performance. Companies employing women and a more diverse work force are in a better position to serve consumer markets where these groups make the purchasing decisions. More gender-diverse boards could enhance corporate governance by offering a broader range of perspectives and experiences.
A 2017 UK report from the Women’s Business Council measured the relationship between gender diversity on the Senior Executive team and higher organisational performance. The report found that for every 10% increase in gender diversity, Equity Before Interest and Taxes rose by 3.5%.
We should celebrate organisations that embrace diversity in all its forms and which reap the benefits from it. I’m proud that at the FRC over 60% of our staff are female and more than half of our executive committee are women. We are signatories to the Women in Finance Charter and have formed a Diversity & Inclusion Committee to develop and implement best practice across the organisation. But we are not standing still. We act in the public interest and so our workforce must reflect this. We have also started to recruit from a wider spectrum of experience for our Board and Committees.
We will publish the new UK Corporate Governance Code this summer. Looking through the more than 250 responses we received to the consultation I am heartened that many individuals and organisations feel similarly about ensuring greater diversity in the workplace and leadership.