Sunday, 11 March 2018

Race, Gender, and Business: The Institute of Directors in the Spotlight

In Financial Regulation Matters, we have looked on a few occasions at the issue of gender in relation to the world of business (here, here, and here) and to a lesser extent the issue of race (here). However, in today’s post we will be examining recent developments coming from the Institute of Directors (IoD) that bring both of these issues sharply into the limelight. After gaining a better understanding of the IoD and what its role is, the two issues will be examined to gain a better understanding of the problem facing the business arena, all for the aim of providing context to the revelations that are making the headlines at the moment.

The Institute of Directors was founded in 1903 and, after just three years, was awarded a Royal Charter for the purposes of supporting, representing, and setting standards for business leaders across the country. The Royal Charter was the basis of the IoD establishing and implementing four key ‘principals’, which include: (Better Directors) promoting for the public benefit ‘high levels of skill, knowledge, professional competence, and integrity on the part of directors’; (Lobbying) representing ‘the interests of IoD members’; (Corporate Governance) ‘to promote the study, research, and development of the law and practice of corporate governance’; and finally (Support) ‘to advance the interests of members of the institute’. The IoD has had a long and storied past, with past members including future Prime Ministers (Stanley Baldwin MP), leading suffragettes and Peers (Lady Margaret Mackworth); the IoD has also played host to a number of leading figures like Harold Macmillan, Ronald Reagan, and Margaret Thatcher. In 2015, the IoD elected its first female Chair – Lady Barbara Judge – who is an American businesswoman has been known as a ‘champion of women’s rights and boardroom diversity’ which, when viewed in relation to the attempts to modernise the IoD, seemed to be a particularly shrewd move by the Institute. However, recent revelations have sought to sour that vision.

Last week, Lady Judge resigned from her position as Chair, as did two of the Institute’s most senior directors. Their resignations came as a response to an ever-developing scandal that is rocking the IoD at the moment, with claims of discriminatory remarks and practices being levied at Judge and the two directors (Sir Ken Olisa and Arnold Wagner) amongst others. After claims put forward by members and staff members at the Institute, Judge herself is now facing more than 40 allegations of inappropriate behaviour, with the media reporting that she has been recorded as saying things like ‘we have three inexperienced people doing a job [on the IoD’s secretariat] when one experienced person could do it and they are making mistakes. And so the problem is we have one black and we have one pregnant woman and that is the worst combination we could possibly have. No, two blacks and one pregnant woman. I couldn’t believe it!’ and that black people ‘can get aggressive’. Whilst Judge is rejecting any suggestion that she said the latter whilst admitting the former (she said that her language was not ‘of the modern standard’ but that the IoD ‘had breached her trust by recording a secret meeting’), the consequences for the IoD are proving to be damaging, with a legal investigation by the law firm Hill Dickinson providing a basis for sweeping internal reforms and, potentially, being held to be liable for breaching data protection laws regarding the leaking of information. There are also suggestions that the revelations will form part of claims by employees that will see the IoD answer for these issues in employment tribunals, whilst the damage to the IoD’s reputation is obvious, particularly considering the ethos it presents to the world.

There are, naturally, a number of associated consequences to this issue. Firstly, there are suggestions that the procedure for this investigation, and its subsequent transmission, was ‘fatally flawed’ which would suggest there will be legal repercussions for the Institute. Second, there are connotations for Judge, who sits on a number of boards and charities within which she could be described as a ‘gatekeeper’ in terms of setting organisational strategies – if commentary that ‘she always talked about these things. But she didn’t necessarily live as she spoke’ is to be believed, then the knock-on effects for the many organisations that Judge is a part of may be long-lasting. Yet, the issues raised do bring up points that are important to consider. There have been a number of analyses recently discussing the race-related inequality in the British workplace, particularly in relation to under-representation in senior roles, and the issue remains a poignant one. This author is reminded of a recent comment by the ousted Cabinet Member Priti Patel who recently stated that the BME (Black and Minority Ethnic) label is ‘insulting’ and ‘patronising’ – Patel bases this view on her belief that people should not be put into positions simply because they fulfil a race or gender-related criteria. Whilst Patel is obviously entitled to her view, there is a potential negative effect to the suggestion because it was not attached to any suggestion of how best to break the institutional and personal barriers that exist otherwise – in fact, the conversation was shaped with regards to her potentially running for the position of Prime Minister. She concluded by discussing that people should be ‘viewed on their individual merits’ which, whilst of course is true, is idealistic; Judge’s comments, when viewed in relation to her status, is just one very small example (of which there are many more) of why Patel’s views are not helpful; being viewed upon one’s own merits is impossible when such bias exists within people who control the entrance to certain positions within society. Whilst it is extremely positive that people from non-white backgrounds do succeed and gain positions of high status, it is vital that we not misunderstand that progression as the ‘norm’ – they are very much sparse exceptions to the rule.

Keywords – race, bias, gender, Institute of Directors, Priti Patel, society, Business, Law, @finregmatters

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