Inclusion

Still work to do

In many countries, the diversity and gender debate have become synonymous – and there are good reasons. According to Credit Suisse’s Gender 3000: Women in Senior Management report companies with more women on their boards generate more than 26 percent increased return on equity, while an MSCI survey (which looked at more than 6,500 global boards) found that male-heavy boards carry a higher risk for investors and are more likely to be hit by scandals.

However, genuine inclusion has a broader impact than any one aspect of the current diversity debate. If led by the board and the CEO, inclusion should deliver greater customer orientation, diminished groupthink, increased colleague satisfaction, genuine brand value and improved decision making. Statistics readily demonstrate improved diversity and companies quite rightly trumpet their successes.

If led by the board and the CEO, inclusion should deliver greater customer orientation, diminished groupthink, increased colleague satisfaction, genuine brand value and improved decision making.

But creating a culture of inclusion – where even the least dominant individual feels they have a voice and management at all levels own the issue – is a more subtle achievement, one that requires a sustained environment of openness, support and bravery.

Boards are facing the ‘trust gap’ as colleagues are reluctant to self-identify around some of the more invisible aspects of the ‘I&D’ discussion – such as mental health. This is a critical discussion for boards to address and yet it is often put in the ‘too difficult’ box. Nevertheless, organisations such as Barclays Bank Plc in the UK are enabling individuals to start the discussion.

Their ‘This is Me’ storytelling campaign shows people talking openly and freely about disability and mental health. These issues don’t define the people or prevent them from doing a great job with the right support – they are just an intrinsic element of them, for part or all of their lives.

It takes global organisations like this to be torch bearers for inclusion, derived directly from core business objectives.

GlaxoSmithKline, for example, is committed to providing an inclusive and diverse workplace at all levels in the organisation across the world. To ensure best practice they are currently reviewing their approach to talent acquisition – which includes assessing the ability of its executive search partners to deliver truly diverse talent.

As boards look to the future of their organisations – from millennial graduate applicants to board directors – inclusive cultures which bond customer, colleague and societal aspirations together will be at the heart of future success.

UK

The recent findings of the Parker Review into the Ethnic Diversity of UK boards revealed that out of 1,087 director positions in the FTSE 100, only eight per cent of positions are held by directors of colour, of which 1.5 percent are UK citizens, despite the fact that 14 percent of the total UK population is from a non-white ethnic group (up from 2 percent in 1971). Seven companies account for more than one-third of directors of colour in the FTSE 100, whilst 53 of the FTSE 100 do not have any directors of colour at all.

Furthermore, five years on from the Davies Report on women’s representation on UK boards, it was found that numbers had more than doubled. The Report stated: “There are more women on FTSE 350 boards than ever before, with the representation of women more than doubling since 2011 – now at 26.1 percent on FTSE 100 boards and 19.6 per cent on FTSE 250 boards. We have also seen a dramatic reduction in the number of all-male boards. There were 152 in 2011. Today there are no all-male boards in the FTSE 100 and only 15 in the FTSE 250.”

There are more women on FTSE 350 boards than ever before

Melanie Richards, Vice Chairman of KPMG in the UK, and one of the authors of the Report’s 2015 update, said: “There can be no doubt that Britain’s boards have undergone a significant shift over the last five years and the FTSE 100 is to be congratulated for boosting the number of women in its boardrooms to more than 25 percent, with the FTSE 250 having made great progress too. This achievement is just the first step in an important journey and there remains substantial work to be done. We must continue our focus on gender and look at the true diversity of those leading our businesses. In order to remain relevant to our clients and communities, we need leaders who come from a wide range of backgrounds, each bringing different skills and views to the table, creating boardrooms that truly mirror our society. Without these different outlooks and diversity of skills and experiences, our businesses will simply not thrive in this fast paced changing competitive world. Inclusion is a pivotally important item on our agenda at KPMG and gender is a critical focus of our strategy. We are delighted to be supporters of the Davies Review and will continue to champion their work to redress the gender balance in Britain’s boardrooms.”

But what of wider inclusion? Antonio Simões CEO at HSBC should be applauded for increasing the visibility of LGBT issues at HSBC. He works with its Pride networks and chairs the UK Diversity & Inclusion (D&I) Committee. Lord John Browne dubbed him “a poster child for diversity” in his book The Glass Closet. Claudia Brind-Woody Vice-President and Managing Director, global intellectual property licensing at IBM is one of the most senior out executives at the company and co-chairs its Global LGBT Executive Taskforce, taking the lead in revolutionising training on LGBT visibility and rights. She serves on LGBT boards and is an active speaker at LGBT events worldwide.

