This week saw the launch of the Igniting Change 2 report commissioned by Powerful Women, an organisation committed to improved gender balance within the energy industry. The study, undertaken by PwC, found that of the 89 top UK-headquartered energy companies, almost two-thirds (62%) have no women on their boards and only 9% of board seats in the energy sector are held by women with only 2% being held by women in executive roles. Only 8% of companies have at least 25% female representation on their boards, which contrasts with UK business in general where over 26% of FTSE-100 boards have at least one-quarter of seats taken by women.

Some commentators observe that the sector, particularly upstream oil and gas, is undergoing a period of severe depression, and so this is not an ideal time for pursuing “non-core” objectives, however laudable they may be. However, there is broken logic here, since times of difficulty are precisely those during which organisations need to optimise and fully exploit all of their resources.

 

Diverse teams outperform homogeneous ones

Multiple studies have shown the positive benefits of diverse teams on corporate performance, with higher earnings, better return on assets, improved margins, superior problems solving skills and greater levels of innovation.1, 2, 3, 4, 5 Diversity itself isn’t enough…the other essential ingredient is inclusion – for groups to reap the benefits of diverse backgrounds and perspectives, the ideas of all members must be heard and considered.

The question is, given the clear business benefits from building diverse teams at all levels of organisations, why is there still so little genuine diversity in the business world in general and in the energy industry in particular? Given the challenges currently faced by the sector, why are firms not falling over themselves to realise the bottom-line benefits of diverse leadership teams?

This is a complex question, which cannot satisfactorily be answered by suggesting the industry is populated by cave-dwellers with stone age thinking. There are issues around attracting women into the sector in the first place, and challenges around retaining them throughout their careers.

 

Finding the “best candidate”

A commonly held view is that the best qualified candidate should be appointed to any role, and that issues of gender, race, sexual orientation and so on were irrelevant. It’s hard to argue with this at face value, however it is in some ways simplistic. How can companies be sure they have access to the best candidates? How even is “best candidate” defined?

It is all too easy to design job specifications as a like-for-like replacement for the incumbent, which is unlikely to generate a diverse candidate pool. It is also very easy to define the requirements too narrowly, focusing on specific technical track record and ignoring the value that diverse experiences and perspectives can bring.

An interesting case in point was the controversy surrounding the selection of batsmen for the England cricket team. The decision of the selectors not to choose one of the world’s leading batsmen because of a belief that despite his outstanding ability to score runs, he would not make the contributions they were seeking to the team more broadly, attracted a great deal of media coverage. The “best” candidate is not necessarily the one with the highest technical ability.

 

Different career journeys

A senior female engineer will have faced very different challenges from her male counterparts. She will often have chosen to study sciences at A-level, in a school environment where girls often have to choose between being “brainy” and “feminine”. At university she would have been one of a small minority of women on her course, and on graduating, she would have entered a predominantly male workforce.

Senior women today will have begun their careers at a time where casual workplace sexism was far more common. In some cases, basic facilities for women were lacking (eg separate washrooms) and she would have faced spoken or unspoken assumptions that she was incapable of understanding technical concepts from both colleagues and clients. In meetings she would have been expected to take notes and make the tea, even as she rose in seniority. She may well have experienced workplace bullying – shockingly, the Project 28-40 report published in 2014 found that more than half of women surveyed had been subjected to bullying or harassment in the previous three years. And of course, she may have been juggling family life alongside her career, at a time when women remain predominantly the primary carers for their children and face the “double burden” of maintaining a home and family as well as professional life.

 

Igniting change

These issues often do not appear on the male radar until they have teenaged daughters, at which point some are motivated to take a long hard look at their own work environments from a completely new perspective, and discover that perhaps they would not be so happy for their daughters to have to face these challenges.

In overcoming these obstacles over their careers, senior women in predominantly male sectors bring a wealth of qualities and achievements that are not evident in the typical CV. In assessing the “best candidate” for any position, it would be beneficial for hiring managers and recruiters to be more mindful of the value these experiences can bring to their organisations.

The energy sector is a fast-changing environment, facing disruptions from technological advances, expected or unexpected regulation, extreme weather, accidents, and all sorts of other occurrences that can challenge firm performance. A more diverse and balanced workforce will be better equipped to ride these storms and deliver superior results for all stakeholders.

 

 

1  In Women Matter: Gender diversity at the top of corporations: Making it happen (2010), McKinsey found that companies with top quartile representation of women in executive committees had 47% higher return on equity and 55% higher average earnings before interest and tax than those with no women at the top.

2  In their 2012 report Gender diversity and corporate performance, Credit Suisse found that companies with women on their boards saw 26% share price outperformance versus companies with all-male boards.

3 A review of research in the field in 2013 by Catalyst showed gender diverse teams displayed superior problem-solving skills and were more innovative.7, 8, 9

4 A 2014 study by Gallup found that the performance of gender diverse business units was higher than less diverse units. Sangeeta Bharadwaj Badal, Senior Researcher in Entrepreneurship at Gallup said “a key finding of this study is that gender-diverse and engaged business units outperform those that are less diverse and less engaged….by enabling employees to turn their differences in thought, behaviour, skills, knowledge, and talent into innovative ideas and practices that can drive a company forward.”

5 In 2016 the IMF conducted a study of over 2 million businesses in Europe and found that firms with a larger share of women in senior positions have significantly higher returns on assets (ROA). Replacing one man in a senior position by a woman is associated with 8–13bp higher ROA, a figure that rises to 20bp in sectors which employ more women in general, and 30bp in knowledge intensive sectors which demand higher creativity and critical thinking.

6 New research in 2016 from The Peterson Institute for International Economics and EY analysing corporate results from approximately 21,980 global publicly traded companies in 91 countries showed that having more female leaders in business can significantly increase profitability. The report, Is Gender Diversity Profitable? Evidence from a Global Study, reveals that an organisation with 30 percent female leaders could add up to 6 percentage points to its net margin.

7 Anita Williams Woolley, Christopher F. Chabris, Alexander Pentland, Nada Hashmi, and Thomas W. Malone, “Evidence for a Collective Intelligence Factor in the Performance of Human Groups,” Science (September 30, 2010); “Collective Intelligence: Number of Women in Group Linked to Effectiveness in Solving Difficult Problems,” Science Daily (October 2, 2010).

8 Malcolm Higgs, Ulrich Plewnia, and Jorg Ploch, “Influence of Team Composition and Task Complexity on Team Performance,” Team Performance Management, vol. 11, no. 7/8 (2005).

9 Lu Hong and Scott E. Page, “Groups of Diverse Problem Solvers Can Outperform Groups of High-Ability Problem Solvers,” Proceedings of the National Academy of Sciences of the United States of America (2004).

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