Business Innovation and Skills - Minutes of EvidenceHC 342

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Oral Evidence

Taken before the Business, Innovation and Skills Committee

on Tuesday 4 December 2012

Members present:

Adrian Bailey (Chair)

Mr Brian Binley

Katy Clark

Caroline Dinenage

Julie Elliott

Ann McKechin

Mr Robin Walker

________________

Examination of Witnesses

Witnesses: Helena Morrissey, founder of 30% Club and CE of Newton Investment Management, Liz Murrall, Investment Management Association, Tim Ward, CEO, Quoted Companies Alliance, and Debbie Crosbie, Director of Operations and IT, Clydesdale Bank, gave evidence.

Q152 Chair: Welcome to this morning’s meeting and thank you very much for agreeing to speak to us. If you could introduce yourselves for our transcription purposes, that would be helpful. We will start with you, Tim.

Tim Ward: I am Tim Ward. I am the Chief Executive of the Quoted Companies Alliance. We champion the interests of small and midsized quoted companies in the UK.

Debbie Crosbie: I am Debbie Crosbie. I am the Operations and IT Director of Clydesdale and Yorkshire Bank.

Liz Murrall: I am Liz Murrall. I am the Director of Corporate Governance and Reporting at the Investment Management Association, a trade body that represents the fund management industry in the UK. Our members have £4.2 trillion of assets under management globally, and 34% of the UK market.

Helena Morrissey: I am Helena Morrissey, Chief Executive of Newton Investment Management and founder of the 30% Club, a businessled initiative to see more women on UK corporate boards. We are aiming for 30% by 2015.

Q153 Chair: Thank you very much. Some of the questions will be addressed to all the panellists, but that does not mean that all the panellists have to respond. We are time-limited. Obviously, if somebody has said something and you want either to add to or subtract from it, that is fine, but do not feel you have to say something if everything you would have said has been said by the previous speaker.

Can I start with a general question? You may have followed our previous sessions. At one of them, a witness said, "When you improve gender diversity on boards, financial performance declines." What is your experience? Helena, you are obviously keen to open on this one.

Helena Morrissey: I anticipated the question. The gentleman was alluding to one study, which was on the Norwegian experience, where quota legislation, as I am sure you are aware, was introduced so that within very short order-I think it was something like six months-listed companies had to put 40% women on their boards. The analysis showed that introducing gender equality, as it were, in that way had a negative impact in the immediate aftermath on shareholder returns. There are six widely recognised studies on experiences in countries where there is no quota: two-McKinsey and Catalyst-on the US Fortune 500; Société Générale on European countries; Citigroup on Australia, where there have a "comply or explain" model similar to our own; and two more recent ones, IRIS and Credit Suisse, on the global experience. They all usefully corroborate the positive impact of having more women or a better gender balance on boards, and they are empirical studies. I think it is a question of how you get there. It is not that women per se-obviously, I think it is counter-intuitive-detract from value to shareholders.

The other thing I would point out is that I think the reason why the voluntary, businessled approach in the UK has been having some success over the past two years is partly related to the views people have of the causes of the financial crisis, and the fact that the traditional-often maledominated-boards had too much sympathy for each other and did not challenge management teams. It is not just that it is conventional wisdom, but rather a much more widely accepted view.

Q154 Chair: Are any of the other panellists interested in either adding to or subtracting from that viewpoint?

Liz Murrall: Yes, if I could, please. From the perspective of institutional investors, we would support boards being diverse. That must be good for the business: they bring new skill sets to the board, challenge groupthink and embrace new ideas. While I think there are a number of studies, it can be difficult to establish causality, and it may be that women are selected into the betterrun companies in the first place when there is a voluntary approach. You only have to look at things such as Rightmove, which embraced new ideas in terms of the internet and grew from nothing to a £1.7 billion business. Compare that with Trinity Mirror, which failed to embrace the internet and basically declined from being a £1.6 billion business to being a £70 million one.

Q155 Chair: My next question was to you, Liz, based on the evidence submitted by the IMA. I am not sure that you really need to add that much more to it, given what you have just said, but is there anything else that you can say that would explain the evidence that you submitted-that greater diversity has a positive effect on corporate performance? Do you wish to add anything to that?

Liz Murrall: No, I think I have just said it.

Q156 Caroline Dinenage: I would like to start with Helena, please. Your written evidence suggests that legislation to increase numbers of women at board level is not needed. How can a higher proportion of women in senior positions be achieved without legislation? In your evidence you say there is a strong desire among the major firms to accelerate results in this area, particularly among those firms that do not have that innate desire to achieve these things.

Helena Morrissey: Starting with boards, I think we are seeing very clear evidence that without legislation the voluntary approach is having a big impact. Just updating my own evidence, since 1 March this year, 49% of nonexecutive directorships in the FTSE have gone to women. I believe, as do other members of the 30% Club, in the at least equal importance of appointment on merit, so I do not think you could actually better that rate of appointment-given that, obviously, you are looking in a smaller pool of senior women than men.

The 30% Club has shifted its focus this year to the pipeline, where there is clearly a lot more work to be done. In a sense, that reflects a wide range of issues, some of which are very much sociological and some of which very much relate to the companies themselves. We had an event on Friday at which one of the Ministers in the Government spoke and referred to the current typical working establishment as having a 1950s air about it. Just as Liz has talked about companies not embracing the internet in terms of their customer base, I think it is true that a lot of companies are stuck in the very traditional "at your desk" mentality and are very rigid.

At the 30% Club, we have been working initially on an effort with commercial services firms, who have this problem in extremis. There are often more than 50% women at the intake and then none on their boards. It has been extremely edifying to have had a very detailed analysis and to conduct focus groups over a very short, focused period of time. It was a 10week project, and about 20 firms were involved, of their own volition. We have a clearer diagnosis of the problem now. It is as much to do with women’s perceptions of what it takes as it is to do with the environment that the companies are creating. I think a multi-faceted solution is needed. We have now developed an executive pipeline initiative, which is much more recent. Interestingly, a number of large companies came together and wanted to skip that stage of analysis. They all said, "Yes, we have that problem. We know about it. We want to move straight to piloting more radical ideas." That is where I think the seed of the issue lies.

Lastly, in terms of where companies are not embracing this, I do think that there has been a paradigm shift in the past two years in UK business. This has moved from being seen as a women’s issue to a business issue. To echo one of Liz’s points, the betterrun companies are the ones who are thinking, "How do we attract and retain the best talent-men and women? What do we have to do to modernise our practices to be relevant to the future and to work more smartly and efficiently?" I think it is a bit of a tidal wave. The companies-and senior managers within them and CEOs-that are slow off the mark are being slightly engulfed by it.

Q157 Caroline Dinenage: I would quite like to quiz you the suggestion that 30% is the magic number when the financial performance of a company increases because of a critical mass of women on the board. Why is it 30%?

Helena Morrissey: Setting the magic number at 30% came out of the Société Générale report, where they crunched numbers to find out what proportion of women made a difference to the bottom line. I echo Liz’s point that you cannot prove causality, but that was their line, not mine. I chose the number of 30% because, unrelated to the particular women’s issue, there are various studies that have been done on when the view of a minority group is heard as their opinion, not as them being a representative of a group. If you have one token women on a board and they speak up, people think, "That’s the women speaking," whereas if you have three out of 10, the research suggests-obviously, you can never entirely prove these things, though this does seem intuitive-that that person’s opinion is heard as an opinion. Some of the chairmen-Robert Swannell from Marks and Spencer, for example-have challenged me by asking, "Why is it not 50%?" At the time we launched, women made up 12% of boards. To be honest, once we are at 30%, I suggest the rest will follow, but I will not be setting up a 50% club.

Q158 Caroline Dinenage: Would you think that as the percentage of women on a board increases, it would have a proportionate increase on the financial performance of a company, or is 30% the optimum?

Helena Morrissey: In fact I do. Another fascinating study-I do not want to seem like I am regurgitating lots of other research-was done by a team from, and it was published in, the Harvard Business Review about the best balance of a team. They looked at teams with very highoctane, highIQ individual members that were all men or all women, and compared their performance in certain puzzles against a lowerIQ but mixed team. It was not until you reached two-thirds women that you peaked in terms of performance. They were so sceptical of the results that they ran it again and obtained the same results, which was quite interesting.

This goes back to all sorts of things. There are 55 chairmen who are supporters of the 30% Club. These are their boardrooms, and they are very eloquent about the fact that they have seen a better dynamic, and more effective challenge and decision making, and that should, in due course, lead to better financial returns.

Q159 Mr Walker: It is interesting that you talk about the chairmen taking a sense of ownership of this 30% process. Do you think there is more scope for institutional investors to take ownership of this process and for shareholder activism to put pressure on companies to put a greater proportion of women on boards?

Helena Morrissey: I do, but let me defer to Liz so that I am not always talking.

Liz Murrall: Yes, I think in any marketled solution it is vital that investors have a role to play as the owners of those companies. We have had the stewardship code in the UK since July 2010. In September 2010, 80 institutional investors had signed up. Currently, as of September 2012, we have 220. More and more investors are becoming engaged with companies. As an industry body, we monitor what that means in practice. We look at the activities that underpin disclosures under the stewardship code. Specifically in relation to diversity on boards-as an institutional investors’ representative, this is primarily what we are interested in-we have a number of measures that facilitate shareholders’ engagement on this issue. We have had changes to the corporate governance code in the UK. The code always required companies to report on the nominations process. In July 2010, a requirement was introduced to look at diversity, including gender, for the first time. Following Lord Davies’ report, the code was further modified and asked companies to report on their board diversity policy, including gender, to set measurable objectives as to how they will achieve that policy, and to report on progress. At the event that Helena was referring to on Friday last week, we had a report on what progress had been made on that. Whereas the FRC had asked companies to look at this for financial years beginning on or after October 2012, it did actually push for early adoption of these requirements. Cranfield School of Management looked at the annual reports of the FTSE 100, 93 of which had published reports in that time frame. I think that something like 59 of those 93 had a diversity policy including gender. Even though this is so new, seven had actually reported on progress.

All these things help institutional investors engage on these matters. As part of the 30% Club, Helena has an investor sub-group that sets out guidelines for investors’ engagement. That currently comprises 14 investors who have £1.9 trillion of assets under management. They are all signed up to this and committed to it. To put that in perspective, the IMA has 220 members, and we have £4.2 trillion of assets under management. Just under half of them have committed to this.

Q160 Chair: Liz, I was looking at the evidence submitted by the IMA. You are pretty forthright, but I think the evidence is slightly more qualified-at least the sections I have read. At the start it says, "There is also a certain amount of evidence that greater diversity can have a positive effect on corporate performance." That is not exactly an overwhelming endorsement of that policy. It goes on to list that evidence, but then, at the end, it says, "The latest research from the Bundesbank suggests that a greater proportion of women on bank boards resulted in a more risky conduct of business, before citing lack of executive level experience as the cause." Could you comment on that? It does seem slightly at odds with your very forthright position.

Liz Murrall: The issue is that when you have academic or consultant research, it is difficult to establish causality. That was the point I was seeking to make. However, from the perspective of institutional investors, there is value in boards that are diverse while being the best fit for the company. I have cited examples of how companies embracing new ideas have ensured they had better performance. What we do not want to see is a continuation of the boys’ club of board appointments; there needs to be more challenge and more constructive thinking on boards.

Q161 Chair: Everything you have said is fine, but you have not actually answered the point about the Bundesbank. Would you question that evidence?

Liz Murrall: I think I would question all that evidence because of the difficulty of establishing causality.

Helena Morrissey: The only thing to add is that it obviously is important. This is why it needs to be voluntary, business-led and possibly slightly slower than ideally we would all like. We would like to wake up tomorrow and have these wonderful companies that are diverse at all levels, but the fact is that it takes time to develop executive skills. You cannot create a CEO or a CFO overnight. The one valid point the Bundesbank research and the Norwegian study make is that just promoting somebody because they happen to fit one category or another is bound to backfire, which again is one of the reasons why I think it is actually very counterproductive in the end to do anything through legislation.

Q162 Chair: Would you be able to look at that evidence and send us a more detailed critique of it?

Liz Murrall: I would be happy to, yes. I remember reading it at the time it came out and thinking that it was a very weakly constructed argument. I am happy to do a formal analysis.

Q163 Caroline Dinenage: I really wanted to talk about the pipeline that delivers women at senior executive levels, from which the majority of board members are recruited. This is a question for everybody. Why is it that even in companies where there are more women at the intake levels, that number still dwindles significantly at the senior executive level? How can a company increase the number of women getting to that stage and therefore the pool from which to choose board members?

Debbie Crosbie: Can I start with that? I can talk both from my personal experience and, more broadly, about the policies of the Clydesdale and Yorkshire Bank. The reality is that a lot of women find the challenges of child care very, very difficult to balance with their career. There is no question that it is difficult to make sure that you have arrangements that are both flexible and costeffective enough for a number of women who are coming through the ranks. In my experience, there are certainly a lot of occasions when women make very considered choices and decide that they have to opt out because they do not have sufficient opportunities to give them that range of options.

My personal experience is that it is also important to have a number of women who act as important role models and who can give guidance-not just in terms of confidence building, but around how to find practical solutions to solve some of those issues. The more opportunities you create for women to learn from other women and to look at those role models, the better that will become. Equally important is the organisation’s appetite to support you. At Clydesdale and Yorkshire Bank, we do a number of things that aim to make sure women who do return to work get very specific help. We run a programme called Baby Gurus, in which women join workshops before they return to work. We also do number of talent programmes and development interventions that are specifically aimed at trying to encourage women to build confidence, to find practical solutions to some of those issues around child care and to think through some of the real challenges that they will inevitably face when they come back to work.

Q164 Caroline Dinenage: Does anyone else have anything to add?

Helena Morrissey: If it is okay to take the floor again, I think the analysis that we have done with these professional services firms-which, as I mentioned, have this problem in extremis-has been very illuminating. As I mentioned in passing earlier, it does show that this is as much to do with women’s perceptions of what it takes-in this case to be a partner. For example, at entry level or a more junior level, there was a gulf in ambition, as 76% of the men aspired to partnership and I think it was 49% of women. The follow-up question was along the lines of, "Does work have to be your No. 1 priority to be a partner?" Almost all of the women thought it did and the men did not. Again, this goes back to this issue about culture, which we have not really talked about so far. We are trying to catalyse a shift in culture so that people start thinking, "Should I appoint people in my own image?"

A lot of the work we looked at was on the appraisal system. Again, there is something similar to a network here. I am not talking about a formal network, but more of a sense-one that is unconscious, I think-that people are being assessed on a very strict, strait-laced set of criteria: how many hours they are actually in there, the face time and so on. I am putting down a challenge to this group. This type of firm’s whole business model is based on billable hours. Your worth as a person and contributor is how many hours you work. As a client, the question is this: does that reward the worst incompetence and inefficiency? It is not necessarily part of having great service from one of these firms. That is a natural challenge. There may be things I am missing-this might not be the appropriate thing-but that is the sort of thing that I think we need to be more radical about. I think there are a lot of fundamental things about how businesses work that we should address, rather than saying, "Oh, we can just have another diversity initiative. If we had a bit more mentoring, it would all be fixed."

