Blog : BOARD TALK
|Posted on September 27, 2016 at 6:00 PM|
There are currently 59 directors with an academic background serving on Fortune 100 boards in the United States.Guess how many non-executive directors with an academic background there are on the boards of FTSE 100 companies? EIGHT.
This is according to research undertaken by Oxford Brookes University’s Centre for Diversity Policy Research and Practice. It was commissioned by the 30% Club Higher Education Working Group and co-sponsored by KPMG in the UK.
“Changing Places: Women on Boards” is the first major UK study into the exchange of board-level talent between business and academia. It found that movement between these two sectors is far more frequent in the US "as academic Non-Executive Directors (NEDs) interact much more with businesses, government and other organisations outside academia than their UK peers."
It says US company boards are over seven times as likely to include a senior academic compared to boards in the UK, showing that British business is overlooking talent in higher education. (my emphasis).
Now why on earth would it do that ? We have been talking about diversity forever - or at least since 2011, when Lord Davies launched his review for the UK Government on women being under-represented among non-executive directors in the boardroom.
It does not come as a surprise that UK board chairs interviewed for the research "highlighted an informal bias against having executives on corporate boards expressing concern that academics might argue on intellectual rather than commercial lines and hamper board discussions." (my emphasis).
Oh.My.God. Does that mean they might do the opposite of 'dumb down' the discussions ? When did commerce develop an anti-intellectual bias? It sometimes seems as if in Britain we have an anti-technologicalinnovation bias, could it all be part of the same thing? Keep out those who do not fit with an existing culture, and maintain a small pool of talent with multiple roles for all.
(Much more tactfully) Melanie Richards, Vice Chair KPMG UK, said:
"There seems to be a degree of caution from corporates that bringing senior academics into the boardroom may result in longer deliberations for certain issues. However, by bringing together a more diversified group, business may benefit from more thoughtful discussions, which should strengthen the quality of decision making and outcomes."
There are of course, a lot of women in academia - another way to improve gender balance on boards ?
The report says: "Higher education is more gender diverse than business with women holding nearly 40% of university boardroom roles. By widening their search to include senior academics, UK corporates would also be significantly widening the pool of female candidates."
Interestingly, the study has highlighted that the flow of female talent from business to university boards is relatively healthy compared to female academics entering corporate boardrooms.
So, while 33% of women on university boards come from the private sector, less than 2% of female NEDs in the FTSE 100 come from academia. "This means cross-sector mobility also has huge potential to improve the gender diversity of boards" it says. (my emphasis).
Going back to the objective of diversity in our boardrooms, I moderated a panel for the regulator, the Financial Reporting Council (FRC) last week in London's Mansion House as part of their 'Culture to Capital' event, focusing on Corporate Culture. Twitter #CorpCul2016.
Justin King, ex-CEO of Sainsbury's, now vice Chairman at Terra Firma, was on it.
I was checking the transcript (more information/videos soon on FRC website) and I was reminded he said: "I am often asked who the best non-executive I have ever had was. For a long time I have refused to answer that question because you know that is a road to ruin. In that regard, it occurred to me that there was a very clear answer, and that was Anna Ford. When we appointed Anna, there were a lot of raised eyebrows in the City, so to speak. How could a newsreader possibly be a fantastic non-executive for a business? To Conor’s earlier comment, she thought £60,000 a year was a pile of money and that she should commit fully to the business and embrace it. She spent loads of time in the stores, she went to suppliers, she went to depots, she read all board papers before board meetings, she did not take the BlackBerry into the board meeting, she never left early or arrived late and asked every question, as you would expect of an investigative journalist."
(The reference to Conor is to Conor Kehoe, senior partner Mckinsey who spoke earlier about short-termism - and whose speech is well worth reading).
From Justin King - an interesting volunteered example of putting diverse skills to good use at Sainsbury's?
“From our own experience, we know business leaders and senior academics gain a huge amount personally from collaborating with each other: the evidence in this new report shows how UK employers also have a great deal to gain from achieving more professional diversity on their boards, whether those of companies or academic institutions” they said.
And the added: "Overall, the study points to strong social and economic arguments for women to ‘change places’, especially from academia to the private sector. In order to achieve this, the key is improving relationships not just between institutions, but also between individuals."
Indeed. So let's get everyone talking to one another. And read the report for some practical ideas for change.
As it seems we are finally now talking about the importance of corporate culture and the role of business in society, it is time to look at the whole dimension of what any individual has to offer.