Business, Innovation and Skills CommitteeWritten evidence submitted by Opportunity Now

Who we are

Opportunity Now empowers employers to accelerate change for women in the workplace. We work with our membership of employers, from private, public and education sectors to offer tailored, practical and pragmatic advice on workplace issues.

Founded in 1991, the original aim of Opportunity Now was to maximise the potential of female employees and improve their recruitment and retention prior to the start of the new millennium. 21 years on, the need for the work of Opportunity Now is just as strong.

The campaign pillars of focus are:

Balanced Boards.

Flexible working.

Equal Pay.

Opportunity Now is part of Business in the Community, a registered charity.

Business in the Community

Business in the Community mobilises business for good. Our members commit to take action on the key issues of today, be they people or planet, and create a unique platform for collaborative action.

Our Response

Opportunity Now welcomes the chance to respond to this consultation. We have more than twenty years of experience working with businesses to increase the number of women at senior levels, improving women’s progression in workplace, addressing the gender pay gap and flexible working. This has allowed us to develop an expertise which forms the basis of our response detailed below.

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?

For the last 21 years, Opportunity Now has been working with employers to tackle inequalities between men and women in the workplace, including the gender pay gap and job segregation. It is our belief that the most powerful driver for change within UK workplaces is the Gender Business Case1 which needs to be used alongside legislation to lever real change for women in the workplace.

Opportunity Now welcomed the Gender Equality Duty and Equality Act 2010 legislation and its impact on gender equality. The Equality Act 2010 contains a reserve power which could lead to mandatory reporting of organisational pay gaps by 2013. Opportunity Now contributed to recommendations made by the Equality and Human Rights Commission (EHRC) to encourage organisations to voluntarily report on their pay gap.

In 2011, the median full-time gender pay gap for hourly earnings was 10.5%. For the tax year ended 5 April 2011 the figure for median gross annual earnings for male full-time employees was £28,400, while for women the figure was £22,600.ⁱ More information on the pay gap can be found on http://www.equalpayportal.co.uk/

The EHRC found that women working full time in the finance sector earn 55% less per year than men working full time.ⁱⁱ This demonstrates the impact horizontal segregation can have on the gender pay gap. In the UK, we know that women cluster in the ‘5 Cs’—cleaning, catering, caring, cashiering and clerical work, whereas men occupy a wider range of jobs. Opportunity Now has over 20 years of experience of working with employers to tackle job segregation—both at vertical and horizontal levels. We have developed best practice recommendations2 for employers to tackle horizontal/occupational segregation, in order to widen their talent pool, make the best use of talent and more effectively reflect their customer base.

What gets measured gets done and this is certainly true of the gender pay gap and job segregation. It is only when employers really mine their data and get to grips with the real picture, that they can set about solving it. Opportunity Now’s data reveals that within our membership of employers, 61% of private sector employers have already put an infrastructure in place to audit pay on a regular basis. However, if the recommendations from Opportunity Now and EHRC are to be successfully taken up by employers, it is vital that clear guidance and practical and pragmatic assistance is provided. Collecting and publishing pay data requires business commitment, time and resources, and we would urge the government to ensure that employers are adequately supported.

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

For the last 20 years, Opportunity Now has been at the forefront of championing transparency on pay and other issues such as workforce composition. Opportunity Now was pleased to help shape the Think, Act, Report initiative and is delighted to be working with the Government’s Equalities Office to further develop this initiative. We strongly believe that increasing women’s recruitment, retention and progression within UK businesses is not a women’s issue but a commercial imperative. Creating workplaces which better tap into the talents of both men and women offers clear business advantage in terms of talent, innovation and financial performance.

Opportunity Now played a significant role in promoting and encouraging sign up to the Think, Act, Report initiative, with the majority of signatories being Opportunity Now members. To encourage more visibility amongst organisations on transparency of gender equality reporting, Opportunity Now and GEO last year launched the Transparency Award3 to highlight best practice on transparency on gender equality issues in the private and voluntary sectors.

