“The problems that face our world are so complex and difficult that we will need all the talent available to solve them.” We wrote those words in the preface of our first book, A Woman’s Place is in the Boardroom, in 2005, and reiterated them in the second, A Woman’s Place is in the Boardroom: The Roadmap. Writing in early 2008, we noted that the complex problems facing our world were proliferating, and gave as examples the July bombings in London and many other acts of terrorism worldwide; the increasing pressure on the world’s resources; the potential impact of climate change; the credit crunch; political, social and economic problems in the Middle East, Asia and Africa; and a whole series of natural and human-made disasters in other parts of the world.
We believed then that not applying the talent of half the population to deal with those problems represented an enormous waste of resources. We still do. Nor have we changed our view that although increasing the number of women on the boards of our large companies will not of itself solve these problems, it will contribute to their solution by increasing the reservoirs of human ingenuity, imagination, insight and will available to address them.
We had no way of knowing, in early 2008, just how complex and difficult the world’s problems were going to become, as the credit crunch developed into a full-blown financial and economic crisis. Expressions that would have previously sounded like hyperbole became, as banks and companies fell and governments wobbled, realistic descriptions of potential outcomes, and the question of whether western capitalism itself would survive began to be openly debated. The chairman of a leading global bank – a man not given to hyperbole – described, during our discussions for this book, the events of the financial crisis as a “near-death experience”. “It was a damned close run thing,” he said. “It could have easily gone down. It almost did.”
The impact of the financial crisis is still emerging. The UK chancellor of the exchequer, the Rt Hon. George Osborne MP, speaking at Bloomberg in August 2010, said that it was in the summer of 2009 that “we saw the first signs that fears about the liquidity and solvency of banks would become fears about the creditworthiness of the governments that stand behind them”. The chancellor observed in the same speech that the UK’s budget deficit – at 11 per cent of gross domestic product (GDP) – “remains the largest in the G20”. In March 2010, consumer debt in the UK stood at around £1500bn (Department for Business, Innovation and Skills, HC 475) and, at the end of October 2010, public sector net debt in the UK was £955bn (ONS: Public Sector Finances). Other countries – Ireland, Greece, Portugal, Spain – were also in challenging economic circumstances and, in November 2010, commentators were debating whether the euro would survive.
The “credit crunch” we wrote about in 2008 has developed into a financial and economic crisis which, in turn, is generating political and social repercussions. It is not hyperbole to say that the UK economy, in common with other western economies, is confronting some of the most serious, and most intractable, problems it has faced in living memory.
Against this backdrop, two courses of action are needed. First, we have to try to ensure that nothing resembling the banking crisis, which threatened the whole system of western capitalism, ever happens again. Second, in parallel with the reform of regulatory frameworks and the management of risk, the economy has to return to growth. Women now account for 46 per cent of the UK workforce, and their increased participation in the leadership of our large companies and institutions has a part to play in addressing both of these challenges.
What is that part? In the preface to the 2010 edition of Fool’s Gold, Gillian Tett, social anthropologist and US managing editor of the Financial Times, suggests that one way in which élites tend to control a society is by influencing the cultural discourse: the way the society talks about itself. She points out that what matters, when exerting influence on the discourse is not merely what is publicly discussed, but also what is not mentioned in public – either because it is deemed impolite, taboo or uninteresting, or because it is simply taken completely for granted. “Areas of social silence, in other words, are crucial to supporting a story that society is telling itself.” The particular “story” to which Tett is referring is the one about the catastrophic impact on global markets of the credit bubble, but the argument holds true for other stories, including those that inform the “cognitive map” of boards. Sir David Walker, in Annex 4 of his Review of corporate governance in UK banks and other financial industry entities, points to the risks of dysfunctional board behavior and observes that “board behaviour cannot be regulated or managed through organisational structures and controls alone”. Annex 4 refers to the danger of “groupthink”, one aspect of which is an unwillingness to talk about an issue within the group, and thus the creation of what Tett calls an area of “social silence”.
This is where women can make a contribution. Increasing the number of women in strategic decision-making bodies – such as boards – will work against both “groupthink” and “social silence”, in two ways. First (as we have shown in our previous books and reiterate in the pages that follow), since women often simply don’t know the “rules of the game” and are unfamiliar with the dynamics of largely all-male groups (such as boards), they are more likely to ask straightforward questions, often opening up the debate and – sometimes unknowingly – challenging what Tett describes as patterns of social conformity or shared ideology and assumptions. Secondly, for whatever reason, many senior women have a highly developed moral compass and a strong desire to debate a whole issue and to bring people into the debate. These qualities are not, of course, confined to women; nor do all women possess them. But hundreds of interviews with women during the course of researching and writing four books have demonstrated that many women do have them.
A third reason to make more space at the boardroom table for women relates to the “upside”: the need for a return to economic growth. Research by Professor Lynda Gratton of the London Business School and others has shown that creativity and the entrepreneurial activity that leads to innovation, and thus to economic growth, is more likely to emerge in gender-mixed teams.
There is a tendency for the issues of corporate governance reform, the need to stimulate growth and the desirability of more gender diversity on boards and their equivalents outside the corporate sector, to be discussed separately, as if they were discrete challenges, each of which needs to be addressed on its own. We show in this book that they are all aspects of a more fundamental need to reconfigure, recompose and, in so doing, reinvigorate institutional leadership at the end of the first decade of the 21st century. We also show that the interconnections between governance, growth and gender are recognised by many male leaders, as well as by many aspiring female leaders, and by many national governments, particularly in Europe. The Treasury Committee’s Report on Women in the City 2010 describes the linkage between the contribution of talented women to strategic decision-making, and economic recovery:
“We must ensure that talented women are not being denied the opportunity to contribute to business and commercial decision-making. This is a concern not only for women as individuals… The UK needs to draw on the talents and experiences of women in order to successfully rebuild our economy following the recession.”
If we were redesigning institutional leadership from the bottom up, using the findings of research into the links between gender diversity on the one hand, and corporate performance, the quality of corporate governance and the creativity of leadership teams on the other, we would not start from here. But “here” is where we are, and we must focus on the process of rebuilding with the tools that are to hand. We hope that this book will help to indicate where we need to get to and provide useful suggestions about what we need to do, and how, therefore, we may “get there”.
The author can be contacted at: Peninah.email@example.com
Published by Palgrave Macmillan, 2011