How more women on boards will change a company for the better

What effect does having more women on an executive board have on the risk decision-making of that company?

This isn’t a question with multiple-choice answers: there’s a definitive right answer.

And yet many companies that embark on a so-called diversity drive don’t know the answer and in turn, fail to understand the probable outcomes of what they are about to do.

That’s according to Simon Fanshawe, co-founder of LGBT charity Stonewall and board member of POWERful Women, the UK initiative that promotes gender equity in the energy sector.

“People talk about the right thing to do, but they don’t know why they’re doing it,” said Fanshawe. “My first question to any company is: why are you doing it? What is diversity for?

The second question he asks is: do they understand the difference between “diversity deficits and diversity dividends”.

On the deficits, he said: “If you look at your talent pool across your organisation, who are the people who are not coming in? Who are the people not going out?

"And who is not being deployed across the organisation? Why is that happening? Identify the deficits and the reasons for them.”

Speaking at International Energy Week in London last week, Fanshawe next outlined the diversity dividends – and now we get to the answer to my opening question.

“CEOs always ring me up and say: we must get more women. But you need to understand what happens when you combine men and women in executive teams and their attitude to risk.

“It’s really interesting when you look at executive teams that take mergers and acquisitions as a growth strategy, and executive teams that take research and innovation as a growth strategy.

“Male-only teams tend to take that higher-risk M&A strategy: the mixed teams take that longer-term, lower-risk-yet-higher-reward strategy.

Why? For the answer, he said, look further down the company ladder. “As women rise up an organisation they start to calibrate risk differently to men. Because, if a man tries something and it doesn’t work, they go: ‘Well, we had a go.’

“Whereas if a woman tries something and it doesn’t work, people say: ‘Oh, she can’t do it.’

“So women face a higher jeopardy as they get higher up in organisations. When you put that into a discussion about risk, you get very different cultural interactions.

Fanshawe said that in terms of tackling gender diversity, “part of the problem with the energy sector is a historical pipeline, and that’s not going to be solved inside a company”.

He said people “shift around the sector” but the sector is not shifting much itself.

“If you look at the pipeline for more women in engineering, those decisions start when you’re eight and 11.”

These sentiments were echoed by Katie Jackson, the current Chair of POWERful Women and Executive Vice-President for Acquisition & Divestment and New Business Development at Shell.

She said: “The pull of our sector should be huge, but I do worry that, particularly with diversity, we tend to be poaching from each other and moving people around, as opposed to increasing the pool of talent.”

Listen to our podcast with Katie Jackson as she talks diversity and inclusion

She said it was vital that the energy sector makes itself “more attractive and we are better able to convey to the next generation the purpose that we all feel working in this industry”.

“We need leaders that will show that this isn’t just a boys’ club – because often it looks like that from the outside.”

Read: Shell executive Jackson to lead UK’s POWERful Women diversity group

She also articulated a thought many in the half-empty conference room were sharing about why so many energy leaders at the event in London had failed to turn up at a session entitled ‘Let’s Talk About Cultivating & Retaining Talent’.

“As we came on stage here, we were all murmuring about the attendance in the room for a session about some pretty crucial topics if you are running an energy company.

“So we need more leaders to show up and engage in debates like this. We need to make sure we have the right cultures in our companies.

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“And we need to make gender diversity feel not just like a ‘woman’s issue’ – this is a societal issue.

“We want to recognise that some of the issues that particularly impact women’s careers around homes and families are in fact a shared issue.”  

Louise Kingham is bp’s Senior Vice-President for Europe and its Head of UK, and she agreed that diversity “is all about culture”.

She said one of the reasons she joined bp was that it was “one of the most impressive companies around this challenge”.

‘Scarcity of talent keeps me awake at night’ says Annika Viklund of Vattenfall

“A decade ago there were no females on the leadership team inside bp – all white men. Today, six of the 11 on the senior leadership team are female.”

She stressed that for success in, not only diversity but a wider recruitment drive to top up the energy sector’s talent pool, companies had to ensure that they had excellent “talent systems and nurturing-of-talent systems”.

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