Debbie Crosbie: Can I build on that? The tone from the top is really important. Our group chief executive in National Australia Bank Group is a male who has children of a similar age to my daughter. He has spoken on a number of occasions quite passionately about some of the issues you have raised. He has some quite specific examples about what he thinks is acceptable in business; he encouraged people to challenge the norm. It will take some time to change that culture, but unless you have leaders of businesses who are prepared to step out, and not just talk the talk but actually do things a bit differently, it will not happen. For example, Cameron Clyne has taken leave in a different way from some of our previous chief executives. Unless you have leaders who are prepared to do things differently, I think it will be very difficult to make that culture change. I think people just talk about it and the business practices do not really change at the pace necessary to make a difference.

Q165 Ann McKechin: Debbie, you talked about how your parent group set a target a couple of years back to increase the number of women at senior management levels. I just wondered what the level of women was when they started this initiative.

Debbie Crosbie: When the group started the initiative, we were at about 23% women in senior roles. Our target is 33%, and at the group level we have now achieved 31%. We are not quite there, but the progress we have made in a reasonably short period of time has been quite impressive.

Q166 Ann McKechin: You talked about a number of measures that your company has put in place, such as helping women come back after maternity leave. The evidence we have taken previously has spoken about people who come back from having children-maybe on reduced hours or part time-finding that they end up in a culdesac of parttime work and passed over for senior management roles or promotion. I wondered in what ways you are trying to tackle that issue.

Debbie Crosbie: First, I will talk about my own personal experience. I was a senior executive and went off on maternity leave. Ten years ago I was offered the opportunity to come back as a senior executive in the bank three days a week. I know it does not sound like a big deal now, but 10 years ago, I felt as if I had won the lottery. I would argue that I probably did more than most of the men in my three days than they did in their five, but I certainly felt very privileged to be given that opportunity. I found no personal barriers to being promoted. I was actually promoted to take on the UK CIO position from working three days a week.

I then chose to come back to work full time, but that was because the organisation allowed me to tie that appointment in with the start of my daughter going to school, so I was very fortunate again. I personally have found that this is not the case. I think there is a twoway set of responsibilities here. Individuals who work part time have to realise that it is not suitable for every role. You must be much more honest about that. I think that dialogue between the organisation and the individual is really important.

We have a lot of different arrangements. Nearly all the requests for flexibility are granted, but there are occasions where individuals ask for arrangements or to go into parttime roles where we have to come back and say, "Look, we do not think that is right for you and we do not think it is the best thing for the organisation." We do a lot to find suitable alternatives, but I think that just allowing people to assume that everything must be flexible is a naive attitude to business. It is very important that the culture in an organisation is supportive, but it must be realistic about helping people set achievable goals for themselves and for the organisation at the same time.

Q167 Ann McKechin: You have talked about the ability that you had to move from parttime work into a more senior fulltime role. Is that now becoming more normal practice, rather than something that was unusual when it happened to you?

Debbie Crosbie: Yes, there is no question. We have a very high percentage of flexibleworking practices. That is not just for women. That is one thing that is important to change this culture. If this is just seen as a women’s issue, it sends the wrong messages. We have a number of policies-whether the responsibilities are caring for older parents or any other responsibility-under which people can apply for parttime working, key working and flexible working. We embed and encourage that as part of how we do business now. It is very important this is not just seen as a women’s issue or an issue for junior people. It is embedded in how we do our business now. It is very important that people like me, who hold very senior positions, are supportive of that. Some 50% of my leadership team that runs the operations and IT functions in the bank are women; two of them work flexibly.

Chair: The next section is on flexible working. Julie will lead on that, as a former trade union organiser, and Brian Binley will be supplementing the questions as a former SME businessman.

Mr Binley: What do you mean a former SME businessman?

Chair: Right, okay.

Q168 Julie Elliott: I think you have answered the first question, Debbie, but I would be interested to know what other people think. Can a senior member of an organisation really work part time or flexibly?

Tim Ward: I think the answer is absolutely yes. It depends on the culture and the values the organisation holds. An interesting study was carried out earlier in the year by the CIPD, which was a survey 1,000 employers and 2,000 employees. The general finding was that employees working for micro and small businesses are much more likely to be working flexibly than those working in medium or large businesses. Also, the smaller the organisation you work for, the less likely employees are to have obstacles to working flexibly. There is something there about the size of the organisation-and perhaps the fact that there are crossovers of jobs and roles-that means people can share or cover each other’s roles much more easily than if you are in a much more ordered, risk-based environment where there are processes and procedures that introduce operational obstacles to working flexibly.

Q169 Mr Binley: Can I pick that particular point up? I do not think that is true. Having worked for an organisation like Courage, which employed 6,000 to 7,000 people in its heyday, and having founded two SMEs, I can tell you that the resources available for flexibility are much greater in a bigger organisation than in a smaller organisation. Most people who work in SMEs work for companies with 20 and fewer employees. Most of the information that those people carry about their jobs is not written down on a job description; it is in their heads. Let me assure you that flexibility places great demands on a company with very limited numbers in its work force. We need to face up to that. You surprise me when you say what you say.

Tim Ward: I am the chief executive of an organisation that is six people. We work flexibly. We have people who work from home.

Q170 Mr Binley: This depends on the type of business you are in.

Tim Ward: Absolutely, yes.

Q171 Mr Binley: It is related to that. Are you in IT?

Tim Ward: No. We run an independent membership organisation. We use technology-cloudbased databases and all sorts of things-to make sure that we are in contact and that people understand other people’s jobs.

Q172 Mr Binley: You have no production or servicetype requirement that the business is open and ready to provide services in certain hours. That is what is vital. Many SMEs fit into that situation.

Tim Ward: I, too, was mildly surprised by the survey, but it was quite clear that 30% of people are now working part time and 40% of women are now working part time. Flexitime is now something that happens as a matter of course in most organisations, as 96% of employers offer flexible working. Times have moved on. When you think that the first text message was sent 20 years ago, the ability to communicate and keep in touch across organisations has improved. I take your point that servicebased organisations, particularly, are able to work in a much more flexible and open way.

Q173 Mr Binley: It depends on what you mean by flexible working, because it covers a very wide area of possibilities. If you are talking about parttime work where you are hot-desking-somebody works the desk in the morning and somebody else works the desk in the afternoon-that is a relatively easy form to accommodate. You may call that flexiworking; I would call it parttime working. My own company uses that to great effect, and we do it quite sizably. Flexi-working suggests a more flexible arrangement than that. It is that bit that really is the concern: placing the responsibility on the employee to do a certain amount of hours when most companies at that level want them to be there at certain times. That is the problem.

Helena Morrissey: I do think, Brian, that you completely right. It does depend on the nature of the work. However, I do think there is-at least there is in many companies now-a preparedness to consider approaches around this issue that they might not have considered before. The question was around seniority-whether it is possible to be senior and work flexibly.

Ten years ago at Newton Investment Management-this is nothing to do with gender diversity whatsoever-I was under pressure to make redundancies, but I did not want to do that. We were in a bad phase-we are now in a much better phase now and that is all behind us, I hasten to add. However, rather than making redundancies, I asked for volunteers to go on to a fourday week for six months. To my surprise, as many men as women came forward. To this day, some of the most senior fund managers at Newton have stayed on a fourday week, and that is because of the nature of the role. We have kept them longer and it has helped to remove the stigma. I think that that is what it comes down to. Again, coming back to these law firms, they cannot work like that, but they could give women or men the summer holidays off, because it is more project-based work. I do think that the idea of being able to flex what flexible working means for the nature of a company is extremely important.

Q174 Julie Elliott: That has gone way around, so I think you have almost answered the next question. The people ringing in to "Woman’s Hour" were very much asking, "Do you think the option of working flexibly or part time can affect the running of SMEs?" I think you have answered that, but does anybody want to add anything to it before I move on to the next bit? You have answered it. Okay, we will move on.

Helena, this question is for you. Can you elaborate on the view expressed in your written evidence that young gifted people are expected to contribute intellectually quite differently from the current senior organisation? Does this apply particularly for women?

Helena Morrissey: I think it is an opportunity for women. I was really trying to get at how the internet has changed everything, and we have touched on that already. I do think, as I mentioned earlier, that companies are tending to lag. This is an opportunity for creating a different working environment that can be more ecologically sound and better on all sorts of aspects of transport or office space and so forth. It does not work for every single type of company.

However, this point was raised first of all by a managing partner of an accountancy firm who said to me, "Helena, if we do not change what it takes to become a partner, we will not be able to attract and retain the best and brightest young men or the best and brightest young women." When I asked him what he meant by that, he said, "I realise now that in every other part in their life, up until leaving university, the people who are really intelligent have learned to use technology in a way that connects them with people and allows them to make an intellectual contribution." They do all their work online and so forth in terms of their degree. I think, again, that companies are lagging at this. It has not been a coincidence, in my mind-this has come up in several other responses to other questions-that those companies that understand this diversity issue are also the ones embracing technology and thinking about how to work more smartly and efficiently, and therefore attracting talented people.

Q175 Julie Elliott: That is interesting. There is a question on employment law now. What are your views on employees being given shares in a company in exchange for relinquishing certain employment rights, such as the right to request flexible working and the proposed changes to employment law?

Tim Ward: Perhaps I could offer an answer to that. I think there is a huge danger that if an employee gives up their employment rights in return for shares and leaves under adverse circumstances, you end up with a bad leaver and also a bad shareholder. The mechanics of organising such a structure are fraught with difficulty. There is already an existing structure, the enterprise management incentive scheme, that allows employees to share in the ownership of companies in a very positive way, rather than in a way that requires somebody to give something up in what I see as a fundamentally negative way. When people are hired, it should be done in a positive way, rather than saying, "As you come in, you must give something up." There will be benefits from this proposal perhaps for directors of companies and for founding shareholders, but I cannot see it as a mainstream scheme that will be widely adopted.

Helena Morrissey: I agree with Tim’s points, but one of the things that I think might have been the motivator behind this is that, from an employer’s point of view, if you employ a woman of childbearing age, or any woman, actually, or somebody who is homosexual, disabled or an ethnic minority-all the groups that we would want to be included in diverse populations-and they are dismissed, there is not only the bill for unfair dismissal, but unlimited liability for sexual orientation or disability discrimination and so forth.

Most employers would not admit that it might give them any pause in terms of hiring those people, but I worry that people are thinking that if something goes wrong, it is unlimited, whereas there is a £62,000 ceiling on unfair dismissal. I think there is something quite odd about that: if you are a white male heterosexual with no disability, you could be let go for £62,000, whereas if you do not tick any of those boxes, you could be asking for millions of pounds. That is something a little bit strange.

Q176 Julie Elliott: The reality is that very few people get awarded those amounts of money in an employment claim.

Helena Morrissey: No, but I think companies are afraid of sex discrimination suits. Obviously, they should be, if something has gone wrong-I am not condoning any of the bad behaviour, of course. However, I am a little bit anxious that some policies that are designed to protect people in any of those groups-we are talking about women being 50% of the population-might end up backfiring by there being such a big gap between what it might cost if things go wrong. I suspect that might have been one of the motivations, if people are saying, "Don’t not hire that person because she is a woman," but she could be a shareholder and perhaps relinquish some of those rights. I do share the concern that Tim has: to solve one problem, you have created another one.

Q177 Chair: Before we move off this issue of flexible working, I represent West Bromwich West, which is a highly industrialised constituency with a lot of small businesses, many of which are fairly traditional foundries. They have survived amazingly well over the last few years by showing great resourcefulness and a huge commitment to the work. By and large, I think it is fair to say the management is male-dominated. They live almost from one day to the next, and they put in very long hours. Do you have any views about how small businesses surviving like this can adapt their working practices to encourage the effective recruitment of women and parttime working? I see one model that seems to work often in the service industries, but it is very much more difficult to adapt for manufacturingbased SMEs. Do any of you have any views on that?

Helena Morrissey: I think that is a valid problem to raise. Perhaps we have seen this in something like the 30% Club. It has filtered down from the top. These problems might seem almost insurmountable when you are thinking, "How will I go about changing all of these things? How would it work?" Instead, what we have seen from the FTSE and down to the 250-obviously I realise it is a long way from these SMEs-is that now companies are starting to think in a way that makes it less scary. This includes the manufacturing companies with bigger work forces.

The worst thing would be to try to impose some sort of requirement on these sorts of companies. One would hope, however, that as they see it happening, they might experiment with saying, "Let us try this role part time," or, "Let us try job sharing in this particular role," or, "Let us try somebody doing a piece of it from home." For example, it could be a receptionist. There can be an office phone that goes through to somebody. If one tries to conquer it all in one fell swoop, it is almost mindboggling.

Q178 Chair: Are there any other comments?

Liz Murrall: I would just add that from the perspective of institutional investors, while we have seen a lot of progress in the listedcompany sector on women on boards, the number of all-male boards has dropped now from 21, when Lord Davies first published his report, to eight. However, if you look at those eight companies in the FTSE, they are largely overseas mining companies. It might be quite difficult for them to have women on their boards just because of the nature of their jurisdictions. While there is a very strong case for having diversity within boards, we also need diversity between boards. Maybe it will take much longer to actually achieve that diversity.

Q179 Ann McKechin: Liz, you spoke earlier about the UK corporate governance code and how it has been modified over the last couple of years. The last modification was in October. The Secretary of State for BIS, Vince Cable, was talking a couple of days ago about a sort of nameandshame policy for those company boards in the FTSE 100 that still did not have female directors. I wondered what your views were on the amended code. There is this issue about requiring companies to explain their policy on boardroom diversity. Are you thinking that companies are likely to comply, or do you think that there will be a core that will be reluctant to accept this?

Liz Murrall: As I said, this requirement is effective for financial years beginning on or after October 2012, but the FRC asked companies to ensure early compliance if they could. The study by Cranfield was very encouraging in this regard: I think it showed 59 companies having a diversity policy that included gender. However, I also think there are proposals from BIS that are coming forward now in terms of narrative reporting, which are asking companies to report on the number of women in the workplace as a whole, and also in senior executive positions. All these things will actually make the whole thing more transparent. It will be for investors-we have heard about the investor group that is coming together-to challenge companies that do not comply with these expectations.

Q180 Ann McKechin: In the IMA’s evidence, it spoke about the voluntary stewardship code and mentioned that 36 firms have signed up. This is in terms of recruitment. In fact, they are responsible for the majority of FTSE 350 applications for positions. How many firms have not signed up to the voluntary code, and what percentage are the 36 firms of the entire work force?

Liz Murrall: My understanding is that they represent around 80%, but I will come back to you on that.

Q181 Ann McKechin: I think that it would be very helpful just to get an indication, and 80% would certainly be a very high percentage. The problem with a voluntary approach is that you make incremental and step changes for a period of years-I accept the argument that all of you reflected on that this takes time-but there will always be a minority of companies that will be very resistant to any change whatsoever. Do you consider that at some point down the line-perhaps five or 10 years from now-if companies are still completely resistant to any degree of diversity, the argument for making things enforceable by law becomes greater?

Liz Murrall: Presumably it is quotas that you are referring to.

