I recently read this statement as a headline for a report published by the CIPD.
"Despite efforts to improve boardroom diversity, if you are a FTSE 100 CEO, you are more likely to be named Steve or Stephen than you are to be female. There are only six female CEOs in this year’s analysis and they were paid 32% less than their male counterparts." CIPD report August 2019. I have said a great deal about the importance of boardroom and organisational transformation. I have argued that inclusivity is key to high performance and protection against poor commercial decisions and scandals. We talk all the time about the need for transformation – and we devote a lot of time at work to discussing this (rather than doing work – see my article on “I don’t want to be a killjoy but…”).
It is clear from the CIPD report, or indeed any report that I have read, that progress to make our boardrooms and senior managers more diverse is poultry. And I fear that this analogy is, in fact, unfair to poultry!
Whilst never before has there been as much dialogue and printed rhetoric about inclusion and transformation and people feeling good about working etc. etc. the reality is that genuine progress is really slow.
And recent rhetoric from some corporates saying they strongly support and accommodate those with mental health issues, makes leaders less authentic if they are not delivering on such promises. And unfortunately, I have a few examples where they are not. Workplaces are simply not as inclusive as they would have you believe, despite the annual report attestations and social media campaigns.
Our boardrooms and executive teams are colluding to ensure that things stay the same more than they change, despite what they may say or write in their press releases and carefully crafted internal coms and LinkedIn posts.
In many instances still the primary remit of HR, which is wrong, social media and conferences are jammed with success stories and what HR professionals are doing in this space. Much of which I believe is missing the point and wasting time. Even when executive leaders proclaim to own the issue of diversity and inclusion it is too often still lip service.
And although I don’t want to devote too much to the issue of compensation, it is clear what happens when the bosses are involved in setting their own pay( lets not pretend that Remuneration committees and regulators have made a material impact or have real teeth in these matters, and before you are tempted to try, the facts speak for themselves). The facts are stark.
In a report on earnings, we are told that income growth at the very, very top of the income distribution has outstripped the strong growth of incomes across the rest of the distribution. This strong growth referred to is not equal across all geographies, but CEO pay hikes certainly are. (Income Inequality, by Max Roser and Esteban Ortiz-Ospina. First published in December 2013; updated October, 2016)
All of the major banks have now released their first CEO-worker pay ratio data, and the numbers reveal that excessive compensation is still a problem in the financial services industry. Among the nation’s top 10 banks, those that pose the greatest risks to our financial system, the average pay gap was 265 to 1 in 2017. (Institute for Policy Studies, April 2018.) I have said before I am certainly not a socialist, but surely any sensible person can tell that something is not right here.
Glassdoor published - Across all companies, the average CEO pay was $13.8 million per year, the average median worker pay was about $77,800, and the average ratio of CEO pay to median worker pay was 204. In other words, on average, CEOs earn around 204 times what his or her median worker earns.
The points above regarding compensation show if nothing else that people around the top table are far more preoccupied with feathering their own nest than they are with genuine transformation. The data shows what executive leadership can accomplish when they put their minds to it ( ie their pay)
What we need;
- Remuneration committees and shareholders need to become more forensic and need also to make proper decisions. They need to use data, other than so-called market data which at the CEO level they undoubtedly influence anyway.
- HR Directors must stop colluding with their CEO’s and ensure that real change actually happens. The problem is that many HR Directors lack true independence, and so collusion takes place, including around the illusion that change is happening at the right pace.
- If an organisation genuinely believes it needs to be diverse and inclusive then it simply needs to achieve that like it would any other stated commercial goal. Organisations throughout history have accomplished amazing “impossible” feats when they are determined to do so. The issue of inclusivity is no different.
Andrew (not Steve) Fox
This article is exclusive to The Business Transformation Network.
Andrew Fox is MD of Rhino Consulting and is an HR Professional, commercially focused and results driven with an excellent track record in leading brands in Financial Services and Professional Services, globally (previously Group Head of Learning & Talent Development at HSBC). Andrew is accomplished at influencing at Board level, providing an unrivalled focus on delivery and execution combined with an ability to create and frame the strategic agenda.