Business, Innovation and Skills CommitteeWritten evidence submitted by Aberdeen Asset Management PLC
We are a pure global investment management group, managing funds across equities, fixed income, property and alternatives for both retail and institutional clients. Total assets under management were £187 billion at the end of September 2012.
We would like to highlight some of the points in our submission as follows:
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Background
Aberdeen Asset Management plc is an independent global investment management group, managing funds across equities, fixed income, property and alternative assets for both institutional and retail clients from offices around the world. Total assets under management were £187 billion at the end of September 2012.
We invest for our clients’ portfolios in companies around the world and actively target investment in those companies with sound corporate governance practices. We are committed to exercising responsible ownership with a conviction that companies adopting best practices in corporate governance will be more successful in their core activities and deliver enhanced returns to shareholders.
We are responding to the issues that we believe are relevant to us both as a FTSE100 company and an institutional investor.
1. Do the Gender Equality Duty and the Equality Act go far enough in tackling inequalities, such as gender pay gap and job segregation, between men and women in the workplace?
Possibly not. Better disclosure of gender pay differences in annual reports would place more attention on the issue. However, in respect of our own business we have the means to identify and address any potential inequalities in terms of pay in having a robust Human Resources Information system and reporting tools, access to detailed industry benchmarking surveys and a rigorous annual remuneration process. We have a team of human resource professionals able to offer employee relations advice and guidance to our managers and comprehensive policies and procedures that give appropriate frameworks for ensuring equality throughout our business.
2. What steps should be taken to provide greater transparency on pay and other issues, such as workforce composition?
Businesses need to have information systems and tools to understand and monitor their workforce. It is our belief that very few businesses want a pay differential but they may have insufficient ability to analyse data appropriately to determine whether or not there is an issue. Companies may have different HR systems across different locations rather than one integrated global system. Even with comprehensive recording tools companies need to have the resources and statistical knowledge to be aware of analytical issues of measuring data and the potential creation of spurious results.
3. What has been the impact of the current economic crisis on female employment and wage levels?
We have seen more women choosing to return to work after their maternity leave, possibly as a result of financial pressures at home. In common with young men, the economic crisis and its effect on youth unemployment in general has had a positive impact on the number of applications for our intern programme. We have also recently launched an apprenticeship scheme. By way of example, four out of the five apprentices on our 2012 scheme are female. One told us that given the economic crisis, she felt it was better to accept an offer of an apprenticeship than go to university.
4. How should the gender stereotyping prevalent in particular occupations, for example in engineering, banking, construction, and the beauty industry, be tackled?
We believe this can be tackled in the longer term by addressing recruitment and selection for entry-level positions, particularly into our own intern and graduate programmes. More needs to be done to encourage young women at school and in higher education to consider roles outside the normal stereotypes, as well as showing boys and young men that women are as effective in these roles as men.
Significant workplace diversity is in place in parts of the financial services sector. For example, our focus on equality is reflected across the business where women account for 48% of our global workforce [http://www.aberdeen-asset.com/doc.nsf/Lit/BrochureGroupAnnualReview20120930].
We have found that stereotypes are fixed very early on and from what we have seen, we need to approach girls at the start of their secondary education. As a company, we try to encourage choosing a career in fund management by piloting employability workshops at two state schools in Aberdeen whose students come from mixed backgrounds. For these workshops and other events where our investment professionals attend, we send female fund managers and other senior females to provide role models.
Methods of marketing also need to be kept under review. We ensure that on our graduate programme website, female colleagues are well represented [http://www.aberdeen-asset.co.uk/aam.nsf/graduates/home].
5. What more should be done to promote part-time work at all levels of the workplace and to ensure that both women and men have opportunities to gain senior positions within an organisation while working part time?
As a company, we have a good proportion of successful applications for flexible working. Factors, such as cost of childcare and transport, can prevent employees requesting part-time working; some people simply cannot afford to go part-time. With regard to part-time working at senior level, this can be challenging in a global business due to the round the clock nature of senior responsibility. Tax deductibility of the cost of childcare would have a major positive impact for many women who wish to return to work but find the economics do not add up.
Women should be supported through their child raising or caring responsibilities, with more thought given to flexible working as well as part-time working. A flexible approach would be more workable for those in senior positions who tend to travel more and modern methods of communication should be used to assist them in achieving a balance. Companies also need to move away from cultures of presenteeism to be able to establish alternative patterns of working and to give appropriate support to those who work flexibly or part-time.
6. To what extent have the recommendations in Lord Mervyn Davies’ Report “Women on Board” (published in February 2011) been acted upon?
We are long-standing supporters of diversity in the boardroom as a PLC and as an investor. We remain of the opinion that appointments to a board should be made relative to a number of different criteria, including diversity of gender, background and personal attributes, alongside the appropriate skill set, experience and expertise. We continue to insist that long lists and short lists reflect that position.
We are also supportive of Lord Davies’ aim to raise the proportion of women on UK boards and our current board is made up of twelve directors of whom three (25%) are women. We are also supportive of the Financial Reporting Council’s aims to encourage diversity in the boardroom.
Our Chief Investment Officer and PLC Executive Director, Anne Richards, has championed her own ‘Backroom to Boardroom’ initiative to support pipeline women as we continue to look at and support our female representation from entry level upwards. We have also become a corporate sponsor of the organisation Women on Boards [http://www.womenonboards.co.uk], which is directed at women from inside and outside the corporate sector. Our Annual Report outlines our approach to diversity and summarises our corresponding search and nominations processes [http://www.aberdeen-asset.com/doc.nsf/Lit/ReportGroupAnnual20120930].
7. To what extent should investors take into account the percentage of women on boards, when considering company reporting and appointments to the board?
As part of our Equity Engagement and Voting Report for 2012 which is published on our website [http://www.aberdeen-asset.com/doc.nsf/Lit/CorporateGovernanceGroupEquityEngagementReport20120930], we consider that “a well-balanced and carefully selected board is the starting point to building an effective board and a board which contains a diversity of talent, skills and background will be better placed to promote the long term success of the company. Gender is one aspect of a diverse board and an important component in creating a corporate culture that will bring benefits to all its stakeholders.”
8. Why are there still so few women in senior positions on boards, and what are the benefits of having a greater number?
As increased female representation on boards has shown, there has been recognition that boards need to become more diverse so we expect ratios will continue to improve. There is plenty of empirical evidence to show that a greater number of women on a board brings a more diverse outlook, rounded debate and challenge and means firms are more closely replicating the diverse demographic of their customers and shareholders.
To date, there are various reasons why there are so few women in senior positions on boards, not least due to the lower numbers of pipeline female successors. Whilst this may in part be due to the constraints of childcare at a critical point in a career, evidence from the US indicates that the proportion of women CEOs with children to those without is the same as in the population at large (source: Organisation for Economic Co-operation and Development). This suggests other factors are preventing women rising to the top.
9. How successful is the voluntary code of conduct (a recommendation of the Davies Report) which addresses gender diversity and best practice, covering relevant search criteria and processes relating to FTSE board level appointments?
We support the implementation of the voluntary code of conduct by search firms. Our Chairman requested that both long and short lists include an appropriate number of suitable female applicants in recent searches that have been conducted for us.
21 December 2012