David Kuo talks to Averil Leimon.
You can listen to or download this podcast here.
David:
This is Money Talk, the weekly investing podcast from the Motley Fool. I am David Kuo, and my guest is a pioneer in the process of psychology and coaching in business. She is a specialist in the science of positive psychology. She's the author of "Coaching Women to Lead". She is Averil Leimon, director of White Water Strategies, and I am delighted to say she is with me now.
Averil:
Hello.
David:
Hello, welcome Averil. Now, I'm really pleased that you were able to join me today, because we are recording this podcast at a time when there are calls to boost the number of women directors in Britain's boardrooms. Before we get into the topic of gender quotas and the rights and wrongs of that, I'd like to start with a fact that I think will interest many of our listeners who are on the lookout for a competitive edge when they invest. In your book, you state that companies with women in top jobs tend to do better than those who do not. Now, that's quite a claim, but what are the facts behind this assertion?
Averil:
Well, when we were researching for the book, Coaching Women to Lead, we looked at all the data was available, and we were quite surprised at just how much data there was available, and research that has gone on over the last couple of decades, looking at things like the Fortune 500 companies, studying at least half of them, and comparing those with high gender balance, at least – not gender dominance, but with a higher percentage of women on the board.
What came out consistently in all the research were serious business measures, that these firms functioned better on all the financial measures, and quite a lot of other important characteristics like motivation, leadership, work satisfaction, and so on. There was absolutely no evidence showing the contrary, and we really did search, because we wanted to be very sound on this, and it was quite astonishing. Certainly the Columbia University, because McKinsey studied it, Adler; I think the Columbia research showed that the more women you had, the better the financial returns were. So there's some solid evidence there.
David:
We all know that statistics can prove anything we want to, so couldn't you actually sort of say, let's do a set of statistics and compare people born in the summer as well as those in the winter, and then sort of come up with a set of criteria and sort of say that, oh, did you know that if we employ more people who are born between January and June, the company actually has much better performances than those who are born in the latter half of the year?
Averil:
Yes, I'm a bit obsessed with the kind of intellectual rigour of things. So looking at these, these are serious heavy hitters. The McKinsey one you can't get away from, and very solid, and very sound and repeated. A lot of this research has been added to year on year, and has charted this and this increase and this consistent differential.
David:
OK, so accepting that this is true, and I have no reason to doubt that it isn't true, if I was the boss of a company, and I had a look at the make up of my board, and I have evidence there to show that, if I have some women on that board and I have more women in senior positions, I am going to improve things like my return on equity; I'm going to improve the shareholder value; I'm going to improve my profit margin – why don't I just go out and do it? It sounds like a no-brainer to me.
Averil:
It does to me as well, and it's fascinating what's actually going on. I think on the one hand, many of the senior, the most senior people don't actually know that this research is so strong, and has been repeated so often, and shareholders must not know, because why are they not demanding a change?
David:
Well, exactly.
Averil:
It's outrageous in a sense that you would deliberately, it almost feels, reduce your chance of good profits. Now, who's going to support that? I think we have to go back to the fact that it's almost not known and then not quite believed ... something about it not quite being believable, that it can make that difference, and it's a bit of a girly story, when in fact it's hard science. We're not talking about women taking over; we're talking about about a third really being critical. What we've got there is that women bring very different things to the table.
David:
Such as what?
Averil:
A different style of interacting. They do have a different risk profile, so they're less likely to be ruled by impulsivity, which sometimes men are more ruled by. One of the critical things is that we have the women at the senior levels stay authentically female, and that's traditionally not been easy.
Women have been encouraged to be more masculine in their style, and where you have tokenism, and one woman's got through, she's often more scary than the men, but then she's had no choice. She's had to go that way to hold her own, and this is why it's critical that there's a tipping point of 30% or three women on a board, because although each of those women might be very different from each other, they have a bit of an enclave then, rather than this lonely position – "the only hen in the henhouse", it's sometimes called, when you've only got one woman at very senior levels.
David:
It's not true of all industries, because in your book you state that 92 out of the Fortune 500 companies have three women on their boards, but these tend to be biased towards things like fashion and retail. Why do you think this is an issue?