Ann McKechin: Yes.

Liz Murrall: The good thing about quotas is that they work, as the Norwegian experience has demonstrated. However, they also have a number of unintended consequences. Appointing women to fulfil quotas can be quite disruptive to the existing board members-not only the men, but the women who have come up the hard way. It can also demotivate people from applying for these positions, because women will see that they can go in as non-executive directors and do not need to pursue a career as an executive director, which is where the majority of non-executive directors are recruited from. In the Norwegian experience, we saw things like women becoming overboarded, and you would have certain women who sat on seven or eight boards. Companies also sought to address it by doing things like increasing the size of the board, which may reduce its effectiveness.

Q182 Ann McKechin: This is the argument about speed. I think you have made a persuasive argument that trying to do this too quickly has these consequences. My point is that if you have a voluntary approach for a period of time to allow people to adjust and adapt, you might still have a resistant core that is not prepared to co-operate or to embrace it. In that case, do you think the argument to make it enforceable becomes stronger?

Liz Murrall: I think you need diversity within boards, but you need diversity between boards as well. It may be appropriate for those companies not to have a gender diversity policy.

Helena Morrissey: Could I make a couple of comments on that? On the Norwegian experience, to clarify, it works only in terms of non-executive directors on boards. There is no change in the executive pipeline and there is no improvement in the number of CEOs who are female in Norway-it is only 3%. A hundred companies de-listed from the stock exchange to circumnavigate the legislation.

On the issue about the point at which it becomes required, I am vehemently anti-quotas, because I think they are discriminatory in themselves. That is a point of principle. However, I do think that investors are the ones who need to insist because, ultimately, they own these companies. It is all very well for us to make excuses and say, "They are mining companies from Kazakhstan and therefore they should be given special dispensation." You do not need to be a miner to be a nonexecutive director on a board. If you want to be listed in the UK, you must abide by the rules here, I think. It comes down to investors. If we really are serious about adhering to our stewardship responsibilities, investors would be saying, "We will vote against the appointment of the chairman of your nominations committee or the appointment of directors," who come up for annual re-election.

Tim Ward: Can I make a couple of points about smaller listed companies? Outside the FTSE 350, we have done a rough estimate of the number of female directorships in companies with a market capitalisation below £1 billion, which is roughly halfway into the FTSE 250. We estimate that it is between 7% and 10% of directorships. However, it is very important to bear in mind that the number of listed companies is not a fixed number, and it is not a growing number.

If the opportunity for women to become directors of listed companies is seen as being very important, it should be recognised that over the past 10 years, the number of UK-listed companies has fallen from above 1,200 to below 600. The number of opportunities for both men and women to become directors of listed companies is falling. That is a very important point.

The point about influencing and changing behaviour is incredibly important from an institutional investment point of view. If you take Barclays, it has thousands of shareholders. Apart from some Middle Eastern shareholders, there are not many that have more than 5% of that particular company. In the smaller listed companies, it is often the case that an institutional investor will have 10% or 15%. The opportunity for institutional investors to influence a change of behaviour within those companies is significant.

Ann McKechin: Thank you; that is very helpful.

Q183 Mr Binley: You mentioned the Norwegian study, which has gained some prominence. Did they do any work on tokenism? Is there not a danger of tokenism when a statutory situation is implied?

Helena Morrissey: Definitely. I would not want to be on board if I was there because of a quota.

Mr Binley: Yes, because you had to be.

Liz Murrall: In the Norwegian experience, the women involved quickly became known-dare I say it-as the golden skirts.

Mr Binley: Have you got that down, James?

Q184 Caroline Dinenage: I would like to talk about equality legislation versus the voluntary approach, and whether there is a business case for equal pay between men and women.

Helena Morrissey: I definitely think there is, but as far as I am aware, there is equalpay legislation already. It has been around for a very long time and yet, obviously, every time there are studies or any analysis of the current situation, we do not seem to have equality, which is why, ultimately-we have seen this through the financial crisis-you can have 6,000, or 10,000 or however many pages there are in the FSA handbook, but if companies do not follow the spirit as well as the letter of the law, it is all for nothing. I think people can tick boxes, but unless they actually own an issue, they just pay lip service.

Debbie Crosbie: I can talk about the experience I have from the bank. We have an annual audit, and the one thing that is important about that audit is that we share the outcome of that audit with our union. Therefore, if there are issues that emerge, we are held to account. We formally investigate any differences of 5% or more. We have committed to taking action. I entirely agree that it is one thing to have legislation, but it is entirely different walking the walk as an organisation. Unless organisations are motivated to do things like that, I am not sure you will see a big shift.

Q185 Chair: Can I just supplement that? The Equality Act 2010 did give the Government power to introduce through regulations a duty on private employers to undertake equal pay audits. The current Government decided not to introduce such regulations. Do you think that would help or not?

Debbie Crosbie: I think that if you have to resort just to legislation, it is disappointing. For me, the bank I work for has done that entirely of its own accord. It is part of the culture and the commitment that the bank has made to having a diverse work force and treating people fairly. It is something that could be considered. It would not make any difference to what we do in the bank so, from a personal point of view, it would not change what we do. I find it difficult to comment on other organisations.

Q186 Chair: Does anybody else have an opinion on that?

Tim Ward: A blanket approach such as that adds to cost of business. It should be much more targeted where possible, because if it is yet another cost, yet another regulation and yet another procedure, it is the smaller companies that bear a disproportionate burden.

Debbie Crosbie: I would totally agree with that. It is just another opportunity for consultants to enter your business to advise you.

Q187 Chair: Perhaps not surprisingly, Julie wants to come in, and so does Robert. Tim, you said "more targeted" approaches. What sort of targeted approaches did you mean?

Tim Ward: This is not a subject I have thought through heavily or fully. I think my general inclination is towards more targeting rather than blanket.

Q188 Chair: I am not sure quite sure, in the absence of a coherent argument, what targeting means.

Tim Ward: Let me say that where there is evidence this is not happening, efforts should be targeted there, rather than saying that the whole of industry should have to pick up a particular bill to make sure that a minority are behaving.

Q189 Julie Elliott: Can I ask a general question about equal pay? I would be the last person to want to put in added bureaucracy for the sake of it, because that does drag companies down-there is no point to it. However, would you agree that equal pay for work of equal value within companies helps businesses to succeed?

Tim Ward: Definitely, yes.

Helena Morrissey: I think it is a moral principle. It does help you to attract the right talent and keep it, yes.

Q190 Mr Walker: I wanted to move on to the next question, which slightly turns that picture on its head. One of the witnesses we heard from last week said that even the current legislation was too complicated and that they would prefer to see a situation of voluntary selfregulation: "If you can do it, we expect you to do it"-a "comply or explain" culture. Do you think there is more scope for that?

Tim Ward: For all legislation, I think "comply or explain" is a very good approach. A principlesbased approach is to be welcomed. I cannot speak to the equality legislation but, generally, we have a corporate governance code for smaller companies that are not listed. That is a "comply or explain" approach. It is principlesbased, and it enables companies to do what they can to meet those requirements and explain where they are still working to match up to the FTSE 100 companies.

Helena Morrissey: The issue has to be what "explain" means if you do not comply. Again, going back to one of the unutilised parts of the puzzle-or something that is not quite fully fledged-investors have often typically accepted that companies do not do these things because they have some special reason-not perhaps over equal pay, but over other aspects of best practice. I think that this is one of the real obligations on the part of responsible investors-they must challenge companies. The FRC examined what an explanation meant and found that many are very perfunctory. If they do not get a satisfactory answer, investors should either vote against the appointment of directors, or not invest in a company.

Q191 Mr Walker: We have seen a voluntary approach work in terms of increasing the number of women members of boards. Do you think it can have a similar impact on equal pay and narrowing the gender pay gap? Also, do you think that activist investors pay as much attention to the pay gap as they do to the number of women on boards?

Helena Morrissey: I do not think that they do. I do not think it is as visible. That is the trouble. This perhaps goes back to some of the issues about auditing and so forth. I think most investors would assume that companies adhered to legislation and would not challenge them on it. This, again, goes back to what one might be-perhaps naively-looking for in terms of this brave new world of investors being responsible and challenging companies who in themselves are very keen to demonstrate their credentials in all this. I think we must create a jump from where are at the moment, with investors very focused on the most recent profit-loss statement and the immediate strategy of the firm, to a focus on broader sustainable policies.

Q192 Julie Elliott: Can I just ask a question? You have talked a lot, Helena, about investors being people with the power to change things by asking questions or not voting for people. In your experience of the companies you have dealt with, are the majority of investors men or women?

Helena Morrissey: It is actually an industry where there are a lot of senior women. The majority are still men, but when we look at our own organisation, Newton Investment Management, about 26% of the senior investment professionals are women. It still needs more work. We have the same problems as every other industry does, but active investment is a performancebased career, and therefore your value is not judged by how many hours you work. I have a large family-I have been there and done that in terms of juggling things-but I knew, ultimately, that it was the quality of my investments. Sometimes spending hours and hours on an issue meant that you analysed your way out of the decision.

Just to be clear, in the investor sub-group of the 30% Club to which Liz alluded, there are 14 members. Four have a male representative at our group, so it is not only female investors. However, that is just a coincidence; it is due to who is running the corporate governance area, which tends to be a little bit more dominated by women.

Q193 Mr Binley: Picking up what Mr Ward alluded to, most investors in SMEs are members of the board, or at least many of them are. If you look at the shareholdings of board members, particularly for companies with fewer than 100 employees, they are the same people. I wonder how that impacts on this particular situation, bearing in mind the sizable percentage of the work force that work in that sector. It changes attitudes, does it not? That is the point I am making.

Tim Ward: Yes. It is about attitudes, culture and behaviour. We do a quarterly survey with the accountants BDO. It is done by YouGov. We ask 100 companies whether they have hired in board and management positions, and 64 said that they had. Some 24% specifically asked for women on long lists and, from that, 38% of the shortlists had women on them, and 28% appointed women. I think that shows a change.

I cannot say how many of those are family-dominated or have a controlling shareholder within the company, but that is more likely to be the case in the smaller quoted companies. I think we are beginning to see a change, but we intend to track that over the next few years to see how that changes in terms of that question. However, it is very important from our point of view that it is not just boards but senior management positions as well, because the boards of smaller quoted companies are smaller and they will have controlling shareholders. It is about bringing women right through organisation.

Q194 Mr Binley: How does this impact on the concept of equal pay?

Tim Ward: It must be a reflection of it. I think it goes hand in hand.

Chair: That does conclude our questions, so may I thank you? That was very helpful indeed. I think I did ask for any further comments you could make about the Bundesbank survey.

Helena Morrissey: I will come back to you on that.

Chair: Again, if there is anything you feel that you would like to add to the evidence that you have given us today, please feel free to submit that in a supplementary written form. It will be given due consideration. Similarly, if we feel there is a question we should have asked but did not, we would be grateful if you would reply, if we send it to you in written form. Thank you very much.

Examination of Witnesses

Witnesses: Dr Ashley Steel, KPMG, and Peninah Thomson OBE, The Mentoring Foundation, gave evidence.

Q195 Chair: Good morning and thank you for agreeing to speak to us today. Could you just introduce yourselves for our transcription purposes, starting with you, Peninah?

Peninah Thomson: Good morning. I am Peninah Thomson. I am the Chief Executive of The Mentoring Foundation, which is a notforprofit organisation that runs the FTSE 100 CrossCompany Mentoring Programme. I am a founding member of the steering committee of the 30% Club and the UK director of the New Yorkbased Center for Talent Innovation. I am the co-author of four books on women’s leadership and getting women into boardrooms. I have brought you one of each-but only one of each.

Mr Binley: I now have something to do over Christmas.

Chair: I am not sure I will have time to read it before asking my questions, but thank you.

Dr Steel: I am Dr Ashley Steel. I am ViceChairman at KPMG. I have spent seven years on the board at KPMG, both at European and UK level. I have also held a global role for about the last 10 years now.

Chair: Thank you very much. It is not such a problem when we just have two panellists, but do not feel you both have to answer all of the questions unless you have something you wish to add to or subtract from the other’s comments.

We will start off with personal experience, and Robin Walker will open.

Q196 Mr Walker: I have a question for both of you. You are both highly successful businesswomen. Do you think that women face more obstacles than men in the professions you have worked in?

Peninah Thomson: Until about 1999, I would have said no. We are all creatures of our experience and life history, and I had an extremely good career, first of all with the Foreign and Commonwealth Office, then with NATO, and then 14 years-that is another 14 years; I do things in 14s-at PricewaterhouseCoopers. It was not until I took what I thought was going to be the last step in my career-to become an executive coach of a small partnership-that I had my worldview challenged, because I started to realise that my life experience, in fact, was not particularly common among women.

If I may, I will just tell you I had nine clients when I first started coaching: six were men and three were women. The women clients I had-although they were extremely competent and highly experienced, and I could see no reason why they should not have thrived in their professional careers-were not thriving as well as their male counterparts. I will not go on with the anecdote, but that was the start of an experience for me after which I started to see the world through a different lens. Up until 1999, my answer to your question would have been no. To be completely honest with you, Robin, if you had started talking about all these topics of glass ceilings and so on with me prior to 1999, I would have thought it was special pleading, but when I started coaching and working with senior women to help them to develop their careers, I realised that actually there was something going on that was partly structural and procedural, and partly behavioural. I changed my world view.

Q197 Mr Walker: Do you think that that was partly to do with the size of the organisations that you worked for? They were large public sector organisations and then large private sector organisations. Perhaps some of the people you were working with were working for smaller organisations that may have found it more difficult to provide equal opportunities.

Peninah Thomson: The answer to your question is that I do not know, because the clients who tend to come to coaching are sponsored by their companies. By definition, it is easier for large companies to sponsor human development programmes and leadership development programmes than small organisations, so I think I had better confine my remarks to my experience base, rather than take a punt on what the situation might be in SMEs, in which I am much less experienced.

Q198 Mr Binley: Again, it is easy to forget that SMEs provide 60% of the employment opportunity in the private sector. We can never afford to forget that. My view of SMEs-it is my sector, so I am biased in terms of the viewpoint-is that they simply want the best person for the job and they really do not have time to mess about with all the other stuff that smacks them around the head and attempts to detract them from their prime objectives of, first, keeping their business viable, and, secondly, earning a bit of profit, if that is possible, on top of that. You have some experience in that sector. Is that a fair view, or do you think I am totally biased?

Peninah Thomson: How could I say possibly yes to that question?

Mr Binley: Of course you can say yes. I will say you are wrong, but you can say yes.

Peninah Thomson: On your point, I completely agree with you that the situation in small and mediumsized enterprises is completely different. Interestingly, just in my own field, running the FTSE Programme, recently-a year ago-we enlarged that to welcome in FTSE 250 companies, which are not SMEs, but it is another layer of activity within the UK economy. Even at that level, it is perfectly evident that the issues are different. It is much closer. What is the best way of explaining this? There is a much more immediate relationship with the P&L for a FTSE 250 company, and I am sure that is even truer for SMEs. I am very willing to believe that. I certainly believe that people are searching for people to do the best possible job and to appoint on merit. Your point is whether the issues are different; I suspect they very much are.

