Diversity calls Boards urged to mix it up
First it was the film industry, next it’s business, the Washington Post reports.
When the co-founder of a London communications group was invited to pitch for business with a Wall Street firm last November, the offer came with an unusual demand.
The document explained that 15 per cent of the scorecard for the pitch was based on the firm being able to show its commitment to diversity and inclusion, Iain Anderson of Cicero Group said.
‘‘It was the hardest measure I have so far seen,’' Anderson said.
‘‘We would never have seen something like that quantified in such a way, even five years ago.’'
Big companies, under pressure to increase diversity on their own boards and in senior positions, are attempting to spread this practice to those they spend money with, according to interviews with executives and independent directors.
They want more diversity from their financial advisers, bankers, lawyers, public relations consultants and auditors -- all of whom are also under pressure to become more inclusive.
Diageo, the world’s largest distiller, is one of those pushing for change.
‘‘When I go into a pitch for banking or accountancy services, I always ask about the diversity of the team,’’ Diageo’s chief finance officer Kathryn Mikells said. Diageo has four women on its 10-person board.
The efforts come at a time when conversations around workplace diversity and behaviour could hardly be more in focus.
While powerful men have stepped down from media, academia and politics since the Harvey Weinstein scandal, the financial community -- home to banks and law firms that rely on corporate advisory roles for large chunks of revenue -- has been largely unscathed.
That could still change. A report by the Financial Times last week exposed a men-only fundraiser in London at which hostesses were allegedly harassed, groped and insulted. Several companies said they would end their association with the event.
‘‘What’s going on in business is part of a general shift in the way we think and talk about gender and gender relations,’’ said Professor Laura Empson of London’s Cass Business School.
‘‘The rhetoric is shifting very fast, attitudes are slower to change, and behaviours even slower.’’
It was only in 2011 that the UK government started formalising efforts to increase diversity across the business community.
As a result, the share of female directors at the country’s FTSE 100 companies has risen from 17.3 per cent in 2013 to 27.7 percent now, according to the Hampton Alexander Review. The group is aiming to boost that share to a third by 2020.
Other initiatives are playing catch up. Last October, the Parker Review published its first report on ethnic diversity in UK boardrooms.
Of 1,050 director positions in total, directors of colour represented only eight per cent, compared to 14 per cent of the general population.
More than half of FTSE 100 companies had no ethnic minorities on the board, and just
Increasingly businesses are being asked by potential clients what their diversity figures are
six had someone in the position of chairman or chief executive.
The review’s objectives are less ambitious: every FTSE 100 board should have at least one director from an ethnic minority by 2021.
Over in the US, Bank of America chief executive Brian Moynihan said when he’s ready to give up the job, the odds are split on whether
his successor will be a woman. That’s a bold statement: putting a woman in charge of a Wall Street firm would be historic.
Adding to pressure in the UK is an upcoming deadline for companies with more than 250 employees to publish pay ratios by gender. Few financial firms have so far reported ahead of the April 4 cut-off.
A McKinsey & Co report this month seems to prove that inclusiveness is good for business.
Companies in the top 25 per cent for gender diversity on their executive teams were 21 per cent more likely to outperform on profitability than those with the least diverse workforces, the study
showed.
‘‘When reviewing our relationship with law firms, I ensure that we look at their diversity statistics on gender, ethnic origin, LGBT diversity, and social mobility,’' said Diageo’s general counsel, Siobhan Moriarty.
‘‘Clients can and will lead behaviour,’' said Katushka Giltsoff, at headhunter firm The Miles Partnership.
‘‘If clients are urging more diversity from their suppliers of financial services providers, those providers will jump.
‘‘But it’s pretty poor that the investment banking industry has not matured sufficiently before now.’’