Business, Innovation and Skills CommitteeWritten evidence submitted by the British Bankers’ Association

1. The British Bankers’ Association welcomes the opportunity to provide written evidence to the Business, Innovation and Skills Committee in respect of its inquiry into women in the workplace. We represent 220 banks from 50 countries on UK and international banking issues.

Questions

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?

2. Banks currently operate in accordance with the Gender Equality Duty 1 and believe that this provides an adequate framework for companies to tackle inequality. On a voluntary basis banks have also established multiple initiatives to tackle inequalities including but not limited to the following:

The requirement for at least one woman and one man on short lists presented by recruitment firms.

Regular monitoring and review of female representation at all levels carried out across various functions and roles, as well as both internal and external appointment.

Initiatives to support and develop a pipeline of female talent.

3. Whilst we appreciate the difficulties of comparing differing roles within organisations, we would suggest that companies could benefit from greater guidance on how to implement these types of measures. Although we do not believe this should be prescribed in legislation, there may also be a role for banks and other companies to look voluntarily at appropriate ways to report on these measures.

What steps should be taken to provide greater transparency on pay and other issues, such as workforce composition?

4. We believe that greater transparency with regard to female representation is a positive step and will help drive change. As an aspiration, organisations should be encouraged to self-regulate in the area of pay as in the area of gender representation. In this area there could be a role for greater guidance to be provided on how to apply recognised benchmarking standards on a voluntary basis.

What has been the impact of the current economic crisis on female employment and wage levels?

5. Banks remain committed to providing employment opportunities for female employees at all levels of their business. The current economic climate has not affected this commitment.

How should the gender stereotyping prevalent in particular occupations, for example in engineering, banking, construction, and the beauty industry, be tackled?

6. Gender is one facet of diversity that organisations should aim to focus on, but we believe this should be part of an overall strategy to increase the inclusion of a range of strands of diversity (ie experience, background, nationality/culture, etc) all as part of a meritocratic approach.

7. As the financial sector has traditionally had fewer women at senior positions, organisations are currently looking to broaden their talent by developing diverse and inclusive pipelines through leadership and development programmes, mentoring and sponsorship, flexible working, employee networks and other ways to support working parents, and mothers in particular.

8. Organisations can also look at other sectors which may have more female talent to find new employees and understand how these sectors ensure that they attract, develop and retain female employees. As stated above, banks are currently involved in several initiatives to tackle inequality which we believe may be applicable to other sectors.

9. We believe that communications and awareness raising around inclusion in the workplace including tackling unconscious bias, role modelling, and profiling of senior leaders, also has a role to play in tackling gender stereotyping.

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?

10. This is a multi-dimensional issue that goes beyond the question of increased female representation at senior positions. Responsibilities and commitments outside of the workplace can contribute to the under representation of women in senior positions. In order to address this, and retain talented employees, companies should be encouraged to voluntarily develop a supporting infrastructure and culture within the organisation to support flexible working patterns where appropriate. This will ensure that family commitments do not deter strong candidates from being given opportunities to progress their careers.

11. The BBA believes that the facilitation of flexible working, a policy championed by several BBA members, can provide employees with the opportunity to develop their skills and experience and further their careers. This could include:

Part-time working.

The opportunity to work from home.

Flexi-hours.

Job-sharing.

Workplace environments to support working parents such as mothers’ rooms and crèches.

Increased use of technology to allow employees, not just women to work in environments that are more “family friendly”.

12. Whilst there are challenges involved in developing and establishing new working patterns the BBA believes that these can be overcome. If flexible working options are communicated widely and utilised overtly by organisational role models, this will help to ensure there are no direct/indirect stigmas or negative consequences associated with these working options. For example, job-sharing is one option which has not yet gained great acceptance, mainly due to logistical challenges, however could assist in ensuring that senior roles are not diluted, but rather companies gain from a dual perspective.

13. It is uncertain whether imposing these by regulation would result in flexible working practices being accepted and fully embraced and we would advocate flexible working practices being implemented on a voluntary basis. Companies should be encouraged to develop voluntarily a robust infrastructure and culture within the organisation to support flexible working practices—ensuring that employees with family commitments are not deterred from having the opportunity to progress their careers.

To what extent have the recommendations in Lord Mervyn Davies’ Report “Women on Board” (published in February 2011) been acted upon?

