My Lords, I am honoured to follow my noble friend Lady McGregor-Smith. I am sure that Peers from all sides of the House will agree that that was an excellent speech, and that my noble friend will add substantially to the breadth and depth of knowledge in this House.
As noble Lords have heard, my noble friend Lady McGregor-Smith has spent a decade at the helm of a FTSE 250 company, and I am sure there are a number of FTSE 100 companies vying to have her as their next chief executive. She raises some important points in her speech, such as having strong business representation at executive level, not just at non-executive level. The mention of her family and the inspiration that came from her parents has clearly been a factor in her journey to the House of Lords, a journey which I have no doubt will in turn inspire others.
Women have long contributed to economic growth. They have done so in every sector of the economy, as employees, self-employed, and employers. But they have often faced a subtle discrimination, which has ultimately been to the cost of economic growth both nationally and internationally. As already mentioned, they face many more obstacles in setting up and growing their business and are less confident in their capacities as entrepreneurs. According to the UN, women in the developing world tend to have less access to formal financial institutions and saving mechanisms, and in developed economies women are less likely to have access to the kinds of investments and networks required to grow their business.
The UN reports that statistical evidence shows that:
“When more women work, economies grow”,
“Increasing women and girls’ education contributes to higher economic growth”.
In terms of diversity, studies show that more diverse companies perform up to 15% better on average. As Forbes Magazine puts it, diversity,
“reduces the risk of ‘group think’ creating an unhealthy level of unchallenged consensus”.
Yet despite the evidence, a gender gap still exists. McKinsey has identified: that to help women better develop as leaders we must design the conditions in which this can take place; that sponsoring, not just mentoring, is important; that neutralising the effects of maternity leave and ongoing parenting responsibilities are key; and that we must place value on a diverse range of leadership styles. Studies have shown that diversity in opinions in board rooms and other decision-making groups leads to better decisions.
In recent years there has been a concerted effort on the part of the UK Government to address issues of gender in the business environment. The report by the noble Lord, Lord Davies, has been mentioned by other noble Lords, so I shall not do so, except to say that despite its success in bringing about significant change there are still areas where it is yet to have an impact. For example, a recent study by Forbes stated that the UK’s financial technology sector is booming but that financial technology companies are still very much a male domain. Very few women are in managerial roles, and only 9% are at board level positions in the top 35 British financial technology companies.
However, cultural change happens gradually and is difficult to impose. In fact, it is long-standing cultural norms which have influenced what we are discussing today. Of course there has been an argument for enforcing legally binding quotas to bring about change. In fact, this issue is being discussed as the Scotland Bill passes through this House, with the suggestion that it becomes a devolved issue, allowing quotas for public sector organisations in Scotland. Some would say that there is a case for positive discrimination, but I must admit that I have a problem with the word discrimination, whether positive or negative. By positively discriminating in favour of one group of people we automatically negatively discriminate against another. It simply creates resentment and ultimately does not solve anything. Equally, I do not think that people from the ethnic minorities or women would want to be token people within an organisation; they want to be there on merit and because they have something to offer. As a former chair of CBI Scotland, I would not like to think that I was there as a token woman, but I certainly dispelled all the stereotypes of male, pale and corporate. Perhaps more crucially, the focus should be on better recruitment techniques. For example, how representative of society are the interview panels? Perhaps that is where we need to start to redress the balance so that the changes automatically filter through.
It is true that women are generally underrepresented in many forums. If we take the World Economic Forum currently under way at Davos, just 17.8% of the participants are women at a forum where Heads of State, chief executives and investors are discussing issues which impact on the whole global socioeconomic and geopolitical landscape.
However, this debate is not just about things which need to change but about the great achievements that women have made despite everything, the great strides forward in the corporate world with their significant presence on boards and the small and medium-sized enterprises owned and led by women that are providing employment and contributing to the economy.
The key in this is education. Looking at the needs of boards, there is a real requirement for financial acumen in this area. Women should be encouraged to take the initiative and go for courses which will equip them better in this regard. As well as encouraging girls to take STEM subjects at school, we should convey that business and enterprise is a very valid career choice. This upward trajectory has to continue. The talent pipeline has to remain populated and carefully nurtured. I congratulate the noble Baroness, Lady Wheatcroft, on securing this debate today.