Averil:
Well, it's not that it's an issue. It's just that it gives us a clue that it's more acceptable for women to get ahead in these kind of areas. Now, we know that women make most of the buying decisions across the board. So that means that those choices are not reflected in a lot of other industries. It's somehow OK. There's a face validity for having women in retail, although one of my favourite stories is one told by Sir Philip Hampton, the chairman of RBS. When he went to Sainsbury's board apparently, he kind of looked down the table in all directions, and it was wall-to-wall men, and he thought, but this is a chain of supermarkets.
He said, it wasn't just that – it was when he checked, none of these were men who ever went into a supermarket. So in terms of steering the business, it doesn't make business sense to me. This is why I keep coming back to my phrase, this is not a women's issue – it's a business opportunity, that if we are looking at getting those women to spend their money, then perhaps we need more balance on all the teams, so that people understand the consumer better – sounds like good business to me.
David:
The fact that women tend to lean towards fashion and retail would suggest to me that they have a passion for it, and they do enjoy doing it. Now the thing is, you are going to be more productive and more successful if you enjoy the industry that you're in. I'm not saying that women shouldn't be, for instance, miners, because if they're capable of doing it, they should do it. But if they don't enjoy it, if they don't like it, then why are we trying to force women to become board members on mining companies?
Averil:
I think the numbers are confusing you in this instance, in a sense. You're looking at where they got through, and you're thinking, that's about female choice. In fact, the numbers of women in banks and other organisations, financial institutions, are legion. They're not getting through – they're getting to just below executive level, and they're leaving. That's not because they're not passionate about banking finance risk; it's that there isn't a place for them.
So when we look at retail or fashion, women are able to get through in those places. They're just as passionate about every other aspect of society and business; they're not able to break through – we wouldn't call it a glass ceiling, but it's more like a labyrinth to find their way through to those senior positions. They also, they look at the organisation, and they think, there's nobody that looks like me up there, and that's when they vote with their feet.
David:
But surely that is when you stand out from the crowd? If you look like everybody else, then you just become a homogenous type of person?
Averil:
Well, except that those who are in the most senior positions are predominantly male, and many of them my clients. So I don't want to offend them, but female ambition is often invisible to them. Male ambition is very palpable – you know when a man's ambitious.
David:
Can you explain that in more simple terms? As a man, I don't really understand what you're saying.
Averil:
When a man looks at another man, and he talks about the next job, he can read him better, because the guy is likely to be upfront and say, "I'm ready. I'm ready for the next job. I'm good, I'm fantastic."
David:
You know me too well, Averil.
Averil:
I was speaking to somebody recently at a conference, and he said, "It's awful. I realise that when a man blags, I think, good on you – good blag. I know you can't do all that, but you carried that off. When a women blags, that's appalling!" He was ashamed of himself, but he knew he had that stereotype, because he knows that women don't do that. So of course, if you're just looking around, there'll be a man with his hand in the air going, "Go on – give me the job, give me the job", where there'll be a woman saying, "Oh I don't know that I'm ready yet, because I'm not perfect". So this is not to blame people in senior positions.
I think women have a huge responsibility here as well, because they get furious. I've seen several over the last year who, in talking to me first of all said, "Do you know, I don't know that I'm that ambitious. I'm a head of investments, it's just a job – I'm not that ambitious." And then when you started to talk, by the end of the session they were saying, "Do you know what? – I am ambitious." But the next question then is, and who else might know that? – ah. They hadn't communicated that to anybody. So what happens is, a woman's ambitious. She holds herself back till she's ready – nobody notices, they give the job to somebody else, and she thinks, "Stuff this – I'm out of here." So there's issues on both sides.
David:
But you tend to find that the human resources department is staffed primarily by women. Isn't the point there that women in human resources should be able to recognise this?
Averil:
It's quite interesting, because I don't have the exact numbers, but often they're staffed with women in human resources, apart from the top job, which is often a man. Again, it's very interesting. We know that in organisations, well we know that certainly graduates, 60% of the world's graduates are women now. We've got highly educated women the world over. 50% will be taken in graduate intake, and every five years organisations lose 50% of the women they have.
Now, if you were wasting another resource like that, that's a real business issue – questions would be asked. I think not enough questions are being asked about what's happening to that talent. In a modern organisation, we need a full breadth of talent. Especially going through difficult times, we've got to have more creativity, more innovation, and those are things that are certainly found to contribute to success, and often you get more of that when you've got more women in a senior team.
