Diversity is good for the boardroom. Companies that have directors from
different cultures and a higher proportion of women as part of their governance
do better. A McKinsey report compared returns on equity and margins on earnings
before interest and taxes (EBITs), for 180 companies in France, Germany, the UK
and USA between 2008 and 2010. Those in the top quartile for diversity and with
the highest proportion of women on their boards had equity returns 53 per cent
higher than those in the bottom quartile and EBITs 14 per cent higher.
Diversity makes good business sense and encourages broader strategic thinking.
The Davies report in the UK recognised the need for increasing the number of
women on boards and British business is beginning to respond: 55 per cent of
non-executive appointments made to FTSE 100 boards between 1st March and 22nd
October 2012 were women. This is great news, especially as appointments are
relatively infrequent. However, the number of women appointed to all executive
boards reduced in the same period. And companies still seem to be missing out
on cultural diversity at board level, not straying too far from "people like
us" who will fit in.
When Lord Davies suggested new sources for experienced board-level women he
pointed to the public sector the professions and the universities but failed to
mention the voluntary sector, thus ignoring a source of some of the most
experienced entrepreneurs, inspirational leaders and creators of growth.
In April 2012 Cass set up an initiative to find women from the voluntary sector
who were interested in exploring the idea of becoming non-executive directors
on FTSE boards. It was supported by then Cass Dean Richard Gillingwater, the
National Council for Voluntary Organisations and Helena Morrissey, Chief
Executive of Newton Investment Management and founder of the 30% Club of FTSE
100 chairmen committed to increasing the number of women directors. Seven women
joined the programme. They were all CEOs of major brands such as Oxfam, St John
Ambulance and RNIB, and they had previously been non-executives on government,
charity and housing association boards, regulators, Treasury officials and even
I was part of the initiative and also interviewed all the women. It was clear
that they were exploring options: they were not intending to give up on the
charitable sector but to use their executive and non-executive expertise in new
ways. They were experts in accountability, demonstrating impact, building
public trust, stakeholder engagement and producing high-quality results to a
strict bottom line. They were specialists in corporate strategy, the
diversification of resources, investment strategies, cultural change and
motivating people without much financial reward and they told stories that
The specifics of financial corporate governance, the influence of market
analysts, the responsibilities of being, say, the senior independent director,
were to varying degrees new to the participants and Cass helped to fill these
gaps with master classes.
The women were all highly skilled and, before this programme, none had been
approached to join a FTSE board. This might now change. At the end of the
programme there was a real sense from headhunters that these women would be a
tremendous addition to any board.
I look forward to seeing how many decide they want to get on to FTSE boards and
how many make it. After all, these companies need women and greater cultural
diversity. And I think we have found a way of giving businesses a real,
measurable, competitive edge: look to these women who have run not-for-profit
businesses and use their skills for growth, to increase shareholder value and
create businesses that can be true to their mission.