Friday 15 November 2019

Raising the golden skirts

As the Government scrambles to find women to install on State boards, Sarah Carey finds herself disqualified because, like many women who took time out to care for her children, her CV has a few gaps. But what's more important? A fancy job title or a willingness to challenge groupthink? Why not kill two birds with one stone? Get a woman willing to say no

Sarah Carey finds herself disguised. Photo: Kip Carroll
Sarah Carey finds herself disguised. Photo: Kip Carroll

Sarah Carey

'Taoiseach, would you please consider reappointing Valerie O'Reilly to the board of the NTA. A woman, bright, intelligent and not bad-looking either! Michael Lowry."

Hey! That's me! My womanhood has never been disputed. My brightness and intelligence have been noted, and while not a classic beauty by any means, I'm told I have a certain allure. As the Government scrambles to find appropriately qualified Board Tottie in response to Gender Imbalance Anxiety, I keep thinking: Why not me? So a few months ago I registered on, the website for State jobs, including board appointments, and kept an eye out for something that might suit. I haven't had any luck so far though. (If anyone cares to write a flattering note to our Dear Leader, go ahead. But don't let anyone find it!)

To be fair, a lot of the jobs advertised on the site are quite technical. Doctors, scientists, human rights lawyers and all that. But when I saw the advertisement for directors for Ervia, the parent company of Irish Water, I thought: "Perfect!" From previous job experience, I know my way around planning regulations, local government, infrastructure and the politics of protest. I've a basic grasp of the economics of energy and water supply. And as Minister for Administration in our house, I spend hours picking through the detail of contracts with customer service agents. So I applied. I thought I had quite a good case.

I started out quite strongly in a business career, but, like many women, walked away from a typical corporate career. Partly, I got extremely bored sitting around watching men make terrible decisions based on ego, fantasy and testosterone. Mostly, I like babies and didn't want to hand mine over to anyone else to mind. Those were MY babies! Then I had a bit of luck and got a job writing a newspaper column. I could stay home and email in my missives. Goodbye, office. Hello, house-cleaning, nappy-changing, column writing, and more house-cleaning.

However, my old connections draw me back in from time to time and I've done a fair bit of high-level consultancy. I worked with a technology company in Silicon Valley, which required input at board meetings. I did a short course in the Harvard Business School on business strategy, where the lecturers were extremely encouraging. Meanwhile, my journalism work requires me to get to grips with complex subjects at high speed, asking probing questions all the way. In other words, despite the tyranny of insecurities that plague me, I know I could do that job. (This declaration leaves me open to the great Irish curse: "She Thinks She's Great", but at some point in your life, you have to stop apologising for your abilities. I'm 43. I think I've reached that point).

So I sent in the application to Ervia. Needless to say, I didn't get the job. Applicants needed 10 years' experience in a company with not less than 1,000 employees, so that was that. I wasn't surprised, but I was frustrated. It got me thinking about what truly qualifies one to be a good director anyway. If you've got 10 years' experience in a huge company, why does that automatically make you a good director? Is it possible to be a good director without a standard climb up the corporate ladder behind you? And with the push to increase the number of female directors, is there anything in particular about womanhood that qualifies one for board membership? Since boards have presided over total disasters, from the collapse of the banks to the shambles of Irish Water, it's about time we figured this out. A bad board can be an expensive mistake.

From time to time I meet the kind of men who are directors and I ask them why they were so useless. Many of them say the same thing: "Oh, the boards can't do much. The management runs the show." I'm not sure I buy the contention that boards merely rubber-stamp the narrative presented by the executives. If that were the case, what's the point and what are they paid for?

Anyway, I know of one board member of a financial institution in Ireland who smelled a rat and asked questions. Too many questions, as it transpired, because she was flung off that board for being so troublesome. Her name is Eithne Tinney and she was a non-executive director of the EBS Building Society.

My parents had a small agency for the EBS, and naturally my savings and mortgage were with the society. Traditionally the EBS culture was conservative. It was a mutual society. That meant there were no shares on the stock exchange and no incessant quarterly growth targets to meet. It lent conservative amounts of money to conservative people at a low interest rate, because profits weren't the point - a philosophy of which I greatly approved. But in 2000, the EBS headhunted Ted McGovern as its chief executive and he began a programme of "modernisation". The same year the board decided that the ordinary members of the society could nominate a director at the AGM. Tinney, a concert pianist and producer at lyric fm won the subsequent election. Her job was to represent us.

With the EBS losing market share to more aggressive lenders, agents began to find themselves under huge pressure to sell non-mortgage products, such as insurance. Rabobank wanted to buy the society, but the proposal would see no windfall payment to the ordinary savers and mortgage holders. Most disastrously, the EBS moved into commercial lending with property developers top of the client list. Profits doubled. Happy days.

But Tinney opposed key parts of the strategy. She hasn't made any claims about foreseeing the financial crisis or realising what damage commercial lending would do. Issues like executive pay and the Rabobank proposal exercised her most. But what's interesting is how the board reacted when she objected to some of the decisions.