There is plenty of other evidence to suggest shifts in attitude in the UK. Out Now Consulting’s LGBT2030 survey points to the fact that within the UK economy, $1bn per annum could be saved in attrition costs by creating/ driving a more inclusive approach for LGBT colleagues. While McKinsey’s Diversity Matters report states that ethnically diverse boards are 35 percent more likely to outperform their peers.

Canada

Canadian Prime Minister Justin Trudeau has promoted gender parity in his cabinet and the corporate inclusion debate is building through initiatives like the Ontario Securities Commission “comply or explain” policy.

Meanwhile, last November Ryerson University in Toronto announced a $500,000 gift from TD to expand the reach and programming of its DiverseCity onboard, an internationally recognised programme of governance training and board-matching to strengthen diversity on the boards of Canadian not-for-profit and public sector organisations.

Ryerson’s board-matching programme aims to expand its reach to include all women and the LGBTQ+ communities. The programme has formed new relationships with the Aboriginal/ Indigenous community to increase their inclusion on governance boards, a representation that decreased from 1.3 percent in 2015 to 0.6 percent in 2016, according to the Canadian Board Diversity Council (CBDC). The CBDC reports that overall, visible minority representation on boards declined from 7.3 percent in 2015 to 4.5 percent in 2016. The programme will expand to persons with disabilities in 2017.

USA

Shortly after the US election result, Bloomberg.com observed: “Chief executive officers at some of the largest U.S. companies, from General Electric Co. to Apple Inc., are reassuring employees they support workplace diversity as a salve to anxieties caused by the bruising presidential election.

“Jeffrey Immelt affirmed GE’s commitment to ‘people of all races, genders and sexual orientations’ in an internal blog post on Wednesday musing on the election. That echoed Apple CEO Tim Cook’s message to workers that the tech giant welcomes everyone, ‘regardless of what they look like, where they come from, how they worship or who they love’. Oscar Munoz of United Continental Holdings Inc. said in a message to employees that they represent ‘every creed and conviction, background and belief’.”

But what of other crucial factors such as age? Silicon Valley has a reputation for ageism, with companies covering younger employees. However, elsewhere in the US, a growing number of organisations – the National Institutes of Health, Stanley Consultants, and Michelin North America, among many others – are embracing a seasoned workforce and have programmes designed to attract and keep workers past 50.

Companies with internship programmes for older workers now include PwC, Regeneron, Harvard Business School,    MetLife and McKinsey. Many companies are also courting highly qualified workers who dropped out of the workforce to raise families; Goldman Sachs, Morgan Stanley, Deloitte and Accenture all have programmes aimed at attracting re-entry mid-career workers.

South Africa

The Diversity and Inclusion (D&I) agenda in South Africa has largely focused on what is referred to as ‘Transformation’. This has been enshrined into law through the “Broad-Based Black Economic Empowerment” (BBBEE) legislation.

BBBEE was introduced to South Africa in an attempt to correct racial injustices that were fermented during and after the apartheid years. However, now that there is a fast growing and thriving black middle class, the D&I agenda has broadened and is much more cognisant of the other strands of diversity. South Africa does embrace gender diversity and women are well represented in the boardroom. With a young population, there is often a mandatory retirement age of 60 years which seems may fit healthy ‘baby boomers’ reluctantly leaving the work force. Given the improvement of healthcare and life expectancy, older workers have increased capacity and indeed economic need to remain in the work force as long as possible.

The LGBT group in South Africa is increasingly at the forefront of the D&I agenda and is perhaps the most controversial area and certainly where the least progress has been made. Often, traditional African cultures (across all race groups) are reluctant to embrace this with many young LGBT individuals being socially ostracised.

Australia and Singapore

The public discourse in both public and private sector organisations is still heavily weighted to gender and there is still a great deal of work to be done. Gender inequity in pay and employment remain a feature of Australian society and can impair labour productivity. Lower female labour force participation rates continue to be a major issue, resulting in less than optimum use of women’s skills.

Leading with inclusion rather than diversity is a subtle but powerful shift in how boards are beginning to think in the region. In Singapore, this is still very much ‘work in progress’, with a slow climb. At the end of June 2016, women held 9.7 percent of directorships on listed companies in Singapore, up from 9.5 percent in 2015, 8.8 percent in 2014, 8.3 percent in 2013 and 8 percent by the end of 2012.