We support the Davies report approach to women on boards, including the amendments to the UK Corporate Governance Code which will mean that companies are publicly reporting on their policies on gender and diversity, and any targets set, for the first time. This approach could be widened. We support government proposals previously consulted on to encourage companies to report the numbers of women at different levels in their organisations. We also encourage member organisations we work with to identify areas and functions within their organisation where women are underrepresented and set targets to better balance women’s representation.

Opportunity Now supports the move by government to conduct another survey of employers in 2012 and government will report annually on progress against four key indicators:

The number of organisations who conduct analysis on their gender pay gap;

The number who have a planned approach to reducing their gender pay gap;

The number who report publicly on gender diversity; and

The number who report publicly on their gender pay gap.

Early indications from our recent benchmark exercise suggest 50% of responding organisations publicise some information on the gender composition of their workforce.

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

Whilst the current economic situation is challenging our evidence from our members is that they are continuing in their commitment to diversity and inclusion. They recognise that diversity isn’t just a nice to have, it is a business imperative.

Our recently updated benchmark tool encourages monitoring of female employees at different levels and wage levels by gender within our member organisations. The overall findings will be published in a report due out in November 2012 which can be found here.4

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

As cited above, the concentration of men in certain sectors has impacted on the gender pay gap negatively for women who are concentrated in the 5 ‘C’s’ of cleaning, catering, caring, cashiering and clerical work. Gender stereotyping in particular occupations is a complex issue that requires a holistic approach—addressing the impact of education, the media and sector’s reputation to potential employees. Many employers have displayed best practice approaches towards encouraging women of all ages and backgrounds to take up non-traditional roles as can be displayed by previous winners of the Opportunity Now Inspiring the Workplace of the Future Award.5

Baroness Greenfield’s report, SET FAIR (November 2002) provided several recommendations for government to overcome the barriers that prevent women and girls in entering, staying and succeeding in science, engineering and technology education and employment. The government published its response ‘A Strategy for Women in Science, Engineering and Technology’ in April 2003 to address the issues outlined in SET FAIR. The main initiative to come out of the Strategy was the establishment of the UK Resource Centre for Women6 (UKRC) in Science, Engineering and Technology. In addition to this, there are several organizations in existence to address the participation of young people in Science, Technology, Engineering and Mathematics (STEM), such as STEMNET.7

Opportunity Now has developed best practice recommendations8 for addressing occupational segregation and gender stereotyping in particular roles. These recommendations were developed based on Opportunity Now’s expertise and work with member organisations. Opportunity Now has found that best practice owned by business and driven by business, results in greater traction in addressing occupational segregation.

Opportunity Now would recommend a working group is set up consisting of organizations addressing gender equality in the workplace, best practice employers, Sector Skills Councils and organizations encouraging girls, women and young people to consider careers in Science, Technology, Engineering and Mathematics (STEM). The working group would seek to determine the most effective way to address gender stereotyping in the industries mentioned above at education and employment level—including apprenticeship and Higher Education level. If the BIS Select Committee is interested in this proposal, Opportunity Now could convene this working group.

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?

For the last 20 years, Opportunity Now has advocated that agile working is an effective way to address job segregation. Our role is to seek out and highlight best practice on agile working, including part time working, approaches which enable women and men have opportunities to gain senior positions. Opportunity Now’s Awards highlight best practice across industry on a range of categories including Agile Working,9 advancing women in the workplace and inclusive culture. Opportunity Now manages the Awards process jointly with the Times Top 50 Employers for Women,10 allowing us to further highlight best practice on agile working, part time working role models and raise the profile of gender equality within the public eye. Opportunity Now holds events for its member organisations on agile working including an event on the changes to paternity leave legislation and is currently organising a roundtable with best practice organisations on flexible working for two board member’s of the Women’s Business Council. Flexible working is one of Opportunity Now’s campaign aims and we are keen that flexible working doesn’t become a “Mummy Track”, or an option available only to people less able to participate in traditional ways of work. In fact it allows businesses to retain the talents of any employee through periods of change in their lives. Opportunity Now is keen for flexible working to be seen as a mainstream business imperative and not as a “fringe” issue.