At the 2007 AGM, the board refused to support her re-election on the basis that she was guilty of "under-performance". I spoke in her defence. "What was 'under-performance'?" I asked. "Was she not showing up? Was she filing her nails?" But despite my brief oratorical intervention and a huge campaign led by Shane Ross, the board had the votes of the big shareholders and she was out. She was re-elected in 2009, but it was too late by then. The EBS collapsed and was subsumed into the AIB after a bailout from the Government.

What was so special about Tinney, the pianist and producer? She had no MBA, no entrepreneurial fairy story and no high-flying corporate career. Why was she prepared to challenge the consensus on the board who had all the business, financial and legal experience? Was it because she was a woman imbued with common sense, or because she was an outsider liberated from the fatal groupthink that afflicted the entire financial system? Or are the two inextricably linked because in the corporate world, women are outsiders?

Let's look at the outsider issue first. Pretty much everyone agrees that the reason no one on the inside saw the financial crisis coming was groupthink. Nazi Germany is the classic example but it happens in ordinary companies and ordinary groups every day. In his best-selling book Thinking, Fast and Slow, psychologist Daniel Kahneman describes its more mundane effects on supposedly clever people. He's done a lot of work on "planning fallacies". This is when a group decides to implement a project and inevitably it takes significantly longer and costs significantly more than originally foreseen. In that context, public service debacles like PPARs and Irish Water fit into a long tradition of delusional planning that you'll find in the private sector too.

The dramatic power of groupthink was demonstrated in the famous 1971 Stanford Prison Experiment. Twenty-four students were randomly assigned to the role of either prisoner or prison guard and told to conform to their roles. In six days the experiment was abandoned because the 'prison guards' quickly resorted to appalling brutality and the prisoners not only accepted the treatment, but attacked any prisoner who resisted. Even the guy running the experiment got sucked in. Six days! Can you imagine what 20 years in an office can do to you? It's just brainwashing compliance.

I've seen and heard executives convince themselves of complete rubbish, cover up for obvious errors and spout grossly immoral practices because "that's the way world works". They're part of a desensitising, delusional experiment in bad governance but they keep telling themselves they're great! All would deny it, but all are victims of groupthink.

But that's not the whole story. Who could fail to notice that the "group" running the banks, regulatory bodies and governments happened to be composed almost entirely of men, with their tendency to high-risk, aggressive behaviour. People have asked if the presence of women would have prevented the financial crisis.

People such as Christine Lagarde, the incredibly clever and devastatingly charming head of the IMF, for example. And find me anyone who describes her without mentioning her elegance and style - #notbadlookingeither. She said that if Lehman Brothers had been "Lehman Sisters", today's economic crisis would look quite different. She also observed that there was just one Icelandic private equity fund - Audur Capital - that made it through the crisis without a hitch. It was wholly managed by women. Lagarde also refers to the Nobel Prize-winning entrepreneur Muhammad Yunus, who brought credit unions to Bangladesh. Ninety-seven pc of his clients are women. Lagarde argues: "When he launched that revolution in 1976, he knew that women would use their loans to advance projects or purchase tools, while he was wary of what men might do with the money."

But we knew that already. When the Credit Union movement was founded in Ireland in the 1950s, its "micro-lending" venture was targeted at women. And in the aftermath of the Haitian earthquake, the first thing emergency workers did was to identify the female head of the family to whom aid was to be given. Men couldn't be trusted to pass on even the food to their families. So at every point on the spectrum, we see evidence that it's safer to trust women with money. Or as Lagarde put it: "When women are called to action in times of turbulence, it is often on account of their composure, sense of responsibility and great pragmatism in delicate situations."

In response to such arguments governments are "encouraging" companies to increase female board membership. The most dramatic steps were taken in Norway, of course. (Does anyone else get tired of constantly quoting Scandinavian countries in the pursuit of perfect societies?) In 2003, Norway introduced a 40pc gender quota for publicly listed companies. Even in that social democratic Utopia, companies had to be threatened with dissolution when they didn't comply. In November last year Germany introduced a 30pc gender quota. Companies who fail to comply will have to leave the seats vacant. It's a pity it's come to this, but the "targets" set in other countries such as the UK (a mere 25pc at that) have failed.

But dig a little deeper into the "success" of the Norwegian quota and all is not what it seems. Of the 563 companies affected, 364 simply delisted from the public stock exchange. By going private, they avoided the quota. Job done. Some have argued that changes in financial regulations making it easier to go private were introduced at the same time, so what looks like mass avoidance of the quota could be a coincidence. That's some coincidence.