Q199 Mr Walker: Dr Steel, if I can return to the original question, do you think that women face more obstacles than men in your chosen profession?

Dr Steel: First of all, please call me Ashley. Undoubtedly, yes. There are a number of reasons for that. One is that at the senior levels of professional firms, there are still very few women. I was one of only two women on the board when I joined our board back in the early 2000s. I was fortunate enough that we then had a chairman in Sir Michael Rake who was very consciously not biased-that is very open to diversity, and also very open to meritocracy.

However, it is difficult. I still find that men talk over women. I see that myself and I am not a shrinking violet, as my colleagues will tell you. However, men have a natural tendency to speak over women. They have a natural tendency to go and take consultation from their male colleagues, so I think that women are slightly sidelined. Women therefore have to work harder to be heard. They have to be tenacious, they have to work hard and they have to find ways to get their point of view taken seriously.

I have to say that I think that is a drain on the individual, and therefore it does not necessarily enable the individual to flourish and deliver what their full potential is within an organisation. However, I think anyone who feels that it is as easy for a woman to be at the senior-and probably even the more junior-levels of the organisation among professional services firms would be kidding themselves. It is much more difficult for women.

Q200 Mr Walker: We had some comments earlier that the culture of billable hours might be part of the problem. Would you agree with that?

Dr Steel: It is not something that I necessarily recognise. Partnerships can be quite different. KPMG has nearly 600 partners, and there is a variety of different roles within that partnership. We are not all driven by billable hours. Once you join the partnership, you are on the bottom rung of a new ladder. Billable hours are very important on the lower parts of that ladder, but actually it is much more about building relationships as you move up the hierarchy. Billable hours are not so important. There is no onesizefitsall answer in that regard.

Q201 Mr Walker: Just to return to Peninah, obviously you have moved in and out of the private sector and the public sector. Do you see a difference in the approach to senior women between the two?

Peninah Thomson: That is a very interesting question. In recent years, the public sector has stormed ahead in terms of appointing senior women as permanent secretaries, for example, although that is now shifting again. The macro point is that this subject is constantly on the move. It never stays still.

Although the FTSE Programme is called the FTSE 100 CrossCompany Mentoring Programme, paradoxically it is open to FTSE 250 and to public sector organisations. We have the head of the Foreign and Commonwealth Office as a mentor. The Treasury Solicitor is a mentor. We were delighted to learn last week that Nick Macpherson from the Treasury is coming in as a mentor on the Programme. Why is that? I believe passionately that both sectors have a lot to learn from each other. There should not be these rigid divides between the sectors and silos, and that is one of the things I have spent most of my life trying to work against. I also think we need to increase communication and learning across these boundaries.

To come back to your question, I do think that the public sector has made tremendous strides. I think it has something to teach us in the private sector, and we have something to offer the public sector, which is why I have both sectors in the Programme.

Q202 Chair: Do you have anything to offer SMEs?

Peninah Thomson: I am starting to feel very conscious that I need to develop something to offer SMEs-that is not a flippant remark. We started this Programme nine years ago. It is 10 next year, and we are very proud of that. We started off trying to do something tangible, practical and pragmatic to address the issues that your Committee is studying. It is a learning exercise. We are all learning; it is not a doneanddusted thing.

The first expansion step was to broaden from the FTSE 100 to include the public sector. The second expansion step was to welcome in FTSE 250 chairmen last year. We are thrilled about that. We are just developing a Pipeline Programme, which I hope you will be passionately interested in, because I certainly am. I need to bed the Pipeline Programme down this year, frankly, but it may very well be, as I listen and learn from the previous session, that we ought also to turn our attention to SMEs.

Q203 Caroline Dinenage: I would like to ask Peninah what the key objectives of The Mentoring Foundation are. How do you measure its success?

Peninah Thomson: The only purpose of The Mentoring Foundation is to run these two FTSE Cross-Company Mentoring Programmes. There is one for executive women, and we launched the Pipeline Programme on 20 November at the Bank of England with the Chief Executive of Legal & General. Now we cover the talent pipeline in companies. That is all it does; it has quite a narrow remit. Would you be interested if I were to take a moment to give you some context?

Caroline Dinenage: Yes.

Peninah Thomson: Four of us set up the FTSE Programme in 2002, after Derek Higgs’ report came out. We looked at that. I had written a couple of books by then. I was consulted for the Higgs report, The Tyson Report on the Recruitment and Development of Non-Executive Directors and then for the Judicial Appointments Commission. I was starting to be regarded as someone with a few interesting ideas on this topic. Four of us bent our minds to what practical things we could do to help move things along. The thing we invented, with the encouragement of 18 FTSE 100 chairmen, was the FTSE Programme.

Over the years, the other three colleagues developed their own pathways and set up businesses-and, in one case, became a professor. I have ended up running it, which I have been very happy to do, and I was doing that in parallel with my day job, which was being a partner at an executive-coaching firm.

After Lord Davies’ report came out, a group of the chairmen who were mentors approached me and said, "We are thinking hard about what our companies ought to be doing to address Lord Davies’ challenge, and we have come to the conclusion that the FTSE Programme is the strongest programme we have in this country. It is a vehicle for bringing very talented women at a relatively quick pace through to being boardready. If we assist you in exiting from Praesta Partners amicably, help you set this up as a notforprofit company limited by guarantee, and commit to giving you some support"-I had never been a chief executive before; I am an adviser-"would you be willing to step forward and try to expand this in order to meet this UK requirement?"

I was very honoured to accept. In the last year I retired from Praesta Partners and became Chief Executive of The Mentoring Foundation. All it does is these two Programmes. It runs two mentoring programmes. It draws women to the attention of 58 FTSE chairmen, which is an extraordinarily wonderful situation to be in. We conduct in-depth research. We do substantive research and we hold learning events: for example, the colloquia at the London Stock Exchange and the Bank of England, of which there have been four. Thanks to the kind sponsorship of Unilever, we are able to run a mentee network to keep contact between mentees. Michael Treschow, the Chairman of Unilever, believes very strongly that women can learn from each other as much as they can from being mentored by the chairmen and chief executives. Those are the things that we do.

Sorry, that was a long answer to your question, Caroline.

Q204 Caroline Dinenage: The last bit of my question was this: how do you measure the success of it?

Peninah Thomson: In the pack, which I hope that you will receive later, there is a brochure. On page 3 of that brochure there is a little chart, which will show you the criteria against which I have been evaluating performance. Fortuitously, even 10 years ago I had a feeling that this programme might work, so I started collecting data in a very systematic way, which was a great blessing.

Some 103 mentoring pairs have participated in the executive Programme since 2003. There are eight criteria through which I evaluate their success. Some 22 have been appointed to the executive committee or the main board of their own FTSE 100 company, while 23 have been appointed as NEDs in private sector companies in the FTSE. Eleven have been appointed as NEDs of a notforprofit organisation or charity-big charities in some cases. Four have been appointed to the executive committee or main board of a nonFTSE company. There are four more to go. Twelve have been appointed to a significant role in the public sector or Government, including one permanent secretary, and 21 have been promoted significantly in their own company. Three have been appointed CEOs of a nonFTSE 100 company, i.e. a smaller company, and one has been appointed trustee of a pension fund. Those are categories through which I evaluate progress. I have not included the names of mentees, because we guard those quite carefully, but what I have included for your interest in the pack is a chart that shows all the achievements since 2003. I hope you will find that quite interesting.

Mr Binley: Would you allow me, Chairman, to balance that?

Chair: Just a moment, Brian. Julie wished to come in; we will bring you in afterwards.

Mr Binley: I wanted to know how many had been sacked.

Q205 Julie Elliott: You have obviously given us a lot of evidence on the outcomes and what actually happens. How do people get on to this programme? How do they become one of the people you mentor?

Peninah Thomson: They must be nominated by their organisation. For example, four new chairmen came along on a factfinding mission to the Bank of England colloquium on 20 November. They had been quite sceptical, to be honest with you, but they have since written and said, "Actually, I think we want to bring our company into this; what do we have to do?"

What do they have to do? The chairman or chief executive must agree to be a mentor. I can go into more detail later, if you would like. Equally, he or she must bring in a nominated mentee or mentees. RollsRoyce has three mentees in the Programme. Other companies have fewer. HSBC has two mentees in the Programme. A mentee can only come into the Programme by being nominated by her company. Companies, if you like, are taking a view about their own talent pipeline and are positioning their mentee or mentees as part of that human development process to build their talent pipeline.

Q206 Mr Binley: Just to be balanced, you read out a very impressive list. How many have been sacked? How many have fallen by the wayside? What sort of tracking have you done on the other side of that coin?

Peninah Thomson: I have a question before I try to answer. When you say sacked, do you mean sacking the chairman?

Q207 Mr Binley: No, I mean this: how many of your people fail? I just want a balanced view. Have you done any tracking on that at all?

Peninah Thomson: Yes. I am in contact with all 104 mentees; my job is to run this Programme and to know what is going on.

Q208 Mr Binley: We just want to understand how successful this is.

Peninah Thomson: May I ask you a question in turn?

Mr Binley: No. Tell me the answer to my question first.

Chair: You will have to find a way of phrasing it.

Peninah Thomson: What do you mean by failure?

Q209 Mr Binley: You have read a very impressive list of successes, but in order to get balance, I wonder how many fell by the wayside.

Peninah Thomson: Thank you for clarifying that. Actually, there were none.

Mr Binley: That is fine.

Peninah Thomson: In order to be absolutely transparent with you, in the last nine years we have had one mentoring pair that I would describe as so-so. There was no warmth between them. They went on for a year-it was fine; it was very workmanlike-but there was no chemistry.

Q210 Mr Binley: That is still a very impressive programme.

Peninah Thomson: Thank you.

Mr Binley: That is what we need to see.

Dr Steel: Can I just make a point about mentoring? I think one must be clear that mentoring does not fix everything. What Peninah is doing is, by its nature, only focuses on a few people. We have mentoring for men and women-it is not gender specific. Not everyone who goes through some form of mentoring necessarily gets promoted or moves upwards. It is only one part of a much bigger, rich mix of things you have to do to help to support women-and men, and people of different diversities-throughout the organisation.

Q211 Mr Walker: I am very glad you made that point, because I think that is absolutely right. In my own business career, I was mentored by the first ever female partner of my firm. It was certainly something that helped me.

Seeing as we have two very successful businesswomen here, I was wondering if you could talk a little about what role mentoring played in your own careers and in getting you to where you are. We have heard a lot of evidence suggesting that mentoring is very important and can play a big role. I think it would be good to get some practical examples of where it might have made a difference to you.

Dr Steel: From a personal perspective, I have never had a mentor. I have looked at people; I have observed people. I was assigned to the now Lord Sharman for a oneyear period and worked alongside him as his executive-not in a mentoring role, but in a real role-and I looked, I observed, I learned and I replicated, if you like. Sir Michael Rake was another very powerful role model I looked at. Interestingly, those were two men-not women. Again, it was about looking, learning, replicating and trying to emulate their success in some of the things that they did. However, it was not a formal mentoring programme. I believe that a lot of people do not perhaps look enough at what people are doing to succeed-or they may not be willing to do what is necessary to succeed. I am not saying that that is right, by the way, but I note it as an observation.

Personally, I often ask myself these questions. I also have a samesex partner. Some people tell me that I am actually doubly disadvantaged. I do not think so; I think it means I am doubly advantaged. However, you must have a positive mind; you must be tenacious. I have always put the firm first, my career second and my family and friends third. That is a personal choice that I have made, but it is a choice and I am very accepting that is the case. It will all come to me later in life. I have worked hard. I work unsociable hours. Certainly, that is the nature of my profession. It was what I felt I needed to do to get forward. That is possibly not right. It is probably not right for a lot of women.

Do the professional services firms-KPMG included-need to do more to enable women to come forward in order to progress? I have not had children. I do not think I would have been able to achieve what I have achieved if I had had children, I admit. My heart goes out to women with children; I cannot even begin personally to comprehend the difficulty that that must cause them in moving on in the organisation. Do I think that organisations have to be more flexible, more helpful and more supportive to women with children? Yes, I do. I think there is a lot more still to be done; it just was not my personal experience.

Q212 Mr Walker: Obviously, Peninah, you have become involved in promoting mentoring. Is it something that came out of experience of your own?

Peninah Thomson: Yes, but earlier on I did not use the word "mentor". I did not think of the interest that was being shown in me as being mentoring. What I was very conscious of, and have benefited from all my life, is that, for whatever reason, people took a kindly interest. They have guided me, warned me, made remarks, provided a touch on the tiller and given a little bit of advice here and there. What is all that? People put me in touch with others; they were generous with their contacts. What is that but mentoring?

While Ashley was speaking, I was thinking, "Who will I talk about?" I would like to tell you that the captain of my Girls’ Life Brigade was my first mentor, when I think back to it, in her style and stance and in teaching me to march. Lady Lockwood was an absolute inspiration. She and I sat on the governing body of a college for mature students together. I learned so much from her. I think I probably learned everything I know about leadership from Sir Nicholas Henderson, frankly-and Peter Allen, the senior partner of PricewaterhouseCoopers.

If I look back, I have benefitted from so much. That realisation was part of the 1999 Damascusroad experience, when I realised that not all women had had people of either gender take a kindly interest and help them on their career path. That is something I felt I could do something about. Yes, I have benefitted hugely from mentors.

Q213 Ann McKechin: Ashley, we have been talking about the Government’s proposals on employee ownership, but of course you work in a profession where employee ownership and partnership is the norm and partners do not have employment rights. I wondered to what extent, given your own experience of being the person in charge of partner profit distribution reviews at your own company, you think that this particular Government proposal has any degree of weight or substance, or whether it going to apply to any particular sector of business?

Dr Steel: I do not know enough about the detail of the proposals, so it is difficult for me to comment, but I would say I think one has to be careful about swapping employment rights for equity in a business. Something inside me says that that is a dangerous road to go down, and I cannot quite articulate what that is.

Q214 Ann McKechin: Other witnesses today spoke about the disadvantage of having to terminate employment if someone still holds shares in the company. What you do in those circumstances is very different from when you are a partner, because if you leave, you no longer have an interest in the company.

Dr Steel: No, and as a partner in the firm, we have no employment rights whatsoever. Technically I am selfemployed within a larger partnership, and I could be asked to leave tomorrow. That is the nature of our business, but one knows that going in.

Q215 Ann McKechin: A lot of the professions are based on self-employment models. I am a solicitor by background, and it used to be simply that somebody was an assistant and then they became a partner. Now there are all sorts of gradations: associates, associate partners, nonequity partners, equity partners and so on. In your own company, there are probably even more complex levels. Do you think that the traditional partnership model that has been used in many professions is appropriate, or does it act as a barrier, in a way, in terms of gender balance perhaps?

Dr Steel: I do not think it has any impact on gender at all. I think partnership is just what it is in the word. It means that you are shoulder to shoulder with your fellow colleagues of the same seniority, which makes you behave in a certain way and makes you want to be supportive. You are all in it together. It drives certain behaviours, and I think that is why partnerships are quite important. We can easily make decisions to make changes and, in a sense, at some levels it is much easier. However, I do not think there is anything genderspecific in a partnership model or an employee model.

