It was announced today on Sky News that Lloyds Banking Group is to set a target that 40% of its most senior 5,000 roles will be filled by women within 6 years (by 2020). This is the first major organisation in the UK to set such a clear and bold target for gender diversity. This is to be welcomed and sets a precedent in ensuring greater diversity in all our organisations and for the UK.
The importance of ‘diversity’ and ‘access to opportunity’ to us
Some of you may be wondering why we spend much of our time addressing diversity here at TWKS. Well, diversity and ‘access to opportunity’ are two of our passions and we have delivered some great projects to support both areas.
Like many people, we see ‘education, the Internet and mobile’ as three aspects that can be considered as ‘great levellers’ and support ‘access to opportunity’ especially given our own business focus on digital and social media. I partly addressed this towards the end of my last article on diversity in December 2013 in a section titled ‘The allure of digital and entrepreneurship’. (Please note, in this piece I am only dealing with gender diversity and will not be going into the financial/business case for diversity or the specific plans to encourage greater diversity for all segments of the population.)
What has Lloyds Banking Group announced?
So, let’s get back to Lloyds Banking Group. Firstly, we must congratulate Lloyds on taking such a bold and public move especially focusing on executive and senior leadership positions.
Lloyds Banking Group has a long history and next year will celebrate its 250th year of operation. During that time it has delivered much and encompasses some of the UK’s best known financial service brands such as Lloyds, TSB, Halifax and Bank of Scotland. The recent challenges are well-known and to support it during the 2008 global financial crisis the UK government invested new capital (becoming a 43.4% shareholder; this has since reduced to 32.7%). And so, it is good to see this organisation (majority owned by the British public) being so bold as regards gender diversity.
It is likely that the CEO of Lloyds Banking Group, Antonio Horta-Osorio, will detail the diversity pledge and targets in a speech next week, which is also expected to feature formal annual targets for lending to SMEs (small and medium-sized businesses) and for first-time home-buyers. Aside from its direct business goals and enhancing shareholder value (yes, including to us UK taxpayers); this announcement firmly shows Lloyds’ appreciation of its broader role in UK society and for all our communities.
What I find so bold about Lloyds’ move is that it focuses on its most senior and executive operational roles and not just the main Board (comprising of a majority of non-executives and the most senior executives numbering 10 people).
The UK position on gender diversity
The Lord Davies report into ‘women on boards’ (published in March 2011) stated that FTSE 350 companies should set out the percentage of women they aim to have on their boards in 2013 and 2015 and, in addition, that FTSE 100 boards should aim for a minimum of 25% female representation by 2015. As many know, I have a problem with this as it includes non-Executives and only focuses on the main boards (which average 10-12 members of a particular organisation).
Currently, if we look at the UK’s leading companies (UK FTSE 100), 17.3% of directorships are held by women. However, taking a closer look at this the percentage of female Executive Directors is only 5.8%; whilst the percentage of Non-Executive Directors is 21.8%. It is all too easy for companies to seek out women to sit on their non-Executive boards from the world of academia, retired Executive Directors and MPs. However, it is progress on the career ladder in companies leading up to Executive Director status where results should be measured and 5.8% does not cut it in our world today.
Likewise, focusing on main Board representation partially ignores the pipeline of executive talent rising through the ranks from management to director-level and then to executive director level.
Aside from reaching senior positions, another disappointing aspect of gender equality is of salary and pay package. It is well documented that a pay gap exists between men and women. Data from the Chartered Management Institute shows that the average bonus for a man is £6,442 compared to £3,029 for a woman in the UK (a substantial 113% more for men).
As recently, as last week – this pay gap made the news again, but from the USA as President Obama made a plea for higher women’s wages in his State of the Union address. He said: “You know, today, women make up about half our workforce, but they still make 77 cents for every dollar a man earns. That is wrong, and in 2014, it’s an embarrassment. Women deserve equal pay for equal work.”
Some of the difference in pay and bonuses may be attributable to highly paid male bankers or executives, but the general picture suggests that employers reward male employees better than female ones – possibly because women are less likely to be assertive in asking for bonuses. Many women may assume that their work is rewarded on its merits; this is a good basis for a debate on greater transparency about overall pay and benefits and not for firms to punish modesty.
The breakdown of Lloyds’ numbers
Today, Lloyds has 28% female senior management representation (i.e. 1,400 women and 3,600 men totalling 5,000 senior roles). We do not know the breakdown across the Lloyds Banking Group – at both senior/director and junior/operational level. However, to meet its gender diversity target Lloyds needs to improve its mix and (assuming steady-state) ‘recruit’ an additional 600 women (with appropriate male attrition) to its most senior roles by 2020 ensuring a 40% representation (i.e. 2,000 women and 3,000 men totalling 5,000 senior roles). In addition, Lloyds will need to ensure strong support and retention strategies are in place to develop the pipeline of female talent and sustain their career with Lloyds.
Lloyds has 104,000 employees – the vast majority of whom are front-line, customer service and support staff. However, I would expect as with the majority of other organisations globally that the majority of the workforce are women at entry-levels and then the steep pyramid to the upper echelons are men (Catalyst’s pyramid of USA women in business shows 51% of management, professional and other related occupations consist of women; whilst less than 4% of CEOs are women).
If we look at Lloyds’ main Board, then Lloyds has exceeded The Lord Davies recommendation of 25% of ‘women on boards’ for FTSE 100 companies – as 3 of the 10 main Board members are women. The Lloyds’ Board consists of 3 Executive Directors and 7 non-Executive Directors, and, as is the case for the majority of organisations, all of the female Directors are non-Executive Directors with all 3 of Lloyds’ Executive Directors being men.
A way forward
Of course, diversity is good for society and business. To be clear, I am against quotas. Targets and transparency of data (specific numbers and progress in terms of gender, ethnicity or any other segment of the population) is essential. We must also include transparent reporting on the difference in promotions and compensation (salary and bonus) for all necessary segments within major organisations. Government must do more here to make reporting and transparency of decision making mandatory. I understand why some people call for quotas given the slow pace of progress. However, I feel that quotas, while forcing the hand of many organisations, encourage both positive and negative discrimination. And so, my overall position is that we need to create an open and fair environment in which diversity can prosper and all are rewarded based on merit and fairly.
In closing, Lloyds Banking Group is being very bold in becoming the first FTSE-100 company to set a formal gender diversity target for its most senior management positions and hopefully this will feed through into greater numbers of female Executive Directors.
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