| Thank you Wilf for that introduction
and the Smith Institute for organising our event today. The fact that we
have standing room only is a tribute to the real power of this agenda.
Looking at the coverage in the Financial Times
this morning it’s nice to see that page 3 now means women on boards rather
than something else!
I want to thank RBS, BT, KPMG and Asda for hosting
the board roundtables that have informed so much of our work.
I’m grateful to Professor Sue Vinnicombe and her
colleagues at Cranfield for the Female FTSE, which is proving to be a very
powerful tool indeed in raising the profile of this issue as well as
measuring its progress.
And I'm grateful to all the business leaders,
headhunters and leading professionals who contributed to Building Better
Boards.
Together, 18 months on from Higgs and Tyson, the
Female FTSE and Building Better Boards inform our vision to get the right
person in the right job, every time.
And they are timely. The DTI Five Year Programme
we launched last month highlights the challenges facing Britain as the
dynamics of the global economy change. Getting the right person in the
right job every time becomes all the more important as the competition
intensifies.
The Female FTSE shows we’re making progress. Women
now make up nearly 1 in 10 directorships - more than 12% up from last
year.
We’ve seen the biggest ever jump in the proportion
of new director appointments going to women - 24 of the 141 new
appointments this year. That’s more than one in six. So it is changing and
the pace of change is accelerating.
Yet women remain substantially under represented.
More than 3 out of 10 companies have no women directors at all.
I don’t think any of us can be satisfied that we
are really using the talent that I know, and you know, is out there.
I am pretty confident that if you did a survey of
the chairmen of companies with no women on the board they would say that
the number one or two issue facing their company was the war for talent.
Getting and keeping the best people for their company. That war is real
and yet we still have so many firms, for their most senior positions, only
recruiting from half the human talent pool – the half that plays on the
same golf course or belongs to the same club. We all know that is what
happens. Higgs spelt it out clearly.
But all of you here today have moved way beyond
that. You are committed to winning the war for talent wherever they are to
be found.
In the intensely competitive global economy, no
business can afford to look radically different from their workforce and
the customers it serves.
I remember Niall Fitzgerald telling me when this
first dawned on him. He had just become chief executive of Unilever and
held a bonding event for senior executives. Only two of the 200 or so
there were women. The two women took one look and said “no thanks” – the
bonding event was a week in the Latin American jungle! That’s when Niall
decided that a company operating in almost every country in the world, in
a market where there were millions of women making decisions every day
between brands, had to have a senior team more representative of the
customers it served.
I am also confident that the best boards want
directors with fresh perspectives.
An optician slots lens after lens in front of your
eyes to give you perfect sight. In the same way, quality decision-making
needs different perspectives.
And it needs culture change, driven from the
top-down.
Our document Building Better Boards shows how
companies are doing just that. I hope these stories will encourage more
companies to follow suit – and reap the business benefits. But it does
require leadership at the top.
Only chairmen can define their major challenges
and the extent to which their skills and experience match up.
Only they can create a corporate climate in which
everyone can speak their mind, or give new members the feel for the
business they need to make a contribution straight away.
Only they can regularly assess their performance
to inform future recruitment and develop the supply chain for tomorrow.
As ICI chairman Peter Elwood puts it, “It’s not
rocket science, it’s good practice.”
It means boards have to look much more widely than
traditionally boards have done, to find new recruits.
I was struck by the finding in the Female FTSE
that:
1 in 3 of the new female directors have public
sector experience.
1 in 5, voluntary or charity sector.
nearly 2 in 3, government commissions or arts organisations.
- women all embodying Higgs’ call that boards
extend their search beyond directors with top Plc experience.
One of the Female FTSE’s new faces is a former
member of the US’s Federal Energy Regulatory Commission. Now Vicky Bailey
is on the board of Scottish Power.
Another is a former civil servant who joined the
Press Complaints Commission and became a trustee of the Almeida Theatre.
Now Mary Francis is on the board of Centrica.
So I don’t think there’s any shortage of people
with talent. Yet barriers still remain.
The biggest? `Not being on anyone’s radar screen’.
In other words, not moving in the right circles, those networks where
people feel comfortable doing the recruitment.
Higgs and Tyson both highlighted the ‘marzipan
layer’ of high-performing managers - that crucial but largely untapped
layer just below board level.
A layer full of women and people from black and
minority ethnic communities.
Take Helen Mahy, Company Secretary at National
Grid Transco. Two years ago they agreed to her joining the board of Aga
Foodservice Group. Now she’s applying what she’s learned at Aga back to
NGT. As she puts it - ”it’s amazing how many issues in smaller companies
come up in larger companies too”.
So we are urging more boards to look at the
marzipan layer and enable them to take a non-executive role in another
firm to get the experience they need to benefit their own company.
I’m delighted to see so many others have taken the
lead in mentoring and networking initiatives too.
Centrica, with three women directors is joint top
with J Sainsbury, of the female FTSE 100 companies when it comes to having
the highest percentage of women on its board.
But it’s not content to stop there. It has 13
women just below Board level - its chief Executive Sir Roy Gardner is one
of more than 20 FTSE 100 Chairmen or CEOs now mentoring women like them to
get to board level. We are bringing some very experienced women through
into that mentoring programme. The next stage is to make a real success of
that programme.
We too have responsibility in the public sector.
Since 1988 we’ve seen the proportion of women
senior civil servants rise by more than half to nearly 3 in 10 and the
proportion from ethnic minorities double to 1 in 30 today.
But we know that we could be doing better still.
The public sector goes far wider than the civil
service. More than 900 public bodies are sponsored by Government
departments, some wielding huge budgets with considerable power.
Recruitment consultants play a pivotal role in
helping us find effective, quality people to run them – so it’s vital
these consultants help us meet the standards we are expecting of everyone
else.
The Cabinet Office managed call-off contract for
executive search services across Government is up for renewal next year. I
can announce today that, as part of the tendering process we will be
challenging headhunters on their diversity track records.
I have agreed two significant practical changes
with Cabinet Office.
First, as a minimum we will be looking for more
diverse fields of candidates from the headhunters at every stage of the
recruitment process and actively monitoring their performance.
Second, and I think most significant, we will be
encouraging the search companies to coordinate their approach to
supporting “near-miss” candidates who were qualified and very nearly
reached the benchmark, offering them detailed feedback and help through
mentoring and coaching.
But the main response has to come from business.
The quality and weight of the people we have here
today is a testament to the fact that this agenda is not a sideline, or an
add-on to corporate success. It’s a central part of the business itself
and corporate governance agenda.
I look forward to working with in the months and
years ahead as we look to making an even greater success.
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