Q216 Mr Binley: From what you have said, Peninah, I guess this question is primarily directed to Ashley, because it is about your views on the Government’s proposed reform of flexible parental leave-with parents being able to choose how they share the care of their children, particularly in that early formative period. I want to come at it from the perspective of SMEs, because I genuinely think the resources are available to bigger corporates-be they Government or business corporates-to deal with this problem rather easily. If you go lower down the scale of employment, it is more difficult to deal with this problem, particularly when you recognise how many people set up a life partnership from the workplace. We have not done enough work on that, but my guess would be that it is considerable, and that the workplace is perhaps the No. 1 place-maybe except for the pub-where people meet and then go on to set up relationships. I wonder what you think about the particular proposal and, specifically, its impact on the smaller SMEs.

Dr Steel: Again, I do not know the detail.

Q217 Mr Binley: No, but your company deals with quite a lot of small SMEs as well as big management people, so you would be in that sort of environment.

Dr Steel: It does, but for the record I tend not to deal with SMEs.

Mr Binley: You do not get in with the real stuff.

Dr Steel: I have to say, however, that I was brought up in a family business, so I do understand SMEs.

It is much easier for a large organisation to provide all the flexibleworking arrangements-be they for men or women-than it is for a smaller organisation. My sister is self-employed; she owns her own hairdressing salon. All the people she employs are females. In that particular business, it is not straightforward as to when some of the women will have children and want maternity leave, but it is manageable because they can work more part time; they can take time off then come back. However, I am sure there are other SMEs-perhaps in small manufacturing-that would find it quite difficult, potentially, to replace skills, particularly, for example, those of a man who wants paternity leave. Again, I do not sit here knowing the answer to that. It is a conundrum that we all need to continue to work towards trying to resolve. I am very sure that we do need to do more for women in order for them to have the flexibility they need to get back into the workplace.

Q218 Mr Binley: I understand. Peninah, would you like to make a comment? I did not want to put you on the spot, if you felt that you did not have any background to offer.

Peninah Thomson: I do not, but I have an observation. My mind is starting to turn on the conundrum you have raised: how do we cascade further out into the labour force-including to people employed in small and mediumsized enterprises-some of the benefits people in larger companies have? One of the things I have just jotted down for me to reflect on is to talk to Dick Olver at BAE Systems, because he is extremely keen on getting more women into engineering, as is Sir John Parker. This is something that drives each of them. I am starting to wonder whether perhaps in a year’s time, when women have been through the pilot Pipeline Programme, of which BAE Systems is a member, we can perhaps use them as ambassadors into SMEs. This is a little idea that I am starting to think through as I listen to what is happening this morning. I am just starting to cogitate. I will give some thought to this. I do not have an answer, but I will give some thought to it.

Mr Binley: That is a step forward; I am grateful. I think I will keep my other two questions for the next panel, because there is no sense trying to drag information from you that you are struggling to provide.

Q219 Chair: If I could just add something, in my constituency there are many foundries and it is difficult to get people to go into foundries to work. It is fair enough that the age profile is such that I am not sure that this is a big issue, but I could see it potentially being one in a context where a company is finding it difficult to recruit people and there is flexible working and the opportunity for males to take paternity leave-if, indeed, it is a maledominated company. How do you address the problem that this potentially creates? Do you have any ideas that you could throw at us on that?

Peninah Thomson: I am a big fan of role models. That is one of the things I think the Programme has provided. That is something I am trying to encourage the 104 women who have been through the Programme to regard themselves as, because people who have themselves experienced something good that has added benefit, inspired them and opened doors for them are the very best ambassadors for that process. In my evidence, I think I popped in a paragraph at the bottom about how important getting into schools is. Increasingly, I think this is more and more important. It is also important to get into universities and help young people to understand the full breadth of opportunities that are available to them. I am starting to wonder whether some of the 104 mentees might be willing to approach being ambassadors and role models in a slightly more systematic way. This is something we could perhaps explore.

I am on the strategy group of my old college, Lady Margaret Hall. We have been working quite hard to get a broader intake-in common with many other colleges. We have had some success. I wonder whether there is some learning that I could take from that enterprise and put it into the Programme and encourage our mentees to be ambassadors, role models and articulate exponents for younger women at an earlier stage of their careers-or, indeed, at school or university-who are considering, as it were, non-standard, non-conventional and nonstereotypical career paths such as the one you have described.

I do not have a pat answer-you would be amazed if I were to pretend that I did. We would not be sitting here if there were an easy answer to that, but I think role models have a part to play. Being ambassadors also might have a part to play.

Q220 Chair: If I could just explore it further, do you think that the implementation of this sort of legislation might actually provide a solution, in so far as the small businesses that have had difficulties recruiting people in the past may find it easier if those people feel there is a regulatory regime that would meet their particular needs?

Peninah Thomson: That is a tough question for me to answer, Chair. On the whole, I am much more in favour of example, influence and bestpractice modelling, rather than increased regulation. That is just a part of my belief system. I respect the idea of legislation, but I am not sure about this. I am a big fan of carrots. What I try to do with this Programme is to create a carrot: something that people will want to join and participate in. I think I regard more regulation or legislation slightly as the stick. I think I would prefer to see whether we could build a climate of desire in which more companies want to participate.

Dr Steel: May I make comment on this? I created and chair a group called the Women in Transport and Logistics group. Effectively, it is a dinner club. We meet four or five times a year. I thought there would be few women we would pluck out to join this group. I am pleasantly surprised that it continues to grow. One of the things we talked about at one of our recent dinners was the lack of role models and the absence of promotion of female train drivers, female bus conductors, female lorry drivers and so on. We actually felt that what needed to happen was greater promotion: women do not see women as lorry drivers, necessarily.

Unless there is more of a public campaign around these types of roles and the possibility of women being in them, I think it will always be difficult to find women moving into those types of roles. I do not know whether that is a responsibility of the Government or of local employers and SMEs, but more promotion around this area would be a good thing.

Q221 Caroline Dinenage: I have a supplementary question-not on this specific subject, but on the general information that has come out today. I come from a manufacturing background: my business was manufacturing. It is a business in which it is very difficult to take time off. When my baby was two weeks old, I had to take him back into the office with me-that is just the nature of the business. I just wondered, within the mentoring scheme, whether you felt in some way that the mentors had learned from the mentees. Had they changed their working practices as a reflection of what they had learned from their experiences?

Peninah Thomson: That is very much the case. Almost without exception, the mentors tell me this. I go around and see them about three times a year-it varies, but certainly twice a year and usually three times a year. Let me stick to the male mentors. Over and over again I have heard them tell me, in some cases with great surprise, "I am learning as much in this as she is." That is a good thing. That is another crossboundary learning thing that I am such a big fan of.

My answer to your question, Caroline, is yes-they do. In fact, though I will not name the company or the chairman, one chairman of a FTSE 10 company told me that one of the things his mentee had told him about practice in her own organisation had so startled him that he went back to his own organisation, summoned the HR director-let us call him Henry; his name was not Henry-and said, "Henry, talk me through how we do this here; tell me that we do not do what company X does, because I do not like the sound of it one little bit." That was very interesting for me to learn. The viral nature of good practice is very powerful. Yes, they do learn from the mentees; it is a twoway process.

Q222 Chair: Can I just finish? As a matter of principle-I think I probably know the answer to this, but I would like it on the record-are you in favour of regulations to ensure that a greater number of women are appointed to boards, or do you think it should be a matter of merit?

Dr Steel: Can I pick that up? If you had asked me that question a year ago, I would have been absolutely anti-quotas. I always felt that it was either quotas or a meritocracy, and that you could not have both. If you ask me that question today, I have fundamentally changed my mind. I actually think that we will not succeed in making sure there is equity of access for women on boards-or all the way down through management hierarchies-unless we do have quotas.

I noted the earlier comments around 30% and that the 30% should be 50%. Until we achieve full equality, which may be decades out, I think the overall ambition should be 50% and much more representative of the population of the country. I do believe that quotas should be introduced. When we get to 30%, I will celebrate, but I do not think it stops there.

Q223 Chair: That shows how wrong I was. Can I ask you, Peninah?

Peninah Thomson: I have to differ. I am on record as saying I think quotas would be entirely counter-productive and not in tune with our governance framework of "comply or explain" in this country. I think we are making much faster progress now since the publication of Lord Davies’ report. People have got their foot on the accelerator now. There is much more to do-I am not saying it is done and dusted-but we are making very significant progress. It would be hugely destabilising for the ecosystem of governance in relation to this topic in the UK to impose quotas. I think it would be a big mistake.

Dr Steel: Can I just add to that? I see lots of women-not just in my own organisation, where we are really good; we have four females on our board now-across the businesses that I work in and the client organisations that I see. At the next level down there is a really rich vein of women who are more than capable of being on boards-both in nonexecutive roles and, most importantly, executive roles; we must not duck that. The 30% Club has done a fantastic job on the non-executive directors, but we must start tackling the executive roles. I think that the timetable to achieve it could be 10 to 15 years-I am not putting a timetable on it-but I think we must put a stake in the ground to help keep that rich vein of people. The multitude of programmes we have are proven to help, but this is still not moving us fast enough. That is a reason why I think I have changed my viewpoint over the last 12 months.

Q224 Julie Elliott: That covers my question, which was going to be about what had caused this sudden change. Going forward from that, you are saying that there is this rich group and we need to get them up. What, in your experience, has brought that rich group up? To get to that level, you must start at the level below. Are we doing enough through that chain to get people to that level? In my experience, the very informal discrimination starts at the very lowest level, not when people have reached that oneoffthetop level. It is about getting through that.

Dr Steel: By definition we have not done enough; otherwise we would have 50:50 representation on our boards and throughout the management hierarchy. By definition, the answer is no. However, my fear at the moment is that women in the work place and senior women in the work place are receiving a lot of airtime. That is fantastic, but it still feels sludgy and slow. My fear is that this rich vein of women who exist-I see this-will actually give up as the task is too hard. My fear is that we will go backwards, not forwards. I think that we must grip this. We must grip it now and start being much more proactive and bold in helping women-albeit through quotas, but also with meritocracy running right alongside it. I would never have wanted to join our board unless I had got there on merit. That would be against every bone and every breath in my body, but I believe you can have both.

Q225 Mr Binley: I do not believe you can have both. I think you have made the point yourself that one cannot have both in your answers to our questions. You did make the point that your life was a lifestyle choice. The whole problem of lifestyle choice is emotionally and culturally more difficult. If you reach the stage where there are forced quotas and too many people are not of the ability-as could be the case if there is less of a marketplace-you will run into trouble. That may not sound very fashionable, but it is the reality out there in the workplace.

It is about choice. Many women I know do make that choice about family, and it does reduce the size of the market available. I think there is a real problem between size of market and quota-lifestyle choice and quota. I am sure that forcing that through at this stage could be very detrimental to your cause. I would not want to see that, because I genuinely believe that, in the sector I work in, it is about the ability of people-not about gender, colour or creed. I genuinely believe that at the level I work in, because I want people who will make my company more successful and earn me more money, it is a very simple basis.

Dr Steel: So do I, Brian, but are we therefore saying that, on average, women are less able than men?

Mr Binley: No, we are not. I made that point.

Dr Steel: I made a lifestyle choice. I worked hard in order to achieve what I have achieved.

Mr Binley: That is admirable.

Q226 Chair: Let Ashley respond and then, if necessary, I will bring you in.

Dr Steel: However, I do not think that the things I have done are necessarily right for every woman to have to go through. That is why I say that organisations have to do more to ensure that the life that I had to go through to move forward in my career should not be the path that every woman has to take. So much more must be done by businesses and by the Government to make sure that what I had to go through is not necessary. But we still need to have women on boards. I think some women-I am not saying all women; how could I talk for all women-will choose to be at home because it is just too difficult for them to go back to work, although they would probably like to. We must change that situation. I am not saying we need 30% or 50%-you can choose whatever number you want-on boards over the next year or even in 10 years’ time.

Q227 Mr Binley: But you did say 50%. You would rather go to 50%. You did say that.

Dr Steel: I honestly think 50% is the right goal, because that is representative of the population of the country. I don’t know what the population of the world is, but I suspect it is representative of that as well.

Mr Binley: You are the witness; I am not. However, I think you run a great danger of setting your cause back.

Q228 Mr Walker: Ashley, you mentioned some of the issues women face in terms of being talked around and talked over-those kinds of things. Are you not concerned that there could be risk-if you have a quota system and women are being put into positions because of a quota-that there would be more danger of being ignored by colleagues, who will think they are there purely because of the quota?

Dr Steel: Yes, I think there is that risk. By definition there is that risk. I ask myself-I am still formulating my thinking-whether that is a risk worth taking? Businesses take risks every single day of the week. If everything was black and white, business would be boring. I think it is a risk worth taking. We have a large number of programmes now that are supportive for men and women. There are mechanisms and safety nets-whatever you want to call them. The risk is there. However, the sooner there are more women on boards, the sooner risk will start to diminish, because there will be a greater number of women on the boards, and those businesses will be successful.

Q229 Chair: Regarding this issue, we have heard the Norwegian experience quoted considerably during the course of this session. There is a study by the University of Michigan on the impact of mandated female board representation. I understand that it suggests that balanced boards through mandated quotas can have the opposite effect, undermining shareholder returns. Are you familiar with this research and have you any comment on it, Ashley?

Dr Steel: I am not familiar with that research, no.

Q230 Chair: If you would like to be and could provide us with a comment subsequently, that would be very helpful. On a different topic, Ashley, earlier you said that the Government should do more. Do you think that current employment legislation is too complicated? Are you in favour of regulation of private employers to undertake equal pay audits?

Dr Steel: Like the previous panel, anything that adds to the regulation of businesses I would be against. There is probably too much regulation at the moment. Again, I think of my sister and her hairdressing business. There is an awful lot of regulation, and that is quite a cost for small businesses. I am pretty much antiregulation.

I would make one comment on laws. I think the Equal Pay Act was in the 1970s, but I do not think we have equal pay yet. There are a couple of reasons for that. One is that women do not have equal access to senior roles where you find higher pay. The other thing is that one trait of women is that we do not necessarily shout about our performance and the good things we do in business, whereas I think men-I know I am making generalisations here-tend to be a bit more outspoken about their achievements. I do not think we should seek to change how women behave.

I will contradict myself slightly here, because I think mentoring can help women get out there and be heard, but I would want to encourage organisations to look inwards at themselves and at the mechanisms they have for collecting information about people’s performance, to rely less on who shouts loudest and speaks up, and to introduce mechanisms that are about collecting information about individual performance in a much more rigorous way.

Peninah Thomson: It is tremendously encouraging-building on Ashley’s point-that there are two very interesting developments that support that process. First, there is the Government’s own "Think, Act, Report" framework that has been introduced by the Home Office, which a number of companies are taking up and will voluntarily encourage organisations to provide that sort of data and that sort of information.

At the colloquium at the Bank of England, Baroness Hogg talked about the introduction-I think on 1 October this year-of the regulatory framework that requires companies to report on the situation with regard to gender in their companies. Those two very good mechanisms have been put in place and we need to give them a chance to work. I am not sure how old "Think, Act, Report" is, but it is not older than about a year, is it?