For the remaining companies, behold the rise of the 'Golden Skirt' or what I call 'Mary Davis Syndrome'. The small number of women deemed appropriately qualified ended up with multiple jobs. The most notorious was the case of Mimi Berdal, who sat on 90 Norwegian boards. In all, a small group of around 70 women held most of the quota-compliant seats on country's boards. To be fair, the multi-jobbing Mimi told The Daily Telegraph that "the term 'golden skirt' was itself sexist", pointing out that male colleagues with similar multiple roles were referred to as "'well-known businessmen', not 'golden trousers'".

But this is my problem with the whole thing. If the problem "group" is men (and their testosterone-fuelled, risky behaviour) then women are the solution. But if you define the group as "people who've worked their way up the corporate ladder" then women are merely a subsection of the group that created the problem in the first place. In that case, the solution is to draw directors from outside the corporate system altogether; not from the bird bath within it. Otherwise what looks like diversity is pretty superficial: skirts versus trousers. But fine ankles don't necessarily equate to fresh thinking.

The Institute of Directors in Ireland conducted a survey in 2013 amongst its female members, who identified this problem too. They referred to a "Directors' Club" that's really hard to break into (even though the 155 women surveyed were already in the club). The IDI Chief Executive Maura Quinn said, "the barriers identified were not just barriers to gender diversity, but barriers to board diversity as a whole". She argued, "age and ethnicity were also important for boards to encourage constructive debate and challenge the executive".

So, the director of the EBS board who wrote to Eithne Tinney to inform her that her services were no longer required was a woman. Professor Yvonne Scannell, a Trinity College environmental law professor, Arthur Cox consultant and serial board member. I cannot testify as to her looks or elegance, but she has served on the boards of Forfas, An Foras Forbartha, the Irish National Petroleum Corporation, CIE and Tara Mines. In 2007 she'd been on the EBS board for 12 years. Scannell and Tinney - both women. One an insider. One an outsider.

I'm not saying Scannell is by any means the worst offender when it comes to serial board membership. Far from. But on the face of it, her femaleness did nothing to insulate her from the consensus thinking that led the EBS into the lending that brought it down.

Alan Dukes was installed as the Chairman of Anglo Irish Bank after it collapsed and has had plenty of time to reflect on what went so wrong and what could be done to put it right. So I asked him what he thought was more important; - gender or outsider status? He said he's "agnostic" about gender balance, but was far more enthusiastic about outsiders.

He argued that "while the majority of members of a given board should be people with a variety of experience in areas related to the business, every board should have some "outsiders" of intelligence and wit who can see groupthink for what it is and who have the confidence to challenge any prevailing orthodoxies." In his classic dry style he observed that, "healthy scepticism is not a gender-specific characteristic."

Even taking into account the risks of confirmation bias, my research backed up my instincts. Companies need people who have different experience to the drones churned out by MBA schools. Fortunately, since bright, intelligent women (who aren't bad-looking either) drop out of corporate careers at an alarming rate to pursue a more balanced family life or an alternative career, then it's a win-win for me. If you put women with alternative experience on a board, then you kill two birds (ha!) with one stone. You get a woman, and an outsider.

In fact, one part of my story I've omitted so far is that I'm on a board. It's not a company board, but there are interesting parallels. A statutory Register of Architects and Chartered Surveyors was created a few years ago to prevent people trading in those professions without proper qualifications. If for any reason an applicant is refused registration they can petition to an appeals board who'll review their case. Two years ago I got a phone call from a civil servant in the Department of the Environment who told me I'd been nominated by the minister to this board. "But I don't know anything about architecture," I protested. He explained this was the point. There would be architect members, but the majority were non-architects to avoid a closed-shop approach. (Why can't we get this for the legal profession?)

When I was told there'd be formal hearings and decisions could be appealed to the High Court, I pointed out that I'd no legal experience. He said there'd be formal advice, but the key goal was fairness. And before I got too excited: there was no fee. This was public service. Despite the lack of money, and having failed to persuade the gentleman I wasn't qualified for the job, I accepted.

We've had several hearings since and it's been a revelation. It's hard work but the members are incredibly constructive and argue each case out passionately and professionally. The experts are there, but the entire concept of insulating the process from insider thinking is a model for others. This - I thought - is how everything should be done. Instead, by insisting on box-ticking CVs for its board members, the corporate world excludes fresh thinking by design. Which seems like a bad idea when we know that box-ticking will be the downfall of western civilisation. Sure we're halfway there already.

In fact, this is why we shouldn't necessarily dump the entire system of political appointees. As I discovered myself, it provides a great opportunity to go left-field. Of course, that system has itself become an opportunity for insiders from the political world to do the rounds. But that doesn't mean there shouldn't be a mechanism to ensure independent thinking on boards.

Instead, the mistakes and disasters of boards, public (Central Bank) and private (the banks), are rewritten into a narrative that excuses poor thinking at the highest levels. If these boardroom antics merely resulted in the rise and fall of individual rich boys and girls, who'd really care? But boardroom mistakes have cost us all dearly - too dearly. So sure, let's get bright, intelligent women on boards. But if we just replace yes-men with yes-women, then nothing will ever really change.

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