Tag Archives: bankers

Board diversity will curb governance scandals

Governance is a critical issue in any board room. Get it wrong and scandal won’t be far away – whether headlines about MPs expense scandal, horse-meat in ready meals, banks being bailed out by the taxpayer, or our leading football clubs given red cards by regulators.

Bank machineAt the root of each of these governance failures is leadership. It is often said that “the fish always stinks from the head”, and that’s because poor leadership infects the entire culture of an organisation. It breeds behaviours among decision makers that are underpinned by self-interest, continuing the disastrous domino effect. And yet, as we have found with the colossal sums needed to rescue our banks, the decisions of board members have a profound impact on people’s lives, particularly the vulnerable and our underrepresented young people.

Recent events have magnified the problem. What we desperately need now is a much greater emphasis on diversity in the board room if we truly want to improve the governance of organisations in the public, private and third sectors.

We already know diversity adds value to a board due to the variety of views, experiences and backgrounds included in the decisions that are made. It makes sense, whatever way you look at it, to have your customers, service users and wider society represented at the top level. Unfortunately, in 2014, we still have a situation where only some 12.5% of the members of FTSE 100 company boards are female, despite women making up over half of the population. A scandal in itself. But achieving gender-balanced boardrooms, according to The Equality and Human Rights Commission, could take over 70 years. We have to do better.

Specifically, to shorten the cycle, we must foster and nurture the next generation of emerging leaders from all walks of life to ensure such governance failures are avoided in the future. And this has to include providing opportunities for young people to participate in decision making, active citizenship and civic engagement.

In Edinburgh alone, for example, there are over 1,800 voluntary sector organisations but 90% report vacancies on their boards of trustees.  Not only is this bad for governance, these boards are predominately ‘grey’, with the Charity Commission reporting that the average age of a trustee is 57.  Young trustees enthusiasm for a range of causes across Scotland remains a relatively untapped resource. But there must also be the right level of support to help guide them.

Princes Street Gardens

It’s why I and colleagues at Edinburgh Napier University are pioneering an educational programme to give our students the skills to experience the boardroom. Our new ‘On Board’ course was first piloted by the Birmingham Leadership Foundation (BLF) in the wake of the city’s riots.  At that time, I was working there and used Twitter to lead the call to form the riot-clean up group. And what struck me was how young role models without any need for recognition came together in an act of solidarity to say “not in our name”.  Later, as a Young Trustee myself of BLF, we launched Birmingham’s Get on Board programme to nurture the next generation of future leaders and role models.  It’s been a life-affirming success.

In Edinburgh, we’re delivering the On-Board programme in partnership with the Association of Corporate Governance Practitioners to give students a formal qualification. They interview to take part and are chosen on merit. As it happened, two thirds of our first group of successful applicants ended up being female. Meanwhile, organisations such as the Voluntary Action Fund, Midlothian Play and ICE store have already recruited a ‘young trustee’ onto their boards.  It’s a step in the right direction.

In the future, we want to extend the programme to public and private organisations who wish to support staff keen to give something back to local communities.  Candidates will not only gain a university qualification with professional body recognition but a practical experience in good governance and ethical leadership.

In short, it comes down to passion, about a cause and contributing to people’s lives.   Trustee’s decisions provide the very glue that binds, in part, Scottish life.  In this year of Homecoming and the independence debate, we have an opportunity to celebrate the volunteers who make up Scotland’s civil society. Then comes 2018 – the year of young people in Scotland. It’s time for all of us to help celebrate and nurture their talents.

Dr Miles Weaver is a Senior Lecturer at Edinburgh Napier University’s School of Management.