Business, Innovation and Skills CommitteeWritten evidence submitted by the Chartered Management Institute

Introduction

The Chartered Management Institute (CMI) welcomes the opportunity to submit evidence to the Business, Innovation and Skills Committee in its inquiry into Women in the Workplace. CMI is the UK’s only chartered professional body for management and leadership. With over 90,000 members across the UK at all management levels and sectors, we are dedicated to promoting the highest standards in management and leadership excellence.

CMI believes that while progress has been made, issues persist regarding both pay and career progression for women. More needs to be done to change corporate cultures and we agree more transparency would help encourage the worst offenders to take action. Research shows that companies who embrace gender diversity and have one or more women on their board perform better compared to those who do not. However, for lasting progress to be made, efforts should not focus solely at the board level, but also on creating a strong talent pipeline of women at all levels in the workplace. Ann Francke, Chief Executive of CMI, has warned that “A lot of businesses have been focused on getting more women on boards but we’ve still got a lot to do on equal pay and equal representation in top executive roles. Women make up almost three out of four at the bottom of the ladder but only one out of four at the top.”

Managers have a significant role to play in helping combat unequal pay and representation, whether it be through effectively implementing flexible working or through supporting those at junior levels to help them progress through the talent pipeline. The latter is particularly pertinent in industries where strong gender stereotypes still prevail, such as engineering or construction.

CMI Supporting Women in Management

CMI actively supports women in management and leadership, with 32% of our membership being female. This is proportionate with UKCES data showing that 32% of positions in the managers, directors and senior officials occupational group are held by women.1 However for both members under 30, and members registered within the 12 months up to November 2012, the percentage that are women is over 35, showing that the proportion of women in CMI’s membership will continue to rise.

A number of CMI initiatives work towards this agenda, including the Women in Management (WiM) Network. The WiM Network works nationally to help address key challenges currently affecting women managers, including opening up opportunities for career progression. As well as offering a supportive environment for managers at all levels and in all sectors, it provides impartial career advice and a wide range of networking opportunities.

CMI has also grouped together practical resources and support for women, available at www.managers.org.uk/paygap. The toolkit contains advice for women on issues including mentoring and coaching, implementing flexible working hours and, critically, how to develop skills to improve your negotiation skills in business.

CMI works to promote the debate among managers about gender issues, for example through the National Management Salary Survey, with Xpert HR. Ann Francke, CEO, and Petra Wilton, Director of Strategy and External Relations, have both appeared on Sky News to highlight the issues. An event was also held in partnership with the WiM Network on 7 November on the “Women in Management” debate at the Institute of Engineering and Technology, with over 200 guests in attendance.

We would be happy to discuss these initiatives in more detail with the Committee and how, as a professional body, we may be able to further promote the adoption of good practice among our membership.

1. Gender Pay Gap

1.1 Evidence

In November, CMI released data on the gender pay gap that was collected through the National Management Salary Survey (NMSS)2, by XpertHR. The unique survey, now in its 39th year, covered the period between August 2011 and August 2012, with data collected from 38,843 employees working in executive positions in UK organisations, through from junior levels to those on the board.

The figures reveal the average female executive suffers a lifetime earnings gap of £423,390 when compared to a male worker with a similar career path. The average male in an executive role earned a basic salary of £40,325 over the 12 months to August 2012, compared to £30,265 for a female in the same type of role. Although female junior executives earn marginally more (£363) than males at junior levels for the second year running (£21,491 compared to £21,128), the gender pay gap remains substantial at the opposite end of the executive career ladder. Female directors earn an average basic salary of £127,257–£14,689 less than the male director average of £141,946.

The figures also show that the gap extends to annual rewards. Women receive less than half of what men are awarded in monetary terms—the average bonus for a male executive was £7,496, compared to £3,726 for a female executive. This picture gets worse as women and men progress in their careers with 50% of males at director level receiving bonuses compared to 36% of females. At £65,000, the average bonus paid to a male director was £7,000 more than that awarded to a female director.

Data taken from the NMSS in previous years shows the impact of the recession on both employment levels and salaries for managers by gender.