Baroness Hogg and the FRC’s initiative was enacted on 1 October this year. I would like to suggest that we should give those initiatives a chance to function for a bit before we start throwing everything up in the air again and destroying the jigsaw. You get the point.

Dr Steel: It was interesting listening to the earlier panel, because there were a lot of questions about research and being able to justify that businesses will be better by having more women on boards and so on. As I sit here, I just want to flip that. Demonstrate to me that it is better to have a predominance of men on boards. It is always about women having to justify their position and their place. Sometimes we need to think about that and flip that question around. Maybe there is research on that; I do not know.

Q231 Ann McKechin: Ashley, I was interested in your comments about how you balance rising by merit with having quotas, and how you now believe a bit in both. Is that on the basis that perhaps quotas should be introduced after a period of years? If we have a programme where we have various targets and initiatives but they do not work, should we consider quotas? Would that be your judgment, or should we be thinking about introducing a quota such as a minimum of 10% or something now, and trying to build that figure up as the years progress?

Dr Steel: As I have said, I have moved my thinking around. I do not know exactly what the end outcome would be. I do believe, though, that we need to seize the opportunity now. I see no reason why we should not; I see no reason why there should not be some form of quota. The devil will be in the detail. You mentioned 10%; intuitively, 10% feels just wrong. The devil will be in the detail, but I think we need to be doing more and I think quotas are possibly a way forward. I do think you can have quotas and a meritocracy sitting alongside each other, but I certainly did not think that a year ago.

Chair: That brings us to the end of this session. May I thank you very much? I will repeat what I told the previous panel: if you feel there is anything you wish to add to any of the answers that you have given us today, we would be grateful to receive it in the form of supplementary written evidence. Particularly, Ashley, if you could have a look at the University of Michigan survey and comment on it, I think we would find that helpful. Similarly, of course, we may feel there is something that we would have liked to have asked you but failed to do so. We would be grateful for any reply to a supplementary question we submit. Thank you.

Examination of Witnesses

Witnesses: Anya Hindmarch MBE, Chairman and Chief Creative Officer, Anya Hindmarch, Dr Margaret Mountford, Trustee, the Bright Ideas Trust and adviser on "The Apprentice", 200509, Marie O’Riordan, EditorinChief, John Brown, and Heather Rabbatts CBE, first female NonExecutive Director of the Football Association, gave evidence.

Q232 Chair: Good morning and welcome. Could I just ask you to introduce yourselves for voice transcription purposes, starting with you on my left, Marie?

Marie O’Riordan: My name is Marie O’Riordan and I am a freelance magazine journalist. I have formerly edited three consumer magazines. I am currently EditorinChief of a company called John Brown.

Anya Hindmarch: Good morning. My name is Anya Hindmarch. I am founder, Chairman and Chief Creative Officer of my company, Anya Hindmarch.

Dr Mountford: I am Margaret Mountford. I was lawyer in the City for 25 years. Now I do a variety of things. I am a trustee of the Bright Ideas Trust, which sponsors young people setting up business, and I am Chairman of Governors at an inner London school.

Heather Rabbatts: I am Heather Rabbatts. I hold a number of nonexecutive directorships, including on the board of the FA, and I run a media and film company.

Chair: Thank you very much. I will just repeat what I told the two previous panels. Some of the questions will be person-specific; others will be general. If it is a general question, do not feel that all of you are obliged to answer if something has been said by the previous person, unless you wish to add to or subtract from it. Feel free to pass on it.

I will ask Julie Elliott to open the questioning.

Q233 Julie Elliott: As successful businesswomen, do you think that you face more obstacles in work than men would in your profession?

Anya Hindmarch: No.

Dr Mountford: No.

Heather Rabbatts: Yes. It would be a shame if we were all in agreement, would it not?

Marie O’Riordan: I would also say yes.

Chair: We have two yeses and two noes-this should be interesting.

Q234 Julie Elliott: For those who have said yes, can you give examples of what those obstacles are and how you have overcome them?

Marie O’Riordan: My entire experience is in media, specifically women’s magazines. It is a very femalefriendly environment. I had two experiences with very big companies where there was good legislation for maternity leave, etc. However, I think the core of the staff were mainly women in our fertile years-between the ages of 25 and 50. When I was managing staff at that level, talent was the key competitive advantage. The magazines I was managing were very big brands, so I was lucky enough to be able to attract the best talent available.

When they went on maternity leave, I encouraged them to take as much time as they needed, and there were pretty good rights in their contracts-for example, one company had six months’ fully paid maternity leave, which I recognise is generous. However, I did feel from my bosses that I was considered quite an indulgent boss when I encouraged them to come back at reduced hours, if that was what they wanted. They generally did want to come back at reduced hours. Generally, they would come to see me before their return to work and say they wanted to come back at reduced hours. In order for me to have that person back on my team, which I would generally want because they were the best at what they did, I was prepared to look at them working from home or having more flexible hours. But my bosses felt that I was a little bit indulgent of that and would discourage me from accommodating their flexible hours.

I felt that quite a lot of men at similar levels-certainly at the executive level-enjoyed going to evening networking functions, of which there are very many in the media sector. While they would seem to me to enjoy those functions, I would find the women tended to be very stressed about returning home either for relieving nannies or child care or doing homework-or just generally being a mother. I felt that men had an easier ride of it at a certain senior level.

Q235 Julie Elliott: Were your bosses men or women?

Marie O’Riordan: There were probably more women than men, actually. We did discuss it. Often my female bosses would say, "Well, nobody helped me on the way up, so I do not see why we should indulge the next generation." The merit versus quota debate was often had.

Heather Rabbatts: Taking the assumption that talent is reasonably equally distributed across men and women, if you were to look at the numbers represented across FTSE or industry or other sectors, women are clearly not represented in terms of the talent distribution-by the sheer fact that everybody is talking here today. I am the first woman appointed on the board of the FA; on most of the boards I sit on, I am the only independent nonexecutive director who is a woman. That is true across a number of sectors. All the prima facie evidence is saying that women are not represented.

In terms of my own experience, if you look at women’s careers, there is the time leading up to having children, there is having children, and there is trying to return to work. Women are impacted by these in a variety of different ways. There are mechanisms, as has been referred to earlier, for trying to encourage women back into the work force, but they are pretty sparse, and not that effective. We leak huge amounts of talent out of the system.

If you want us to talk about our own personal experience, I would say it is actually incredibly lonely. On one level it is great to be a role model, allegedly, and the first women on boards, but it is a very lonely place. I do not begrudge them this, but men have a whole series of conversations, comforts and familiarity that you are always trying to break into, whether that is in formal agenda pieces or in the informality around a board. You learn to navigate your way through that, but I think many women, when I talk to them, find that quite difficult to contend with. Experiences of both the formal setting and the informal cultural code are difficult to get at.

Q236 Julie Elliott: Thank you. Do you think it is important that women such as you are seen as trailblazers or role models, or do you think that gender is irrelevant?

Dr Mountford: I think gender is irrelevant. I think women do not do themselves any favours by having women’s groups-and women’s this, that and the other. If you look at a job, you look at who the best person for it is. I never perceived things in gender terms. I can remember interviewing a prospective trainee and being asked how many women partners we had in my City law firm. I said, "I do not have a clue. I have never counted them." That is not relevant; it should not be relevant. I find it rather alarming that we are still sitting here discussing these things when we have heard the same old stuff year after year after year.

Q237 Julie Elliott: If it is not relevant and we assume the population is equally talented among the genders, then why are there so few women on boards?

Dr Mountford: They do not stay the course to get there-that is my feeling. There are issues as to why they do not stay the course. The point is not sticking token nonexecutives on boards; the point is having women at senior executive levels coming through. Nobody wants anybody as a nonexecutive on their board who does not have relevant experience. Nobody wants to be the token woman on the board. We have to stop women leaving the professions and business at these intermediate levels. It is not a board issue at all. They leave for a variety of reasons. More of them leave now because perhaps there are more choices-certainly at the more senior level.

Anya Hindmarch: I went to Goldman Sachs and they explained to me that they recruited 50:50. Often it is 60:40. By the time they get to senior levels, it is down to 20:80 and maybe less. The truth is that I do not think women want to do it. A lot of women-and I think this is brilliant-probably have a choice with their partner that one of them has to be more involved with child care and, perhaps, often it is the women who has those nurturing needs. I think that is great. We are forcing an issue.

I think it is slightly insulting to women. If they want to do it, it is completely possible. I know a woman you had here this morning has nine children. She is very hard working; her husband does the majority of the child care. They have worked out that solution. Other women balance it 50:50, and sometimes the woman stays at home.

The difference is that we are different from men-we have children. Because we bear the children and, mostly, we like to care more, the majority of the child care goes to women. I think we are forcing an issue that almost becomes annoying to women, personally. It demeans women. We need to make sure the workplace is fair, but we should not force it beyond that.

Marie O’Riordan: My experience is probably slightly different because I worked in a femaledominated environment. I found that women did want to proceed to the executive and board level, but probably felt constrained by the fact that their partners did not have flexible working hours. Their partners could not, or chose not to, take responsibility for the child care as much as the women I was working with were able to, who primarily undertook the child care side of the relationship. However, because their partners did not work in such an enlightened environment, my female colleagues perhaps took on the lion’s share of it, whereas if men had had equal paternity leave and paternity rights, etc., women would have been more inclined to go forward to the executive level. The people who did go to the board level were women without children. They were the ones who succeeded. My view is that it was not talent that was preventing them proceeding, but time. They felt they could not balance it by being good parents as well as good colleagues.

Heather Rabbatts: Clearly, parenting has a huge impact on both women’s and men’s lives. I will make a couple of comments. I talk to various women. Certainly, when I was at the Bank of England, I spent some time talking to both the banking and investment banking community, where, as has been mentioned, you find that women get to a certain level and they are no longer apparent. One of the cultures we discussed was the longhours culture, where it was a wellknown trick to leave your jacket on the back of the chair at 6.30, go out and come back at 8.30, and work perhaps until 9.30, but one’s productivity was questionable. Most women who were caring for children could not do that. There is something about the cultures that are created in companies that makes it very difficult, at times, for women to progress.

There is another point about women having the requisite experience to be on boards. It is absolutely about ensuring that you have expertise and whether you have had a rich career. I remember once, when I was running a football club, having various people apply to be a football manager. One person sent in their form saying that they had taken Accrington Stanley to the final of the European Championship. Whilst my knowledge of football is slightly limited, I knew that Accrington Stanley had not been to the European Championship final. When I read further down their CV, it was because they played PlayStation. Because they played Football Manager, they believed that this equipped them with the right skills and experience to apply for jobs in real life. I tell that story as a slight joke, but you would be surprised.

I think it is fantastic that men have that level of self-confidence about themselves. Whenever I have recruited people, men will always say, "I ran this project," and women will say, "We ran it together." I have been involved with mentoring schemes. If women present themselves in a different way, they have a huge amount of skills and experience to bring to boards. I sit on boards where my male counterparts are certainly as not as experienced as many of the women I know. That is because they are still not part of that board conversation.

Chair: Unfortunately, Accrington Stanley beat my team, Cheltenham Town, in real life.

Heather Rabbatts: I am so sorry, Sir-oh dear. We all can speak of the pain, however, of losses by our clubs.

Chair: I will bring in Brian Binley.

Mr Binley: I am a Northampton Town supporter.

Heather Rabbatts: Good on you, Sir.

Q238 Mr Binley: I want to pick up on Marie’s point and relate it to the world of politics. I have been involved with the Tory party for 52 years. You might think I am a total anorak-and I think I might agree-but the selection boards that select candidates to be Members of Parliament are often dominated by women in the Tory party. They were the people who always picked men. This sort of supports the point you are making, and it supports yours too, Heather. There is a cultural thing going on here that needs to be broken down. I do not believe it will be broken down by quotas or whatever; it will be broken down by women themselves creating the cultural change. Is that a fair point of view, or am I being overly optimistic?

Marie O’Riordan: Cultural attitudes are much more difficult to shift than legislation. I feel that women have not been on boards for long enough-that is, for centuries-to feel the benefit of bringing in other women. I am looking at the portrait of the woman whose room we are sitting in.

Mr Binley: Some of us call her the Great Lady.

Marie O’Riordan: She is a wonderful woman, but famously she did not promote many women. Often women are almost embarrassed by their success and do not feel like giving another woman a leg-up in case they are criticised for being feminists. I think a lot of women on boards become more male in attitude than they were before they got there. There is some cultural dynamic that is difficult to identify, and I believe quotas would change that.

Q239 Julie Elliott: I would like to make comment. Obviously I am from a different political party than Brian, but that is certainly not my experience of politics. My experience of politics in the Labour party is that probably until about 15 years ago, when quotas were introduced, the committees that appointed politicians were almost entirely male. They were very heavily maledominated. Until we changed that through quotas, there was no difference. However, I do recognise what you are saying about women pulling the ladder up. That is definitely a recognisable thing in the political world; it is an issue of how, when people get to a certain point, they think, "That’s it," and stop other people. That is an issue.

Dr Mountford: Do they pull the ladder up? I personally think that that is nonsense. Whatever position they reach, if they are in a position to promote people, they should-and I hope that people do-promote the best person for the job. They should not be letting down the ladder lower than it would otherwise go, nor be pulling it up. We always have this talk about queen bees being up there and getting rid of the ladder. That is another of these old wives’ tales.

Marie O’Riordan: It is more complex than that, though. I do not think they pull the ladder up because they are suddenly antifemale. I think they are sometimes lacking in courage about promoting female rights in terms of flexible hours, maternity and all of the issues that actually discourage the younger generation from coming up. I think female board members have often achieved that without any of those benefits and therefore think, "If you want to make it, you must do it on your own and without these benefits."

The younger generation of women do not want to do that: they want to have flexible hours; they want to see their family; they want to have equality; and they want their husbands to share the burden.

Dr Mountford: That is not equality. What I think you are saying is that they want rather more than equality. They want flexible hours, but the same position as someone who has not had flexible hours. I am fine if everybody can have flexible hours. In the business I was in, as a corporate lawyer, clients did not want you to be saying, "I am off now and someone else is coming." If a jobshare were possible at that sort of level, there would be an overlap, which would have a cost associated with it. Either the client would have to bear the cost, or the firm would have to bear the cost. A seamless transition is not possible in that sort of a role.

Anya Hindmarch: It must start with what the company needs. Unfortunately it is a little oldfashioned to say it, but ultimately that is what drives this. Then everyone has to work flexibly and for the talent you have.

Talking of cultural shifts, I think the thing that needs to shift is that it is okay for men not to be the breadwinner. It is only fairly recently that women are now working while sharing and delegating child care. It is beginning to happen that sometimes, in relationships, men will say, "Do you know what? Actually, you have more chance in your career; you go and do that. I will look after the children." I think that would be a huge help. That is not strictly about paternity, because often I think the mother needs to be with her baby in those early months and so on. However, if there is any shift that needs to take place, it should be that that is a fine and okay thing among the guys-not a wimpy thing. It is beginning to happen.

