Richard Nesbitt was the COO of CIBC, one of Canada’s Big 5 Banks until 2014 and prior to that was CEO of the Toronto Stock Exchange. He now is an adjunct professor at University of Toronto’s Rotman School of Management and CEO of the Global Risk Institute for Financial Services. He won the Visionary Award in 2014 from Women in Capital Markets organization for his sponsorship of gender-diverse management teams – and co-authored with Barbara Annis, Result at the Top: Using Gender Intelligence to Create Breakthrough Growth.
Roddy: Hello and welcome to this podcast from Ideas from Leaders with me, Roddy Millar. On today’s show I’m delighted to be in conversation with Richard Nesbitt. Richard has a very full resume from which some of the highlights are Chief Operating Officer of CIBC, one of Canada’s top banks. And prior to that, CEO of Toronto Stock Exchange.
Since retiring from CIBC, Richard has been CEO of the Global Risk Institute for Financial Services, an institution set up in 2011 by amongst others, Mark Carney, the current Governor of the Bank of England, to better understand and manage financial risk.
However, it’s in his role as an author and thought leader, as well as adjunct faculty at the Rotman School of Management at the University of Toronto, that I’m speaking to him today. And in particular, his new book, Results at the Top, Using Gender Intelligence to Create Breakthrough Growth. Co-written with Barbara Annis, founding partner of the Gender Intelligence Group.
Richard, welcome to the show.
Richard: Yeah, thanks for having me.
Roddy: Your new book, Results at the Top, deals with the issue of getting more women into senior roles in organisations. Clearly a topic that’s been well covered by many people over the last couple of decades. Albeit, your and Barbara’s approach is quite distinct in that your primary audience for this book is men. And it’s content is not the usual ‘how-to’ guide for women, but more of ‘why-to’ reasons for men.
As you might expect from someone with your analytical background, the driver behind the book is the evidence of improved organisational performance when there is a more gender-balanced leadership. Can you share with us some of the evidence behind that?
Richard: Yeah certainly. I spent time since… I retired at the end of 2014 from CIBC and I wanted to spend time taking a look at the research. Because I knew what I believed and I knew what I had observed. But I really wanted to go back into the … Trying to explore whether other people were seeing the same thing and whether they could explain why that was. So we took a look at close to 60 different research papers and studies from around the world. And almost unanimously, I would say all but two papers, concluded that the impact of putting women on boards, or women in senior leadership teams, was universally positive.
It was positive from a financial perspective. And from a more qualitative perspective, like environmental issues. The two studies that did not support it weren’t negative. But they were neutral. One was from South Africa and one was from Indonesia. And they used a fairly short time period. They actually said they couldn’t find any difference. So only two studies would show … The vast majority of studies would support the conclusions.
Roddy: Are those studies focused on the, sort of, traditional measure from a financial perspective of a corporation’s performance? Or are we widening the scope of performance to something more eco-system, modal, societal or other different measures of that?
Richard: They’re a combination. I was very interested in the financial case. The business case. One of our chapters is the business case for the advancement of women. Because, you know, I come from business. I come from industry and I’ve got to tell you, the most important thing we do is, at the end of the day, is generate a return for our shareholders. So there’s a lot of other things we do. But that always seemed to be the priority of the organisations.
And so if you want to speak to the leaders of today’s organisations, which by a vast majority are men, you have to speak to that issue. And that’s sometimes called shareholder value. And a lot of people criticise people who focus only on shareholder value because they argue that corporations are about more than just shareholder value, which I agree they are. But that doesn’t mean they’re not about shareholder value.
So first and foremost I took a look at the financial performance.
Roddy: Is it just the additional diversity of bringing in women into what was predominantly a male forum before? I mean, if you were to bring in people from other kinds of different background, do you think you would see the same kind of change in performance?
Richard: I think that … I didn’t do any looking into that. Obviously that’s another field of research that many other people focus on. But, and you would expect that the effect of diversity is not just gender based. It’s also based on other issues. However, it’s very important that … We’re not just saying that you go out and pick any female you see on the street and put them on the board. These people also have to be qualified and able to contribute to a board. They just don’t necessarily have to come from one of the top Wharton Business School or Harvard Business School or Rotman Business School. They don’t necessarily have to have that traditional background.
So I would say, what I’ve seen tells me it’s likely that the diversification effect would benefit organisations in areas other than gender, but I didn’t do any work on that.
Roddy: As I said in the introduction, what’s interesting about your and Barbara’s approach in the book is of course that your focus is explaining or positioning the issue as one for why men should be embracing this for the performance of their organisations rather than the traditional previous focus that we’ve seen where it’s very much trying to focus women on getting into those positions. How do you see that occurring?