Table 1

INCREASE IN SALARY (%) BY YEAR, NATIONAL MANAGEMENT SALARY SURVEY—XPERTHR/CMI

	2012	2011	2010	2009	2008	2007	2006	2005
Female	3.1	2.4	2.8	4.9	3.2	5.1	5.3	5.4
Male	3.0	2.1	2.3	4.9	3.8	4.5	5.4	4.7

As Table 1 shows, women have experienced a greater rate of salary increase than men in most years since 2005. However, smaller increases in recent years seem to have slowed the rate at which the pay gap is closing.

1.2 Policy Recommendations

Requiring all companies to publish pay data in the effort of reducing inequality could create an unnecessary burden on businesses. However, we feel that those companies found to have transgressed should be required to publish aggregated pay data at all levels within the business. By doing this, those organisations that are perpetuating inequality can be pressured into acting.

We support the enabling of tribunals to order pay audits of firms found guilty of fuelling the pay gap, as outlined by Minister for Women and Equalities Jo Swinson:

“We have implemented measures in the Equality Act to make pay secrecy clauses unlawful and we are taking through legislation which would give tribunals power to order that employers conduct a pay audit where they have been found to discriminate over pay.”

We believe that the transparency required of the public sector in terms of requirements to publish senior management salaries is a useful example. This greater openness about pay levels alongside more structured pay bands appears to have gone a long way towards redressing pay inequalities on the basis of gender. NMSS data for different sectors shows that the public sector is found to have the lowest average salary difference, at £5,813, compared to gaps of £20,125 in IT and £11,005 in manufacturing at the other end of the scale. In addition, at the Function Head level the gender gap is under £500 in basic salary, compared to £22,404 for IT.

2. Women in Management

2.1 Employment levels

The UKCES report, Working Futures 2010–2020,3 provides data and future projections on the workforce, split by gender and occupation. While female representation in the overall workforce stands at just over 47%, this proportion falls to 32% in the managers, directors and senior officials category. Furthermore, the report states that men will “get the lion’s share of jobs” from future growth in this category.

The NMSS data shows that women are under-represented at senior levels despite better representation at junior management levels.4 It is positive that at the junior level, 69% of the executive workforce is now female. However, a much smaller percentage have made it into top roles—just 40% of department heads are female and only one in four chief executives (24%). This shows the problem is not getting women into the workforce or junior management roles, but ensuring these women are supported through their careers to senior positions.

The recent resignations of two of the very few female CEOs in the FTSE 100 are a reminder of the continued under-representation of women in the UK’s top businesses. As the Women on Boards 2012 report showed, while there has been significant progress, only 15.6% of all directorships in the FTSE 100 are held by women.5 We very much welcome and support continued monitoring and reporting of this area as one indicator of women’s status in the workplace, but it should not be the only measure debated: as our data suggests, the issue of women’s progression to senior management roles extends well beyond the FTSE 100.

2.2 Female job security

Labour turnover data collected in the NMSS shows that more women than men fell foul of job cuts in the 12 month period between August 2011 and August 2012: 4.3% of female executives were made redundant compared to 3.2% of male executives. This difference in redundancies grows as women move up the ranks: twice as many female directors were made redundant as male directors (7.4% compared to 3.1%).

The number of women made redundant has almost doubled from the 2011 figure of 2.2%, mirroring the trend in 2008, when redundancies rose from 1.9% to 3.4% in the space of 12 months.

Table 2

REDUNDANCIES (%) BY YEAR, NATIONAL MANAGEMENT SALARY SURVEY—XPERTHR/CMI

	2012	2011	2010	2009	2008	2007	2006	2005
Female	4.3	2.2	4.5	1.3	3.4	1.9	1.4	2.9
Male	3.2	2.2	3.0	1.3	2.7	1.1	1.5	2.2
Total	3.8	2.2	3.6	1.3	3.0	1.4	1.4	2.4

In contrast to redundancy figures, more men than women left their jobs of their own volition—14.2% of men resigned from positions in the 12-month period compared to 12.2% of women.