The Office of National Statistics latest figures show that in the three months up to April 2012 the UK workforce consisted of some 13.60 million men and 7.72 million women in full-time employment, and 2.11 million men and 5.85 million women in part-time employment.ⁱⁱⁱ In our 2010–11 benchmark11 exercise we found that while all employers surveyed offered some form of flexible working (75% of Opportunity Now employers offer nine or more types of flexible working), 28% of organisations said they did not consider flexibility at all when designing jobs. We also found considerably less part-time working evident at senior levels, thus reinforcing the myth that it is not possible to work in senior level roles on a part-time basis.

Opportunity Now conducted research on agile working within organisations—Out of Office12 and Out of Office II13—which found that more flexible working can be a business benefit as well as an employee benefit, and the reports make practical recommendations for employers to embed within their organisations. A recent YouGov Poll conducted by Opportunity Now found 33% of those polled said that greater flexibility would make them more productive and 43% said that it would help them with stress. Opportunity Now recommends profiling organisations that promote flexible working at all levels—particularly those that have seen positive business benefits in light of the recent Olympic and Paralympic Games in London. Opportunity Now promotes senior role models who are able to demonstrate the benefits of flexible working.

Opportunity Now sits on the Private Sector Working Group (PSWG) for the consultation on the Extension of the Right to Request Flexible working to all and supports this proposal as a method for encouraging take up of all forms of flexible working by both women and men at all levels within their organisation. Opportunity Now recommends highlighting the business benefits of agile working through the ACAS Guidance produced with the support of the PSWG, Opportunity Now’s Agile Working Award14 and Working Families Awards.

Opportunity Now is working closely with Working Families and actively supports the ‘Strapline’ project (lead by Working Families) to pilot using a strapline promoting the possibility of flexible working within senior level roles within job advertising.

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

Since the launch of the Lord Davies report on women on boards in February 2011 and following a three year plateau, the percentage of women on FTSE 100 listed companies has increased by 3% to 17.2%. Since 1st March 2012, 55% of FTSE 100 new board appointments were women. However, there were no female Executive Director appointments, (although Karen Witts will join Kingfisher as Executive Director in the Group Finance Director role in October).

The increase is in line with what Lord Davies called for—equating to around one in three new board appointments in the last year going to women. The “comply or explain” model being used in the UK as well as elsewhere has had a significant impact which we believe is sustainable and powerful, and which has been achieved with no threat to effective governance.

Amendments to the UK Corporate Governance Code and progress on other Davies recommendations demonstrate the success of this approach.

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

Research has consistently shown that more women on boards and at senior level reduce risk and improve corporate governance. Thomson Reuters examined the performance of companies with more than 30% women on their board compared with those with less than 10% women on their board, and found that companies with greater numbers of women leaders fared better in periods of greater economic volatility.^iv Furthermore, Leeds University Business School reports that having at least one female director on the board appears to cut a company’s chances of going bust by about 20%. Having two or three female directors lowers the risk even more.^v The Conference Board of Canada found that 91% of boards with three or more women directors explicitly take responsibility for verifying audit information compared with 74% of companies with all male directors.^vi

Other research has shown the benefits of having more women on boards to the company’s return on equity, sales and crucially, invested capital. This research is highlighted in the question below.

At the Opportunity Now Dinner in April 2012, James Leigh-Pemberton, CEO Credit Suisse UK, to approach the investors of the audience’s pension funds to ask ‘how you will hold the Boards of the companies you invest in accountable for complying with the UK Corporate Governance Code’s requirements on Board diversity’. More work needs to be done with UK institutional investors to ensure awareness of the benefits of having more women on boards is taken into account during annual company reporting and at each new board appointment, and diversity and talent management is placed on the board agenda.