But I think you're absolutely right – people are seeing this as an issue. I see lots of organisations, and they've had diversity committees set up and running for years. They've had women's networks for years, and call me a behaviourist in my past, but I can see lots of thinking and I can see lots of talking, but I don't see it coming through to any real doing anything different. We refer to the idea of what we can actually do. I think there needs to be something to make this change. It needs to be a real paradigm shift, because we know that it's wasteful. We know that it's beneficial to have women, and still we just don't make anything happen.
David:
OK, now another issue that you drew attention to is that you're saying that there will not be enough people in the 30 to 44 age bracket by 2020 to take up leadership roles. What has caused this problem, and why is it a problem?
Averil:
There are a number of factors here. The most obvious, the retirement of the baby boomers, which from January ... this is the cusp, this is when a whole level of the population could be removed from leadership, or are start to being removed. We've got a lower birth rate in a number of countries, an ageing population, and all that comes into play. From the measurements, it looks like we'll be 1.3 million short of people in the leadership age range, and even if a small percentage of that is actually those who would be taking up leadership positions, you're still talking about being about 60,000 people short.
In the past, we would be kind of UK-centric enough to assume we'd be able to import. Well, China is going to be hugely under-populated with potential leaders, and we can see how China's growing. It's something like 180 odd million short, the one child policy is coming back to have a major impact. So it may well be that the brain drain will be towards Asia. Interestingly, Asia as well has somehow a capacity to allow women to be ambitious without it looking a bit shameful, which may seem quite paradoxical.
The women emerging at the moment in China are very ambitious, know they're there to hold up half the sky, and going for chief executiveships. So we're going to have this shortage, and it's just another pressure really to engage the disengaged. We can't afford to haemorrhage talent. We've got to keep people engaged and women can be one of the main foci on how to keep people engaged and in that talent pool, and we're squandering it at the moment.
David:
But the thing is, nature abhors a vacuum. So when this vacuum is formed, won't you just suddenly get the women who at one time thought they were capable of filling these positions now coming back into industry and sort of saying, I can do it now, because I don't really have a great deal of competition now?
Averil:
That could be one outcome. However, the women who are leaving at the moment, they're not going and twiddling their thumbs or knitting.
David:
I'm glad you said that and not me!
Averil:
Somebody, somewhere may be knitting, because it's very fashionable. They're not resting on their laurels. They're out there setting up businesses. They're being very successful in their own right. They're making the rules for their business life, and the ways that things are done. So they're not willingly going to go back into a corporate world that they decided wasn't right for them. So changes have to be made either way, and it's much, much less expensive if you can grow your own and foster talent, and foster talent right across the board so that you have a supply when you need them for the succession and the senior posts.
David:
I was also very intrigued by another statistic that you had in your book, and it was that a man will apply for a job if he thinks he is qualified to do 30% of a job description. A woman, on the other hand, doesn't consider herself to be good enough to apply, even if she can do 70% of a job description. Who is right there, the man or the woman?
Averil:
I don't know if anybody's actually right and I would say these are possibly not hard statistics, but you ask anybody in the street, people will absolutely accord with this. I think on the man's side, good for him. There's that preparedness to take a bit of a risk to say, do you know – I'll learn it, I'll pick it up. That also goes along with the confidence, which probably means he's got some sense of his strengths and what he's good at, and that means that he probably can wing it. Now, it possibly would be better if he had a wee bit more before you appointed him, but he'll talk a great game and more senior people will appoint him, and there may be risks in that. So we perhaps should check the veracity of that.
For women, there is still an appalling issue with confidence. I mean, I interviewed 25 women for Coaching Women to Lead, and some of these were really quite scary women. You know, the earth moved as they walked through. They all said, "I'm not one of those scary women", and I thought no, let me be the judge of that. Universally they talked about confidence being an issue – that questioning yourself, self-doubt, wondering if you're good enough and doing it anyway, in their cases. They'd got to senior positions, but they realised that they were slower to get there. They slowed down their progress, and they widened the gap between men and women, and in salaries, of course, obviously, because they were later to get the role.