Table 3

RESIGNATIONS (%) BY YEAR, NATIONAL MANAGEMENT SALARY SURVEY—XPERTHR/CMI

	2012	2011	2010	2009	2008	2007	2006	2005
Female	12.2	4.2	5.6	4.3	7.2	7.8	4.0	3.9
Male	14.2	3.6	4.1	4.8	5.9	6.4	5.7	2.5
Total	13.1	3.9	4.7	4.5	6.5	7.0	4.6	3.0

This also reflects findings from CMI’s latest Economic Outlook report,6 which found a stark contrast between men and women in their perceptions of job security. Sixty-one per cent of female managers reported feeling insecure in their job compared to only 40% of men. It is concerning that the NMSS data suggests this may have a real grounding in reality and is not just a product of male ‘bullishness’ about their prospects.

2.3 Aspiration gap

Findings from CMI’s research report, Management Recruitment: understanding routes to greater diversity,7 showed noticeable differences in the career aspirations held by male and female managers. The report surveyed 1,398 managers and examined recruitment trends among female, ethnic minority and disabled managers with the aim of informing ways of attracting more diverse talent in the workplace.

Asked about their long-term goals, higher proportions of male managers said that they would like to become a CEO (31% compared with 21% for female managers); a board director (30% compared with 20%); or a non-executive director (23% compared with 17%). Men were also more likely than women to be actively looking for a more senior managerial position (60% compared to 49%). Women also seemed more likely than males to mention downshifting for their long-term ambition (15% compared with 11%).

These differences in long-term aspirations were striking when compared to relatively small differences in ambitions for the next three years. Male respondents were more likely to see themselves being promoted within their current organisation (41% compared to 39%) or setting up their own businesses (20% compared to 15%). In contrast, a higher percentage of women saw themselves in a similar position either in their current or another organisation (13% compared to 11%). In addition, more women than men saw themselves switching to part-time work (7% compared to 4%).

2.4 Modern Workplaces

CMI recently welcomed the Government’s decisions to extend the right to request flexible working to all employees and reform the rules on parental leave.

Flexible working can have huge benefits for employers and employees alike, which is why CMI’s members have consistently supported the extension of the right to request by around two to one.8 In addition, around one in five female managers (22%) cite family commitments as a barrier to progression, while they are also more likely than men to mention “work-life balance” when asked what would attract them to a new job.9 CMI’s annual Future Forecast report surveys our members on their preferred policy options for the year ahead. Sixty-two% of respondents supported extending the right to flexible working,10 however this rises to seventy-five% when looking at female respondents, although it only ranked tenth for male managers (59% in favour). Despite this difference, the figures clearly show this is a popular measure among managers.

Our research also shows that people are both working harder and putting in longer hours since the recession. It is therefore no surprise that the most popular employee benefits are those which give people more control over their time.11 Flexible working is highly valued by staff and can make a real difference to their lives. As a result it generates a lot of goodwill and enthusiasm for the company. That alone is of huge benefit to employers.

We would emphasise that managers have a pivotal role to play in making flexible working a success—as, for example, noted by the recent report from the Recruitment and Employment Confederation’s (REC) Flexible Work Commission.12 To get the most from flexible working, managers must be able to manage based on results and not hours spent at a desk. However, with at most one in five managers thought to have had had formal management training or development, too many are still unprepared to contemplate offering more flexibility, not only to meet individual employees’ needs, but also to get the most out of their teams and ultimately to support growth.

We also welcome the reform of parental leave that will allow both parents to share up to a year’s leave to look after their new-born children. This will enable real cultural change around parenting and women’s participation in the workforce, which offers benefits for employers and the chance to help combat the under-representation of women at senior management levels. Similar to flexible working, reforms to parental leave are popular among managers; supported by 72% of women and 60% of men.13

2.5 Development Routes

Findings from a CMI report in February, The Business Benefits of Management and Leadership Development,14 showed that women reported different types of development as being most effective compared to their male counterparts.