I think this will happen naturally; I strongly feel we should not force it. The more naturally it happens, the more respect women and men will have for it. We have come quite a long way in quite a short period of time. We should not panic. Girls need to look after each other-I think they tend to-but generally, like Margaret, I sit on many boards and I do not think about how many men or women there are. I think about who the good guy is, who the bright one is and who the diplomatic one is. Everyone has different traits. I know some very girly men and some very strong masculine women. It is of almost no interest to me at all.

Q240 Chair: Anya, can I just pick up the point you made earlier that much of it is because women make life choices that men do not? That affects their obvious desire and ability to reach top positions. I think that is a fair summary of what you said. In terms of the Government, do you feel that a more positive regulatory framework for industry employment would do something to alter those choices?

Anya Hindmarch: I cannot say strongly enough that any more regulation-speaking as someone who is in a SME-will cripple this country. We are so overregulated, almost to the point where I am nervous talking freely about women because it is such a hot topic. I had HR on the phone saying, "Do not say this; do not say that." It has reached a ridiculous point. If we believe, as I do, that SMEs and businesses are the engine of this economy, we need to deregulate. From the coal face, I cannot say that strongly enough.

Q241 Julie Elliott: What regulation would you get rid of?

Anya Hindmarch: That is a tricky bit, which I would rather talk about privately, potentially, but I think employment laws are very tricky. The amount of money we spend on human resources is not, as I would wish it, to look after my people. We are a really nice employer. I employ predominantly women.

Q242 Julie Elliott: Which employment laws are tricky? What areas are we talking about?

Anya Hindmarch: Maternity laws are tricky. I think unfair dismissal is tricky, although that is not about women. There is a whole raft of things that I think are really suffocating. They almost end up forcing you to behave in an inhumane way. You cannot have proper chat with someone and say, "Listen, I do not think this is working that well; let me find you another job." I used to do that. I have always stayed friends with those people, after recommending them and they have gone on to be very successful. I find myself treading on eggshells and becoming hugely legal. It just feels really wrong, I think.

Heather Rabbatts: The issue of regulation in SMEs is a massive topic in and of itself. If we are focusing the conversation around what is happening in the FTSE 250 across the world of sport, for example, I still think ensuring you have the best talent available to you in your leadership positions is hugely important. Clearly, we are missing much of that talent; that needs to be addressed.

Q243 Chair: Anya, you held forth about regulations. That is fair enough, but you did not actually address the issue. Do you think it will change more women’s perspectives?

Anya Hindmarch: I think it could end up working against women, unfortunately. As a woman, a mother of five and an employer of a lot of women with children, I think it would end up making you make a choice between employing a man or a woman. You probably might pick the easier route because the regulation and the consequential cost and eggshelltreading would just be too onerous.

Q244 Chair: I would have thought that depended on the regulation.

Anya Hindmarch: Most regulation on the subject, in my experience, is supertricky.

Q245 Mr Binley: Mr Chairman, if I may say so, that very much depends on the business you are in.

Anya Hindmarch: Yes, I think that is a very important point. If you are running a call centre-or indeed, for me, the stores that I run-it is easier. The handover is not there. As an example, a lot of the people I employ have jobs for which they are very deep in specific knowledge and relationships with suppliers and so on, and that is not something you can easily hand over. More regulation and less flexibility, which I guess this would ultimately mean, would be very tricky for companies such as mine, but may be easier for a business like a call centre or a big retail operation, which is about putting in the hours perhaps.

Q246 Chair: Again, I am pretty certain I know your response to this, but does the potentially vast pool of talent that may be lost by women under-fulfilling their potential not justify a more interventionist regulatory approach?

Anya Hindmarch: Very simply, I do not believe that to be the case. The women I know who want to go on and have big jobs have every chance. That being said, I do not work in the financial sector, and I believe perhaps that is a slightly separate case, which I could come back to, although I do not have firsthand experience of it.

Certainly in my industry, however, I do not think it is a problem at all. Mostly, the women I know-I know many of them-choose not to do that for other reasons. There is one thing that might change this, perhaps. If you have a family, which I suspect mostly is the reason for women choosing not to go to the top of their careers, the example for that is their mother, who was perhaps the person who did the majority of the child care. If that were not the example, it might shift-hence my point about the shift in cultures and why, perhaps, it is about it being okay for men not to be the major breadwinner.

Q247 Chair: Certainly, with no disrespect to your profession, how representative do you think it is of most women’s experiences?

Anya Hindmarch: It is probably not the most representative, but it is still relevant. In some ways it is a good example of how it can work. I do not know how many women are on my board, but certainly on my executive team, it is probably more women than men. I should count; I genuinely do not know.

Dr Mountford: Surely, by the nature of the panels you are hearing from here-certainly looking at this panel-we will not be representative of the majority of women in the workplace, will we? That goes without saying, does it not?

Chair: We are going to have different panels.

Dr Mountford: Yes.

Q248 Chair: Can I move on now? This question is to you, Margaret. You are a trustee for the Bright Ideas Trust, which helps young people start their own business. What proportion of men and women approach you?

Dr Mountford: I asked the chief executive to find this out. You may this surprising, but we did not have a box on the website to identify gender. They had to do a trawl, and while some of the names were obvious, others were not. It looks as if it is about 50:50. The businesses in which we have invested, however-the current investees-are 65% femalerun. I do not know whether that means women stick it out more through <?oasys [pc10p0] ?>the application process-that is one possibility-or whether the sample size is too small to be able to tell statistically, but I think this shows that gender is irrelevant to us in deciding who we will support. It does not show any evidence of either group being in the majority at that level.

Anya Hindmarch: These are small businesses.

Dr Mountford: Yes, these are startups. They are kids starting up.

Anya Hindmarch: Entrepreneurship tends to be a wonderful and easy route for women. It can be at the kitchen table. There are routes for women; that is why I do not feel women have such a tough time.

Q249 Chair: I think there is an increasing body of evidence to demonstrate that new means of technology and communication are particularly well suited to what are traditionally perceived as women’s working situations. Coming back to the question, however, Margaret, is it correct that you specialise in providing business opportunities for NEETs?

Dr Mountford: Yes. It is for people aged 16 to 30, although that is older than the definition of NEET, which is probably 16 to 19, is it not?

Chair: Yes.

Dr Mountford: But these are kids. Some of them have come out of universities with degrees, but they do not have jobs and they are not in training and they have a business idea. A lot of them do not get to stage of being invested in. A lot of them will receive education along the way, and some will realise throughout that process that running their own business is not for them and they would be better off with an employer. Some of them have had employment experience; some have had none. It is very different starting off a business if you have never worked in one. We see a whole range.

Q250 Chair: As I asked you the original question, I could see how difficult it was to draw a particular conclusion because, first of all, what is the age group we are talking about? Secondly, how many within that cohort are male and female anyway? That could distort the number of people who form a new business. Are you able to provide that information? If you cannot do it now, would you be able to do so later?

Dr Mountford: Yes, I could go away and try to look it up, or you could get one of your people to go away and look it up, I suppose, in terms of the statistics that are available. I have no idea, if you are looking at 16 to 30-year-olds who are not in employment, education or training, what proportion of those are women and what proportion are men. I have no idea. I also do not know whether it is remotely relevant to the debate to take that age range as opposed to any other.

Q251 Chair: The other issue is graduates and non-graduates. The public perception of NEETs is that they are 16 to 19-year-olds with relatively low levels of qualification, but that may not be correct. Any information you can give us about that would be helpful.

Can I just go on to parttime and flexible working? This is a question to Marie, although I think you answered it quite well in your earlier answers. I was going to ask you about the world of the women’s magazine and the high percentage of female employees of childbearing age. I think you probably covered most of the points you would wish to make about your personal experience of running that. Have you found a real problem with continuity of work because of women leaving to have children?

Marie O’Riordan: Because the majority of my team were women, you anticipated the nightmare. Every time someone announced they were pregnant, you went into a maelstrom of panic about how you would manage that situation. Obviously, you had to work within the economics of the budget. However, it never was as bad as you thought it was going to be, and there was rarely more than two or three women pregnant at the same time.

I think the idea of managing it is probably far more terrifying than the reality of it. When it did work very well and the women returned to work, even at reduced hours, they were so loyal and fantastically motivated. They probably worked five times harder for three days a week than they did at five days a week. They cut out lunches. Softer skills went by the wayside; they probably had a less sociable time within office hours than they had before they went off to have children. They probably had less fun.

The other challenge for individuals was the economic challenge, because for example, their salary would perhaps have been reduced by two-fifths if they chose to return three days a week. In the magazine industry, creative staff are not particularly well paid. Child care costs within London are pretty prohibitive, which I think was a big factor. A lot of them might have ultimately resigned after a few years because they just found the economic challenge too difficult.

Q252 Chair: Could I ask the other three panellists a question? I recognise you have touched on this already, but in terms of parttime and flexible working-both for employees and for women in senior positions-have you anything to add about your experience of this that you have not already contributed? I will start with you, Anya.

Anya Hindmarch: I would only say that where it works for the business it is great; it is a really nice thing to be able to offer. In an office of 50 people, we had 13 babies last year, so we had an awful lot of pregnant people at the same time. It can work, but I think you must not feel scared if it does not work.

I do not know all of the ins and outs of the regulation, but I know I am warned to be very careful. We have to try to find something if we can, and that is really difficult in a business of my size. Actually, one team now is completely part time. One person is handing over to the other. There is a real cost to business, there are no two ways about it. This one cost I am prepared to take as much as I can, but I do think we must put the business at the front of this. If that stops working, it does not work for anyone.

Can I talk a bit about maternity, or should I just answer the flexible working question?

Chair: Yes.

Anya Hindmarch: There is one thing in relation to maternity that I would find superhelpful. I think it would be great if you were able to have a sensible chat with people about how long they were thinking of taking off. I would prefer it to go a stage further. I think it would work much better for women if they were asked to commit to how long they will take off. From the point of view of a business, if someone can take two months off or a year off, I have to hire someone for a year, because you cannot hire someone for two months and keep rehiring. I have to hire them a month in advance for the handover and a month at the end for the handover, so I am taking on a 12month-or at least an 11month-cost for what could potentially be two months’ cover. If I have that happening 13 times, in an office of 70-but, at the time, one of 50something-you can see the reality is that it is quite frightening for someone who is really fighting to grow a business. It is an important footprint. That is where one size does not fit all. I feel this is quite a key point. I know it is a hot topic, but I think a lot of decisions made about the time you take off are actually made for financial reasons, not reasons of how you will feel about your baby. You pretty much know you will love having a baby, because if you have a baby, babies are delicious. However, I think you take that decision on how long you think you can afford to take off. Clearly, if a baby is unwell, that is a different scenario-it is absolutely different.

Q253 Julie Elliott: Why can you not have those conversations?

Anya Hindmarch: There is a brown envelope flashing above every woman’s head in terms of tribunal threat.

Q254 Julie Elliott: There is nothing in employment law that says you cannot have those conversations.

Anya Hindmarch: I can promise you that, in reality, when you are practising it, it is very complicated. I have the loveliest group of women-we are so lucky; we have the happiest time-so it is not that my situation is a problem, but it becomes quite threatening. Women do use it. While I would agree in literal terms, I think if you were to talk to some HR professionals, they would say this is not the case in practice.

Q255 Julie Elliott: It is not my experience as a trade union official for 12 years. It is actually good business practice to have these conversations.

Anya Hindmarch: Yes, but at the point of asking whether you will have to hire someone for 12 months and needing to know, you are not able, in any shape or form, to be seen to be forcing them.

Marie O’Riordan: The guidelines of the legislation are that you are entitled to something like a full 12 months off. You may decide, during that 12month period, that you want to come back earlier, but your employer is not allowed to ask you, "Do you think you will come back earlier?" You, as the employer, managing what Anya is describing, have to plan for the person to be off for 12 months-even though that person may choose to come back earlier. The point of not being allowed to ask them is that no woman knows how she will feel or about the health of her child, which means it is unfair to ask her in advance of having the child. That is the thinking behind it.

Anya Hindmarch: For me, that is the bit that is slightly insulting to women. Women do know how they will feel. I sat down and worked out how long I could afford to take off, what I felt I needed timewise, and what my job needed-what I could do in terms of who would be covering me. Personally I feel it would be absolutely fine to commit to that. Clearly, if the situation was different, in that I had an ill child or a problem, I would go back to my employer.

Women are naturally respectful. I think we must not always legislate for women not being respectful; they generally are, in my experience-in 99.9% of cases-as are women bosses. However, it is this sort of thing that I think causes frustration and ends up with everyone behaving by the book. I think that is a real shame. I think we are providing for the lowest common denominator.

Q256 Mr Binley: I want to widen it out, because if you have been in the room for a while, you will know that my particular interest is SMEs. I think they are the lifeblood and the ethical base of business in this country. I am sick to death of corporates, but that is another matter altogether.

Can I ask you to talk about something I see as the nonexecutive chairman of a company that I started in 1989, which employs mostly ladies? I often see that we have a black market in SMEs in terms of the regulation impacting upon employment so that it never really gets to the point that the trade unions come in or other bodies come in. When you have a problem, everybody says, "For God’s sake, pay them. Do not go to court because you will spend too much money." That black market exists. Is that a fair comment? It does not impact on women in the workplace, but it does impact massively on SMEs, and every chance I get to make that point, I do so.

Anya Hindmarch: As an SME, I can say absolutely yes, because the management time is so stretched. My management team is 10 people. If you have a situation in which you could win, frankly, is it worth the management time when that is so much more valuable? You absolutely would settle, even if it were to be completely unfair. To be honest, in my experience it is so weighted towards the employee that it is just not worth taking the risk. It does not come across as being terribly fair.

Mr Binley: That is absolutely right.

Anya Hindmarch: It is crippling for business.

Mr Binley: Yes, it is. I have been there; I know.

Chair: Can I bring in the other two?

Q257 Mr Binley: Yes, I wanted to get to Margaret on that particular point.

Dr Mountford: On what you have just said, I would add a yes. Sometimes, if you are in an insurance situation, your insurer will force you to settle because they do not want the cost to be incurred. You do not even have that decision to make yourself. As far as the law, my former profession, is concerned, I think there are lots of roles where flexible working is <?oasys [pc10p0] ?>possible. There are lots of jobs where people are not so much in transactional work, and there is now a whole growth area in professional support lawyers who keep everybody else up to date. They can work more flexible hours and part time. There are plenty of opportunities. I still think it is difficult if you are a partner in charge of a transaction. You cannot be flexible while that transaction is going on, so you do not have that choice.

I would like to say what I see from the perspective as the Chair of Governors of a school, because it is exactly the same as Anya says. If somebody is pregnant, you must take somebody on to cover the whole year, because it is not fair on the children if the teacher comes back or does not come back. You do not have cover for that. If you lose someone who is at headofdepartment level who goes off on maternity leave, the No. 2 steps in to the actingheadofdepartment role, which is fine. The person comes back from maternity leave and becomes head of department, and then decides-you see this quite often-that she wants to work part time rather than full time. They accept that the headofdepartment role is not something that you can do part time, so you have to recruit a new head of department. You have not found the No. 2, the acting head of department, as good as you had hoped, so you advertise and get somebody. The No. 2 then leaves in a fit of pique, because they were not promoted, although they had done the job and helped you out, and the other one is still working part time. It is something we have to cope with, but it is logistically difficult and it is expensive. Pregnancies and maternity leaves are very expensive for employers.