So one of the things that we feel it's really important to do is to work with women's self belief, their sense of their strengths, and look at risk taking. I'm really very fascinated with how people's risk profile emerges. When you start to look at childhood right through to employment, women are protected on the one hand, but they're stopped from taking risk. Even if it's playing sports as a child, boys are meant to run around and fall down and break things. Girls are still protected from that, and right the way through to business.
I heard a great story the other day from Katherine Corich, the CEO of SYSDOC. They'd been asked to put a team together for the oil fields in Kazakhstan, a change team. They said, well what's the requirement? And they said, "The best" – fine. They turned up with the best team, fully briefed about the conditions, and it turned out it was nine women and one man. The client was appalled, horrified, and said, "But do you know what it's like out there?" They said, "Yes, we're professionals." Off they went and this turned out to be the best change programme, the most effective change programme that had ever happened.
So Katherine went back and said, "Do you know your reactions at the start? – can you explain that, because you're so happy. What was that about?" And what emerged was a very fatherly concern about looking after the girls, in a sense, in a way that they didn't ever think about looking after the men. So they weren't treating them as sons, they were treating the women as daughters. There are lots of social issues.
David:
Are there really?
Averil:
Yes – this is the place for you! Yes, I have a gay friend who is constantly fighting off women. So in fact, they didn't encounter some of the issues that men encountered, and were very successful. I think this is one of the things, that if men do have a reaction and think about it, they sometimes are a little bit fatherly. Where fathers would allow their boys to take risks, they don't allow the daughters the same risk. So we have to encourage women to take that risk and that risk is not something that your risk departments would be concerned about. It's more a case of not having to be 100%, not even 70%.
There are some women who won't apply till they're perfect, and we have to look how it's acceptable to learn on the job. I think part of this is historical, that a woman still stands out. If she's a bad boss, a bad leader, a bad manager, you'll hear about it, whereas there are lots of bad male managers around. It's just, well – some are good, some are bad. The woman will be a focal point and so she doesn't want to put the risk out there.
David:
OK, so let's have a look at some of these women who are bosses, these women who are going to be our future leaders. I was quite surprised to see that 45% of the labour force up to the age of 50 are women, but they only occupy 5% of the seats on boards. Vince Cable, the Business Secretary, he wants to do something about this. Has he got any chance of succeeding?
Averil:
I think we've hit, well I certainly feel we've hit a zeitgeist. I tried to work in this field in the late Eighties, and it was like trying to practice a black art. I think we've reached a time where everybody's sort of beginning to get it, but I think we need a major paradigm shift. We need a tipping point. We need things to change. I think there are relatively simple things. One thing I would like, and I would advise him, if he wants my advice, is to start to look at transparency.
If I'm going to be buying insurance, or a car, or whatever, it would be great to know how many women are actually at the different levels in this organisation, because they'll be thinking about the things that concern me, my family, or whether there's somewhere to put my handbag in a car, to be trivial about it. But I want to know that there are women throughout that process, so the transparency, having organisations reporting on how they're doing, there needs to be reward, because people don't change their ways unless there's something in it for them. Where we've seen teams or managers being rewarded for making changes, it's happened. You know business – if it gets measured, it gets done. If it gets rewarded, it certainly gets done.
Unilever had a great policy called "Just One More", and everybody was tasked with getting just one more woman on their team. It wasn't that they were going out into the streets and grabbing passers-by. There were women eligible, but instead of going for the same old, which sometimes is pale, male and stale, they would just look at it again and think, well actually she's perfectly capable. But their reward was based, part of it was based on whether or not they succeeded. There was no expectation they weren't going to succeed. So it happened, and it made subtle changes.
So I think the transparency, the reporting, the reward, is giving organisations a chance to make voluntary changes, because both men and women are very worried about the idea of having changes imposed on them, like required quotas. Now, Norway have this 40% quota, and lots of people resisted. They felt they had to do it, because it became law. It's interesting now, a lot of the reports are saying that even those firms that resisted are very pleased with the outcome. But you know what it's like – we don't change till we're made to change. I'm old enough, I don't know about you, to remember the seatbelt campaign in this country.
David:
Sadly I remember that also, Averil.
