Why we need more women at the top
Management guru says knocking Britain’s alpha culture on the head would give economy a £150billion boost
Ann Francke is none too impressed with Britain’s boardrooms. The American chief executive of the Chartered Management Institute is in a fiery mood, blaming a lack of skills and training, a lamentable performance on diversity and a failure of transparency for contributing to the catastrophic failures of Thomas Cook and Carillion and for Britain’s appalling record on productivity.
She says: ‘I think a common thread is running through all these failures. We need to create a culture where people feel it is OK and expected of them to escalate bad news quickly.
‘You need to create an environment where your workforce and your middle managers feel able to say, “This isn’t working.” ’
Francke learned her management lessons at the coalface. Early in her career she was a line manager at some of America’s biggest fast-moving consumer goods outfits.
‘I sold lots of things. I sold Pampers nappies, I sold Olay, Max Factor, launched Always in Europe. At Mars I was European vice-president for pet food, so dog and cat food Whiskas and Pedigree.’
She believes that women executives need to tackle sexism head-on.
When she was working at Procter & Gamble, her line manager once informed her that the daily management meeting started at 9am and that she should be there.
At the time she was in the middle of a divorce, a single mother and needed to get her daughter to school, so couldn’t get to the office until 9.30am.
‘At first I was red-faced and embarrassed because everyone was there. Eventually they got used to it and I was fine.’
Her Oil Of Olay skin care division was the most gender-balanced P&G outfit and the best performer, which prompted a visit from headquarters’ staff in Cincinnati who wanted to know how she had ‘enabled her team’.
In most of these roles Francke was the first and only female.
This has been an inspiration for her current job, enforcing management standards, and encouraged her to put down her thoughts in her new Penguin book: Create A Gender-balanced Workplace.
ElEGAnTlY dressed and with a penchant for gold jewellery, 60-yearold Francke believes that there has been a catastrophic disregard among Britain’s top 350 FTSE companies for diversity, with just 8pc of firms complying with governance codes.
‘There is a bunch of people sat around the table, often looking very much like each other.
‘let’s face it, white, middle-aged and male of similar backgrounds, reinforcing each other’s decisions and that’s what creates a lot of these catastrophes,’ she says.
She is in no doubt that gender diversity is the first thing to get right, if only because women are 51pc of the population and not a minority.
‘If you make the workforce a good place for women, you make it a good place for everyone,’ she says.
Francke reels off a series of statistics showing how women are discriminated in the workforce. Men still earn 26pc more than female counterparts, and they’re 40pc more likely to get promoted.
‘Male CEOs still enjoy bonuses about eight times higher than females,’ she adds.
What does she think about the fact that at present there are just six FTSE100 bosses who are women?
‘It’s an absolutely appalling statistic. The number of executive directors in the Footsie has flatlined at about 10pc in the last four years.’
What is particularly exasperating, Francke argues, is that data produced by management consultants McKinsey shows that if you have diversity you’ll outperform competitors by about 21pc. And that could boost national output by £150bn a year.
Among the UK giants, the only company which appears to have recognised this (even though it still has a male chief executive) is Johnnie Walker and Guinness champion Diageo.
‘They have dealt with this in a concerted effort at every level, and are doing a wonderful job in a traditionally male business.’
When I point out that Ivan Menezes, the current boss, is a chap, Francke retorts: ‘They have got over 40pc women on their executive committee and board… and have very little pay gap.’
She argues that the failure of women to progress is down to the lack of presence in the ‘executive pipeline’.
It is the executives that run the place and determine the culture. ‘The alpha culture needs to be knocked on the head.
‘If it had been “lehman Sisters” the financial crisis wouldn’t have happened,’ she adds, referencing the collapse of lehman Brothers bank in 2008.
Francke’s other crusade is on lagging UK productivity.
The data from Andy Haldane, the Bank of England’s chief economist, and the Paris-based Organisation for Economic Cooperation and Development (OECD), shows that half the gap between Britain and other industrial countries is down to poor leadership.
‘If the UK could improve its leadership and management practices, we would also be able to improve our productivity.
‘What happens in four out of five cases is that people are promoted because they are excellent functionally at their jobs. They’re great accountants or sales people.
‘Somebody says, “Congratulations, you are now in charge,” but they don’t train them as managers. You would never go to an untrained dentist or doctor.’
She points out that the data shows that if you are well trained, productivity surges by 32pc.
Her particular bugbear is the way so many of the top jobs in British companies go to financial professionals. Francke points out that 58 of 100 chief executives were previously finance directors, and most chairmen come from similar backgrounds.
‘There’s a strong focus on the numbers, and that drives shorttermism and risk aversion.’
She contrasts this approach with the US, where the chief executive almost always comes from the heads of operating divisions and quite often is the person running marketing.
FrAnCKE points to Mary Barra, who guided General Motors back from Chapter 11 bankruptcy after the great recession, as a role model. She had an engineering background and came up through the ranks having held different roles across the enterprise.
‘Operational nous and marketing, that’s more of a pathway to the top.’
In Francke’s view, the londoncentric approach to business is also to blame for productivity failure. In the US there is a ‘dispersion of economic power from California to new York and Chicago, and there are businesses spread among the top 20 cities. In Germany there is a federalist dispersion’.
As a business leader who started out working in russia after graduating before landing a job for an American company in Germany, Francke speaks from experience.
But breaking the london-based financial stranglehold is easier talked about than executed.