Heather Rabbatts: Can I make a couple of comments? I feel like we are in a permanent state of pregnancy at this hearing.

Dr Mountford: That was the question.

Heather Rabbatts: If you look at all the statistics, whether on women forming SMEs, being engaged in the work force or working longer in the work force-and I think we are all working at least until 90, because we will not have pensions anymore-most women are through having children into their 40s, so they still have another 25 years of productive working ahead of them. There is a slight distortion happening here. Yes, managing pregnancy and uncertainty is difficult, but I think managing people is difficult. I have managed thousands of people, and there are challenges, as we know, due to a whole host of issues. I am not disputing my colleagues at all, but as an SME, where there is a lot of change happening and a work force is particularly concentrated at a certain age, it will give rise to challenges, but what are we going to do? Are we going to stop employing women because they are having babies? No. Can we improve the regulation? Maybe we can, but in terms of this conversation about women getting on to boards and how we can have better representation, I think we should bear in mind that women are working longer across most sectors and becoming responsible, often, for the primary source of income. There are rising numbers of single mothers, so I think their access to gainful work across all spectrums needs to be considered.

Q258 Mr Binley: This is a matter of interest, because most football clubs are SMEs.

Heather Rabbatts: Indeed they are.

Q259 Mr Binley: Most of the people involved with football clubs are of childproducing age, so I wonder how the maternity stuff impacts upon football clubs. If a guy says, "I want six months off. My wife says I must take six months off for paternity leave," will you have to give him six months’ leave? Will he be able to train and play football? How does that work?

Heather Rabbatts: There are two different issues around football clubs. One is the management of the football club and there is another about the squad. The last time I looked, unless you are talking about women’s football, it is men who are playing the game on the pitch. Actually, it is very interesting behind the scenes in terms of football clubs. I do not know the statistics, because I do not think they are collected across the leagues, but certainly my experience of running a football club is that the age profile is older. There are usually very few women. I actually had a club secretary, but she was in her 60s, so she was not producing children any longer.

However, what you find, of course, is that women are not represented at all in the roles of running a football club, whether that is in finance, marketing or as the physiotherapist-although I had a woman physiotherapist to the first team-yet you find many women going into physiotherapy. Of course, football clubs employ lots of parttime staff, because you are ramping up your numbers for games. There are actually quite a lot of opportunities to employ women, but we still have some distance to go.

Q260 Mr Binley: Is there a glass ceiling in football right at the very bottom?

Heather Rabbatts: Well, yes. We are trying to change it.

Q261 Mr Walker: Marie and Anya, you both work in relatively femaledominated sectors and I am interested in following up on a few things. How many women in those sectors come through to board level? I come from a background in the communications industry where the majority of recruits are female, but at the firm of which I became a partner there was only one female partner. Anya, I think you mentioned that probably the majority of your board are female; would you say that is the case across your industry?

Anya Hindmarch: Just to be clear, at the moment they are not because we have just changed our whole board and are in a sort of flux or a transitional process. Prior to that, I genuinely do not know, but it was certainly equal. I do not know across the whole industry, if I am honest.

Marie O’Riordan: I could not speak for all the media. I had two different experiences. In my first company there were a lot of women on junior executive boards, which were ultimately talking shops, if you like, and then the senior board, which would have had the voting power and the financial clout, tended to be <?oasys [pc10p0] ?>made up of men. In my second company it was actually the reverse. The CEO was a woman. She reported in to an American CEO who was also a woman. She probably had three female board members and maybe two male ones.

Q262 Mr Walker: A previous witness observed that women are often the primary consumers of many of the products of companies. Do you think, where that is the case, that companies would benefit financially from having more women on their boards?

Anya Hindmarch: That is not necessarily the case, as long as your executive team is very female. It is a good thing, but where it is relevant. Ultimately, if it is for the good of the business, surely the board would want it because they would see that. I think these things have to happen quite naturally. As I say, I know an awful lot of very masculine women and very girly men. I think we are almost generalising too much on this.

Marie O’Riordan: My hunch would be yes. That is probably the opposite of Anya’s view. My hunch would be that it would have that effect. I have a lot of sympathy with how Anya describes managing a small company, with women taking maternity leave etc. and all of her issues. I certainly sympathise, but I was thinking that if they were all men, she would probably have a whole host of other problems-not least that they would not really relate to her consumers. At least, if she gets through this period of high fertility with them, she will hopefully have a very loyal executive team, eventually, who will carry on, as Heather said, until they are in their 60s or 70s. My hunch is yes, it would make a difference, because of the understanding of the consumer.

Q263 Mr Walker: Picking up on Heather’s point about people working longer, we have heard about a lot of mentoring initiatives and so on and so forth, a lot of which are targeted at younger women. Do you think there ought to be more focus on that older generation?

Heather Rabbatts: I think it is right to think about how you support women when they are returning to fulltime work after they have had an absence, when they often feel they have to play catchup-so about how you help them play catch up. I also think that this is particularly important where women have come back into the work force and-certainly in my experience-are thinking about board roles. We need to look at how you can help to mentor women to have the confidence to apply for board roles. Just going back to your question, we still have quite a lot of job segregation in the marketplace. I think that is probably a feature of what we are talking about across the different sectors.

Q264 Mr Walker: We will have a note of dissonance from Margaret, I think.

Dr Mountford: It is this idea that women need to be given the confidence to apply for board positions. I would not want anyone on my board who had to be <?oasys [pc10p0] ?>bolstered to apply. At the Bright Ideas Trust, we always involve a mentor with a start-up business. That is terribly useful for somebody who is starting up: to have somebody who has gone through the same sorts of issues and who has worked in the same sort of sector to help with their business. I really think we have gone overboard with this idea of mentoring as being a requirement for everybody. If we are talking about board level, people ought to be past the stage of needing a samesex mentor because they are a woman. I find that, actually, quite insulting.

Anya Hindmarch: Hear, hear.

Q265 Caroline Dinenage: I think I know the answer to this question.

Dr Mountford: Ask a different one, then.

Caroline Dinenage: To rephrase this slightly, am I right in thinking that nobody on the panel feels there should be regulation to ensure a greater number of women are appointed to boards?

Marie O’Riordan: No, I would actually support that-unlike my fellow panellists, I think.

Q266 Caroline Dinenage: You would support it. Could you explain that, please?

Marie O’Riordan: I think it is the speed of the thing. There was a period-perhaps 20 years ago-where women were succeeding and making it to board level, and they have now chosen to withdraw because they have found the male culture quite intimidating and not very satisfying. I think Anya referred to the idea of women starting businesses around their kitchen table. They found that environment gave them more flexible hours and they started their own businesses, whereas if you make it to board level in a corporate environment, the culture surrounding that is very male. It involves a lot of dinners, late nights and a lot of things that are not very compatible with family life. I think the current generation find that a turn-off and would rather withdraw from it. If quotas were imposed, you would get more participation within the household by men in child care and sharing child care, and they would maybe jobshare at work or reduce their hours even by one day a week. Basically, they would be sharing that burden. Men tend not to be called by schools when a child falls over or has an illness. The woman tends to be the contact.

Anya Hindmarch: That is up to them. It is up to them to set that up.

Marie O’Riordan: I am talking about tradition, though. We are talking about shifting cultural attitudes. I think it is changing, but it is taking too long.

Anya Hindmarch: It has not taken that long. In the grand scheme of millions of years of women, actually it has shifted dramatically recently. Personally, the focus for me is not at all about quotas: I think that is tokenism; it is demeaning and awful. Certainly, on the boards I sit on, there is an emphasis on, "Have we got our balance right? Have we thought about it?" That is fine. It always makes my toes curl a bit, but I think it is fine to get it going, because I think like attracts like. I think mostly the big piece of work that needs to be done is to make it okay that in today’s world the woman is the breadwinner. Maybe that is the shift that needs to happen, of all things. Again, I think that will happen quite naturally. One will happen and then three and then nine and then nine million-and on it goes. That will be the thing that makes a difference so that, actually, it is the men at the school gate. That is beginning to happen.

Q267 Caroline Dinenage: Ironically, while we have been having this conversation, my phone was ringing. The code was the same as my kids’ school; my instinctive reaction was to google the number and check it was not my children’s school that was ringing. Despite the fact that both of my children’s dad is very handson in their child care, the buck still does tend to stop with the woman. I completely understand where you are coming from.

Anya Hindmarch: That is how we set it up. I think that is probably because that is how you want it to be.

Q268 Caroline Dinenage: That is not really how I want it to be.

Anya Hindmarch: I think you should have a word with your husband.

Caroline Dinenage: He is just down the road; I would much rather they rang him.

Anya Hindmarch: Why do they not? You could say to the school, "Actually, I have a really important job, so could you please ring my husband first?" They will ring your husband first.

Marie O’Riordan: Quite a lot of men are not given that opportunity by their workplace. Men are faced with discrimination on the male side, where being seen as the primary child carer is not really encouraged.

Anya Hindmarch: For me this is the piece of work that needs to be done, if there is any piece of work that is necessary. I think it should happen naturally.

Marie O’Riordan: I think it would probably happen more naturally if there were more women on boards.

Anya Hindmarch: Perhaps there should be an encouragement-not regulation-that it is okay to do things like that. This will come from women saying, "I could not take that call; I had an important meeting. Could you please have equal responsibility?"

Q269 Caroline Dinenage: Does the rest of panel therefore think that if a company would benefit from having more women on the board, the market will just deliver that, because the company will therefore seek to engage more women?

Anya Hindmarch: I think it probably needs a tiny bit of prompting in the most unregulated, gentle way-as just a front-of-mind thing to get it going a bit. I think it absolutely cannot be tokenism; it cannot be anything that is demeaning for women. That goes the wrong way. It should not be that men are raising their eyes to heaven every time they have to put a woman on a board, because I would rather not be on a board if it is because I am in a skirt. That would be deeply insulting. I think, however, that those shifts will probably happen quite naturally. They will probably happen more quickly if you give them a push, but personally I would be in favour of letting them happen naturally.

Dr Mountford: In terms of a push and this happening naturally, there is so much about it in terms of the 30% Clubs and other percentages and reports on board representation here, there and everywhere that you could not have a company board in this country and not be aware that somebody is saying that you should at least consider having a woman on it. That much has happened.

Anya Hindmarch: That is exactly it.

Q270 Katy Clark: Do you not think that women are very aware of the culture in which they live? Most women’s experience is they have faced a lot of discrimination, either personally or around them. I know that Julie was talking about politics earlier on. For a long time it was practically impossible for women to get selected. It has been because women have had very active encouragement.

I speak personally. I stood against men to get selected, but I did not actually put my name in to start with. I only put my name in after the process had supposedly finished because they did not have enough women. I was selected in an open competition with 1,800 members choosing their candidate. Do you not think that a lot of women simply do not think they will get chosen and do not want to go through the pain?

You have talked about feeling slighted by the suggestion that women should be there because of quotas or whatever, but do you not think that putting yourself through a process that you do not think will lead to you being successful is something women are not willing to do? By giving them the message that this is actually something that is possible for them, they will come forward.

Anya Hindmarch: It will take someone brave or someone telling their story, like you are now, to inspire the next one. It will happen quickly. Yes, without a doubt it has not been equal, for all the reasons we know. I think there is a real pace of change going on now. I think that will happen naturally, because it is. That is a wonderful example. Yes, there might be someone who is not very brave and does not do it and then, actually, someone who hears a story and does. In fact, you just have to let these things take their course.

Heather Rabbatts: I do think that, for those of us who have managed to get through glass ceilings or whatever, it is incumbent on us to go and tell those stories, because I am constantly struck by women who say, "I did not think you could do that." That is quite important.

Regarding transparency, following the Davies report about companies’ numbers of women on boards and senior women, making it a conversation is important. I do not support quotas because I think you burden those women with an even more complicated issue than they are already carrying into those rooms. It is important constantly to maintain the profile of this conversation and make boards feel uncomfortable enough to say, "We have no women sitting around our table. Maybe we need to address that."

At the same time, we should be encouraging women to put themselves forward. They do not automatically put themselves forward. I go back to my example earlier: they are often the people who think, "I am not sure I have the experience. I am not sure I am ready." Often, however, they are.

Q271 Katy Clark: Even if you do not agree with quotas, would you agree with an equivalent such as women having to be on the panel of people being interviewed for a role? Quite often, if women have put themselves forward once for a position and they have not been successful, it makes them think that it is something they could do in a different way at a different time. Perhaps there are other methods other than strict quotas to ensure that women are actually considered for these positions. Is that something you have thought about?

Anya Hindmarch: I think it should be about inspirational women inspiring women. The idea of being even on a panel with everyone raising their eyes to heaven because you are the token women who must be interviewed in the process is so annoying. I think it demeans women; it actually could make a joke of the whole thing. We are pretty great, women. Let us face it: we are pretty great. Frankly, as we grow in confidence and see it happen more and more, it will happen. Who knows? There might be a complete role reversal and we will have to have the opposite conversation in 50 years’ time.

Dr Mountford: That would be impossible to regulate. You would be requiring every company board to go through a formal process and then have some sort of record of it that was open to scrutiny. It would be a nightmare.

Anya Hindmarch: That is another point.

Dr Mountford: Anya is right. These women need to be women they want to have.

Marie O’Riordan: To add to the complexity of the debate, the words "tokenism" and "gratuitous" are slightly dangerous. Though I am not familiar with the results of the Labour party quota system, one imagines that quite a lot of prominent Front Benchers nowadays have come through that system, whereas we have all sat in boardrooms-I am sure you can say this of a lot of Committee meetings, too-where mediocrity was ruling the day because it was male-dominated.

Men traditionally have risen through the ranks. They are often mediocre men compared with the reluctant women who are missing out. I do not think it is about tokenism. Often, talent is genuinely being held back because of centuries of sexism, frankly.

Q272 Caroline Dinenage: I would like to ask Heather if she can envisage a female manager of a Premier League football team.

Heather Rabbatts: Not in my lifetime, no. I think there is a very long journey to go-not just in football but probably across sport. I think if I was to be focusing some of my energies on this, it would be about the roles that one sees in football clubs-whether you are a director of finance or a director of law, particularly in the top clubs-and also about ensuring that some of the basic recruitment mechanisms that we are all familiar with, such as open recruitment, are part and parcel of what football should be doing. Whether there will be a woman manager of male football team, I do not know.

Dr Mountford: You do not think that Chelsea will run out of contenders, then?

Heather Rabbatts: They might do. I will put my name forward as a possible backup if Mourinho decides not to take it.

Caroline Dinenage: Maybe you will get a chance to do that.

Chair: That concludes our questioning. Again, you probably heard what I said to the previous panel. If you feel there is supplementary evidence that you would like to submit, because you did not say something that you would have liked to have said, feel free to submit it. Similarly, of course, we may write to you for further clarification on one or two points. Thank you very much. That was a fascinating session.

Prepared 19th June 2013