Investors are a crucial lever for change. The business case is clear, and the support of many investors for more women on boards is having real impact already.

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

As shown above, progress has been made but this is concentrated in NED appointments currently, and more focus is needed on executive appointments. Opportunity Now has produced guidance for employers called Changing Gear15 based on its 20 years of expertise on how to effectively tackle women’s progression in the workplace.

The barriers that women experience in progressing to senior levels are complex and varied.^vii Opportunity Now research called What Holds Women Back,16 found the biggest barrier to women getting senior jobs is the need to balance work and family responsibilities, 82% of female managers and 54% of male managers see this as the main barrier. The second biggest barrier is also related to childcare. 57% of women managers and 20% of male managers believe that women are seen as less committed to work because they may have family commitments. The third most cited barrier to women’s progression was a lack of senior or visibly successful role models (according to 52% of female respondents and 26% of male respondents).

Opportunity Now believes that diversity on boards is good for business and there is a compelling body of research which demonstrates the correlation. According to McKinsey,^viii companies across all sectors with the most women on their boards of directors significantly and consistently outperform those with no female representation—by 41 percent in terms of return on equity and by 56 percent in terms of operating results. A study of the in the Fortune 500, Catalyst studies reveal companies in the highest percentile of women on their boards outperformed those in the lowest percentile by 53% higher return on equity, 42% higher return on sales, and 66% higher return on invested capital.^ix Furthermore, a recent Danish study found that companies with good numbers of women on the board outperformed those with no women by 17% higher return on sales and 54% higher return on invested capital^x. As cited above, companies with larger numbers of women at the top fared better in times of economic volatility.

Similarly, over the course of 2011, companies in the STOXX 600 Index with more than 30% women managers outperformed those with less than 20% women managers by nearly 8%.^xi

Evidence from Opportunity Now employers in the UK suggests that diverse teams enhance innovation and approach problem solving through a wider lens, while homogenous teams can suffer “groupthink” and are less effective at scrutiny, challenge and innovation. When management groups consist of people from similar backgrounds, executives are more likely to take excessive risks or fail to form contingency plans. Our evidence also suggests that diverse leadership groups are better able to deliver business solutions which appeal to diverse consumers and clients.

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?

The voluntary code of conduct has contributed in the shift towards increased numbers of women on boards cited above. However, a broader cultural shift is needed within the FTSE board level appointments search criteria and processes and needs to be actively supported by both FTSE companies and their search firms.

Opportunity Now encourages its members to challenge their search firm’s understanding of diversity, their track record in diverse placements and challenge them on how they would put together a bias free brief, ask for their recommendations on how they would overcome stereotyping. If the Code is to be effective nominating committees must hold search firms to compliance. Pockets of best practice exist which need to be profiled and consultation with executive search firms needs to take place.

Opportunity Now is keen to ensure women’s progression in the workplace moves beyond being seen as simply a boardroom issue and remains high on the government’s agenda and the UK business agenda.

5 October 2012

References

i Cited from The Equal Pay Portal, http://www.equalpayportal.co.uk, Sheila Wild, 2012

ⁱⁱ http://www.equalityhumanrights.com/uploaded_files/financial_services_inquiry_report.pdf (page 7)

ⁱⁱⁱ http://www.equalpayportal.co.uk/where-to-start-2/

^iv Women in the Workplace: Latest Trends in Gender Equality, Thomson Reuters 2012

^v Leeds University Business School, 2009

^vi Women on Boards: Not Just the Right Thing ... But the 'Bright' Thing, The Conference Board of Canada, 2002

^vii See Balanced Boards for more information

^viii Women Matter, McKinsey, 2010

^ix The Bottom Line: Corporate performance and women’s representation on boards, Catalyst 2007

^x Women on Board and Firm Performance, Mijntje Lückerath-Rovers, Erasmus University Rotterdam, 2010

^xi Critical Mass on Corporate Boards: Why Three or More Women Enhance Governance, Vicki Kramer, 2007