Anthony Hilton: Gender pledge by RBS deserves our applause

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Much has been made of the increased representation of women on the boards of major public companies, and there is no doubt major strides have been made — albeit off a disgracefully low base — and the target of 25% representation on the boards of FTSE 100 companies is now pretty well within reach.

But efforts to get more women appointed to senior roles in operational management have been much less successful. Although there are some female chief executives and rather more women serving just below board level on the executive committees, overall the numbers are thin. The reasons are less straightforward than one might think, according to a leading management thinker who was one of the most senior women executives at Procter & Gamble and later at several other major companies.

Her starting point is that there is normally a fairly even split in the number of women and men recruited from university into the junior ranks of management in most businesses. They remain fairly evenly matched throughout their twenties, and it is only in their thirties when they get to middle management that the proportion of men begins to increase.

The conventional and easy explanation is that women take a career break to look after children but her interpretation is completely different. She says that women opt out when they have had a taste of middle management because they have a choice. They typically exercise this choice when they get into the middle-ranking layers of management because when they are there, they find it is the level at which men turn nasty — typically becoming far more interested in stitching each other up to secure promotion than in quietly getting on with the job and doing what is good for the business.

Some women play along with these little boys’ games, she adds, but the vast majority can’t be bothered with it and opt out to raise a family or to search for a company where talent counts more than politics. When the latter turns out to be impossible, they often decide to start their own business. That, she says, is why there are so few women in senior management.

Others may disagree but it does underline the huge significance of the RBS move. McEwan made a public commitment at the annual meeting to advance significantly the careers of women within the bank when he set what he described as a “challenging new goal” of having at least 30% female representation in the 600 executive jobs that make up the top three layers of management. This target has been made a formal objective of the executive committee and has to be achieved within five years.

Nor does it stop there. According to the bank’s website, the target will not be an easier-to-hit aggregate across the bank but will instead apply individually in each of the different business areas. There is a further ambition, though not yet a formal target, to go on from this to achieve a 50-50 gender balance at all employment levels by 2030 — which is only 15 years away.

There is ample research to show that organisations with greater gender diversity outperform similar businesses which are not diverse by as much as 15%, perhaps because diversity of thought tends in turn to improve employee engagement, innovation and decision-making.

But that being the case, it does beg the question of why RBS is out there and alone. If this bank can do it, why can’t all major companies be willing to make such a clear-sighted, unambiguous and open commitment?

Managers with a wealth of health

These are not easy times for investors. The geopolitical outlook is uncertain, no one knows yet whether the authorities will successfully retain control of the economy when they reverse quantitative easing and begin to wind interest rates back up.

China has still to convince that it has an alternative to export-led growth and the jury is still out on whether prime minister Shinzo Abe will get Japan’s economy moving at last. Meanwhile, investment returns worldwide are at or near record lows.

If such conditions are difficult for investors, you would expect them to be well-nigh impossible for the wealth management industry — the legions  of firms that advise and manage the assets of the wealthier slice of the  community. Beset by ever-rising costs and constrained by regulation, it struggles to deliver market-beating investment performance.

But according to figures published yesterday by long-established research group ComPeer, which specialises in the sector, the wealth management industry is in remarkably good health — particularly when compared with a few years ago. Assets under management are well over £700 billion, a rise of more than 40% in the past four years. Revenues and profits are at or near record levels and while there is certainly some consolidation and cost-cutting among the larger firms, there is also a regular flow of new entrants into the business.

Not everyone is doing well, of course, but the industry as a whole is doing a lot better than you might expect.

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June 26, 2015 |
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