14. We believe that the current voluntary business-led approach, currently being driven via the Lord Davies Review, is appropriate and is delivering substantial results. It is evident that companies have responded to the findings and recommendations of the Davies Review, with the increased focus on gender diversity resulting in a significant shift in female representation on boards in addition to elevating the gender diversity debate more broadly.

15. The recent “Women on Boards” update report issued in March 2012 by the Department for Business Innovation and Skills (“BIS”) confirmed that the UK experienced the largest ever annual increase in the number of women on boards. More recent figures provided by the Professional Boards Forum 2 show that at the end of June 2012, within FTSE 100 companies, women accounted for 16.7% of all directorships (an increase from 12.5% in 2011); 47 female appointments have been made since February 2011; 44% of board appointments since 1 March 2012 have been women and there are now only eight all-male boards (a reduction from 21).

16. The progress made since Lord Davies’ original recommendations were published is evidence that self-regulation can and does work. The BBA continues to believe that this remains the correct and appropriate approach.

To what extent should investors take into account the percentage of women on boards, when considering company reporting and appointments to the board?

17. The BBA considers that in line with the recommendations of the Davies report and the current UK Corporate Governance Code, a system of “comply or explain” should be employed whereby it is for shareholders to decide whether the explanation provided on a company’s diversity policy/progress is adequate. This approach ensures overall transparency in respect of a company’s diversity policy, whilst providing scope for each company’s individual circumstances to be taken into account.

18. There are many factors to consider when seeking to maximise a board’s effectiveness through its composition. These include skills, expertise and knowledge that need to be matched to the company’s current and future business activities; individuals with sufficient time commitment to devote to the board (both in stable and stressful times); and individuals who are able to offer a broad range of diverse perspectives to the board, including both geographic representation and gender diversity. Balancing all of these factors to maintain an effective board is a delicate matter. It is also important to take a holistic approach towards increasing diversity on boards, including but not limited to, gender diversity.

19. We believe that investors will be keen to see that the board is well balanced with the right culture, behaviours and chemistry. There is no “one size fits all” formula for an effective board composition and when any aspect of a board’s composition is prescribed, this just makes it more difficult to achieve an effectively operating board overall. A well balanced board that encourages diverse perspectives will deter the potential for “groupthink”. As well as having confidence in boards, investors should be able to satisfy themselves that boards have a robust and transparent appointment process in place.

Why are there still so few women in senior positions on boards, and what are the benefits of having a greater number?

20. The BBA agrees with the conclusions of the Davies report 3 on why women are under represented in senior positions and at board level.

21. The contention that the increased presence of women on company boards would by its very nature bring economic benefits is difficult to evidence with absolute certainty. However a realistic expectation would be that drawing on a broader pool of talent and experience would bring alternative perspectives to board decisions and help ensure the overall composition of the board is balanced. This may help prevent boards from adopting a “group think” mentality which has been a criticism in the past of a number of organisations.

22. Furthermore, women now represent a growing proportion of the consumer base, even in industries where buyers are traditionally male and women control the majority of consumer spending. An increased female presence on the board could therefore help ensure that it accurately reflects the customers and markets that the company serves.

23. We would continue to advocate that board diversity should be considered more broadly than just gender. An increasing body of research demonstrates that board diversity, including different strands such as gender, nationality, skills and experience as well as board tenure, leads to better business results. Diverse perspectives help bring more clarity to board discussions and decisions and help ensure that the status quo is challenged. It is important to consider how a one-dimensional focus on gender may be to the detriment of other strands of diversity and the value these also offer.

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?

24. The progress made in the year since Lord Davies’ original recommendations were published is evidence that self-regulation can and does work.

25. Whilst more can be done to encourage self-regulation, we continue to believe that this remains the correct and appropriate approach. The voluntary approach has also been supported by the latest changes to the UK Corporate Governance Code. Section B.2.4 has been amended to read: “A separate section of the annual report should describe the work of the nomination committee, including the process it has used in relation to board appointments. This section should include a description of the board’s policy on diversity, including gender, any measurable objectives that it has set for implementing the policy, and progress on achieving the objectives”.

26. The BBA would also draw attention to the 30% Club 4 and the FTSE 100 Cross Company Mentoring Programme, which are voluntary, market-led initiatives committed to bringing more women onto company boards. In the UK, the first Lord Davies Annual Progress Report 5 published in March 2012 noted that the voluntary approaches adopted by listed companies were already having the effect of increasing female representation at board level.

October 2012