By Alan Day, Chairman and Founder of State of Flux, a global procurement consultancy headquartered in London, UK
Recently I attended a dinner where Dina Medland was talking about the insights she had gained around diversity in the boardroom. Whilst the points Dina was making were more around boards being more representative of their customer base, the conversation quickly turned to women in the boardroom and the recent efforts that the UK has made to increase female representation across FTSE100 organisations.
Today we see the results of those efforts being published and the number of women in board positions has risen from 12.5% in 2011 when Lord Davies set the 2015 25% target to today at 20.7%. If the current rate of growth in female appointments to the board remained, this would leave the UK short of achieving the target. I know there is an interesting debate around setting targets or not and I can see both sides. Those against targets have argued it should be about the best person for the job regardless of gender. There is also a question on what happens if a business fails; would the targets be cited as a reason for failure of the business?
Conversely, there is always the argument of ‘what gets measured gets done’ and today’s results are a good example of this. Equally it is well recognised that by getting a more diverse board leads to better decision making, less ‘group think’ within the boardroom and ultimately better run businesses (1 and 2).
All this got me thinking about what role an organisation’s procurement department plays in this discussion. The procurement profession already has a strong female influence with Paula Gildert being president of Chartered Institute of Procurement & Supply (CIPS) in 2012 and many others also doing great job in the role before her in 2010, 2005 and 2001. We also have some of our most successful UK businesses represented by a strong group of female Chief Procurement Officers (CPOs); think about just the financial services sector where you have HSBC, Barclays and RBS all with female CPOs. But I believe there is more business that could be done with their procurement influence….
Ask yourself, how often does your organisation look at the make-up of a supplier’s board? Knowing your suppliers well is critical to building a trust and strong working relationship and we know that a business follows the lead of their board. Given research has shown that diverse board is more likely to yield better results (1 and 2), then checking and understanding the supplier board make-up is simply good business practice.
Equally, what are we doing to ensure that we encourage suppliers to operate with diverse boards? Is your organisation’s procurement department building this into their thinking when choosing suppliers or even their decision making processes (should scoring criteria be assigned to it during a buying process?)? I believe if we all started to do this, it would encourage a rapid change in not just how FTSE 100 organisations but organisations in general select their board members.
If government were serious about encouraging more women in the boardroom for the better of UK business (as opposed to avoiding having EU sanctions imposed) then a good starting point would be building scoring organisations for their board diversity into their own procurement processes. Shouldn’t Francis Maud be encouraging all government agencies to now include this into their decision making criteria when selecting new suppliers?
The humble procurement department has an opportunity to change the future landscape of how business operates in the UK (and beyond) and I think we should embrace it.
N. Van der Walt, C. Ingley, G.S. Shergill, A. Townsend, (2006) “Board configuration: are diverse boards better boards?”, Corporate Governance: The international journal of business in society, Vol. 6 Iss: 2, pp.129 – 147
Mijntje Lückerath-Rovers Women on boards and firm performance