Table 4

TOP 5 DEVELOPMENT ACTIVITIES BY GENDER15

Rank	Females	Males
1	Business school qualification	Business school qualification
2	Professional bodies’ qualification	Chartered Manager
3	Coaching by line manager	Management Apprenticeship
4	Management/leadership programme	Professional bodies’ qualification
5	Coaching by external practitioner	Short course on management/leadership

When asked to rank the effectiveness of different Management and Leadership Development (MLD) activities, coaching—either by the line manager or external practitioners—appears in the top five most effective types of MLD for women but not for men. While both groups rank Professional bodies’ and business school qualifications in the top five, overall men appear to favour more formal activities, such as achieving Chartered Manager, management apprenticeships and short courses on management/leadership.

To support mentoring for women, Women in Management (WiM) has recently developed a programme called Horizons. Designed to provide support, guidance and encouragement to members, based on the knowledge, life and experience of their fellow members, it provides a two way learning experience for both the mentor and mentee. It was launched in 2011 and has so far delivered mentoring for 60 pairs of mentees and voluntary mentors. Pairs are matched according to their needs, skills, experience and strengths, and undertake a one day induction which includes training on how to get the best from the Mentoring relationship, what makes a good mentor and how to be a good mentee. It is at this session that mentors/mentees are introduced to their partner, conduct their first session together and set the boundary for their relationship. The mentoring relationship runs for a six month period ending with a celebration and evaluation event.

2.6 Policy recommendations

Just as we support greater transparency to help close the gender pay gap, we also urge the Government to address the issues of women’s career progression by requiring greater transparency from employers about the level of female representation at different management levels. This would make sure organisations are not solely focussing on pay but also on giving female managers the opportunity to progress to more senior levels, ensuring there is a strong ‘talent pipeline’. Introducing a requirement for companies to report on gender diversity at senior management level was strongly supported, particularly by female managers, in a recent survey of CMI members, with 76% of women in favour.16 While male managers were less uniformly supportive (50% in favour), it is clear that overall opinion is in support of representation transparency.

However, the issue is unlikely to be fully resolved through legislation alone. Employers need to take action to change corporate cultures and promote development opportunities such as mentoring and qualifications, which have been proven to be highly successful in helping women build the confidence and skills needed to realise their potential.

However, we welcome the recent news that the EU Commission has opted against the introduction of quotas for the number of women on company boards in large organisations. While we agree the under-representation of women in British boardrooms needs urgent attention, women managers want opportunities based on merit, not legal requirements. Our most recent poll of CMI members to address the area found that a small majority—55%—are opposed to mandatory quotas for women on boards.

CMI therefore supports the EU Commission and the work of Lord Davies in improving the representation of women in the boardroom. We also support the recommendations in the “Think, Act, Report” framework from the Government equalities office, towards reporting on gender equality in organisations, including on the gender pay gap.

2.6.1 Developing girls’ management skills

Although the Committee is focused on women in the workplace, we strongly believe that increasing the representation of women in management positions also requires a focus on developing the skills and aspirations of girls at a younger age, which may help translate girls’ academic success into better career outcomes. CMI is increasingly active in working with schools to provide opportunities to develop young people’s management and leadership skills.

The need to develop management and leadership skills at an early age was highlighted by Lord Heseltine in his recent report, “No Stone Unturned in Pursuit of Growth”. We support his recommendation that this should be integrated into the education and skills system at every level, giving individuals opportunities to develop their management and leadership capabilities early on in life.17

To that end, CMI launched Campus CMI in March 2011, a voluntary programme that helps build management and leadership skills in 14–21 year olds. Campus CMI helps to inspire young people, create confidence in their abilities and provide early recognition of their management and leadership skills. These skills are vital to ensure that pupils are well equipped for the future world of work.

We hope that the Government will act on Lord Heseltine’s recommendation and that it will also encourage more businesses to work with their local schools: not only because of the benefits of equipping young people with management and leadership skills, but because we believe it will help to develop young women’s confidence and increase young women’s understanding of the opportunities that exist in the world of work. We believe this will help translate the high performance of girls, particularly in technical subjects, into increased representation in industries where gender stereotyping still persists.

20 December 2012