Averil:
Exactly – you've never forgotten it. But there was a big phase where they gave us information, they gave us data. They gave us percentages about the successful survival or injury if we didn't wear our seatbelts. They then threw hammers at peaches, and it was upsetting, and they took into wards. We didn't wear our seatbelts – it was only when it became law and we did the clunk-click every trip, it became a habit. I think there's something similar here – we know the data's there. If anybody wants to read it, it's incontrovertible. They've tried the heartstrings, we really ought to do something nice here. That's not going to work. It's about making things happen.
David:
But who's perception are you trying to change? – because the board of directors is voted by the shareholders. So you're trying to change the perception of shareholders, not the management of the company.
Averil:
I think the only way that they can change is when there are requirements, but also when every other level is demonstrating something different. We know headhunters really don't see women. They put women forward. They'll say, oh, their shareholders would reject a woman, but they should still be putting them forward. They could maybe put an all-female group forward, and then they would have to pick from that. But I think we, by not pushing it in any way, it allows the status quo to continue, and we can't really afford that.
We need our businesses to be moving forward, because there's huge competition from around the world. Just staying a bit Anglo-Saxon and stuck isn't going to win the day. So we need to be demonstrating that women in senior positions are making a difference, and our one British CEO in the FTSE 100, Katherine Garrett-Cox at Alliance Trust, she's the only British woman. Somehow we've got a few Americans, but we need more examples of that and the good work that they are doing for people to gradually realise it's OK. Then all the data that we've got that proves it might actually seep in.
David:
So what is the outlook for women here in the UK in senior management positions then, Averil?
Averil:
Well, I found it a bit depressing when I interviewed the women whom I did, because by definition they were successful. They had got ahead in a range of careers, but there were still just appalling practices that they talked about. It really just seemed to take that much more that they had to overcome in order to get into the positions that they were in, and it was lonely and relatively isolated.
David:
You're not making it sound very enticing, are you?
Averil:
Well no, that's one of the things, that women look up and they say, there aren't women that look like me, and women are so heterogeneous, they all want to do it differently. Sometimes they say, do you know the women that are in a position? – they look exhausted, why would I want to do that? And until we have this tipping point, until we have a third, the 30% in there, we don't get a change in the style and the way people work. We don't get people asking, actually is it appropriate that a generation or two of men have not seen their children grow up? – have never attended a nativity play, and it's not that we want women sending everybody home.
It's the fact that we know that this pays into better business. When you treat people like sentient adults who can make judgements about their use of time, then they're going to make better business decisions. It's going to take more women at senior levels to make that kind of thing happen. At the moment, having only a token woman at every level, she's got to outwork the men that she's working with in order to prove herself. It's not smart, it's not clever, and it's not forward thinking.
David:
I think that's absolutely wonderful, Averil. Thank you very much for coming in today.
Averil:
It's been a pleasure.
David:
Well, it's been a delight chatting with you. One of the problems I find sometimes, being a man, is that whatever you say is going to be wrong anyway. It's a bit like the problem of the wife or the girlfriend saying, "How do I look in this dress?" – you don't know how to answer her, because whatever you say is going to be wrong.
Averil:
But the thing is that women can't do this without men. Did I think I'd ever say that in my life? – I'm very independent, I'll change my own tyres, thank you! However, I've gone to the men, the clients, and I've said, "You're in the position to make a difference", and men have responded fantastically, because they know women are great. They just don't know why there aren't any around. They assume they've got domestic reasons, they've left. They don't realise it's just become unpleasant or difficult for them to be there, and that they would really like to be there. So as soon as you talk to senior men, scales lift from their eyes and they're in the position to both mentor, to sponsor women, and to take a bit of a risk and try having one on the board, or on the senior management team.
David:
That's wonderful. Now Averil, you may not know this, but I end each podcast with a quote, and the quote is supposed to sum up roughly what we've actually been talking about. Today's quote comes from Nancy Astor, and Nancy Astor said: "The first time Adam had a chance, he laid the blame on woman" – we know that what refers to – "She made me eat the apple, it was her fault!", and I think women out there need to be very aware.
This has been Money Talk, I have been David Kuo, and my guest has been Averil Leimon, director of White Water Strategies and author of Coaching Women to Lead. If you have a comment about today's show, please post it on the Money Talk web page, which you can find at fool.co.uk/podcast. If you have a suggestion for future shows, you can email me at moneytalk@fool.co.uk, and you can now follow us on Twitter at twitter.com/themotleyfooluk. Until next week, have a great week.