Richard: Well, you know, as a man who spent his career in financial services, I didn’t feel it was really appropriate that I write a paper or a book on what women should do. But I did feel that I could help men improve their companies as well as do better for themselves by sharing some of these ideas with them. So the fact is, in my observation through my career and now having that validated in the research over the last 20 years … And this research has really only been around for 20 years. It tells me that the addition of women to any group such as a board or senior management team, that is all male, will improve the performance of that organisation, financially as well as otherwise. And that that improvement will continue as you move towards a gender balance of that group.
And what’s really interesting is to think about the reasons why that is. Clearly, not only do organisations improve because they add women who have different experiences and different talents, but it improves the performance of the men who are working alongside the women. So it’s very clear that it isn’t men are better than women or women are better than men. It’s the combination of the two which produces the improved performance.
Roddy: You’ve obviously held some very senior positions in notable financial institutions. Can you, from that background, give some insight into why there is a resistance, or why this change hasn’t happened before? Is it purely a cultural thing that needs to be changed?
Richard: Well I think it’s way more than cultural. I think, quite honestly, it goes back. It’s more of an evolutionary thing. I always like to point out that it’s very common in history that in order to make these major events, you need both women and men working together. And that has taken a very long time to happen. I always mention that in the United States, Susan B. Anthony held a major conference on getting women the right to vote in 1850. Okay? And of course, they weren’t given the vote in the United States, Canada, and the United Kingdom until approximately 1920. So that took 70 years.
These things take a long time because we’re talking about cultural, evolutionary change. But clearly people decided at the time, in 1920, that it was important that women have the vote. Now what I would point out to you, who wrote the legislation to provide women the right to vote? Well of course it was men. Who voted in Congress or in the Parliaments of Canada and the United Kingdom, who voted to give women the right to vote? Well it was men because only men could be in government at that time. So men have a role here, a very significant role, in supporting women on this journey.
And we are at a very different part of the journey. We’ve sort of accomplished that in voting and a lot of women are very active in politics. You have Mrs. May in Britain and very senior women in politics in Canada and the United States. So we seem to have done a pretty good job in some aspects of society. But in business, only six percent of CEOs in S&P 500 companies are women. So we’re really under-utilising half the population.
Roddy: Do you see a tipping point there as well? You mention in the book the fact that there are now more women, female graduates and undergraduates going into postgraduate programs. And there are certain employment sectors which are predominantly led by women these days. So do you think there is a snowballing of momentum towards this happening in any case?
Richard: Yeah, I think the snowball is starting to go down the hill. I don’t think it’s picked up momentum yet. I think the picking up of momentum will be when more men shift into sponsorship as opposed to just passive support. But we’re not the only people, Barbara and I, we’re not the only people that are saying this. There’s organisations like the 30% Club and Women in Capital Markets and others that are very actively promoting the idea that men need to work side by side with women in order to improve their companies, by including more women in each role.
So I just go back to what you mention about universities. Universities are now, more than 50% of graduates are women. And that’s probably going to peak out in the next decade at about 60% of graduates will be women. Today, at the Rotman Commerce, University of Toronto, 57% of the graduates are women. And so what you’re seeing here is the population of new graduates, new people coming into organisations and companies, are going to be … The pool of people is going to be predominantly women. That means when you go to hire, you’re going to be, if you’re only going to hire men, if you’re a company that only hires men, you’re going to have an increasingly shrinking pool of talent. So that doesn’t make any sense for a company. That can’t seem to be good.
So you notice none of my comments talk about we should do this because this is the right thing to do. And sure it is the right thing to do. But that has not been effective. Because it’s the right thing to do. The way to encourage leaders of organisations today who are predominantly men is to teach them that this is in their interest, it’s in their company’s interest, and by pursuing this pretty aggressively over the next decade, they will improve their companies and in some cases, outpace their competition.
Roddy: Do you see, sort of, surprising levels of resistance to that still? Or are you seeing that, generally, people at the top of large organisations are embracing that concept? Even if they’re not necessarily enabling it as much as they should have?
Richard: I think where we are, despite you’ve seen the press on Uber over the last few weeks. Which I think is very illustrative of the kind of resistance that is there. It tends not to be overt anymore. People are, you know, generally don’t want to insult other people and they want to be polite so they tend not to speak against this. But what I would say is you should measure people not by what they say, but by what they do. And so far, by what they do, there’s a lot of people who haven’t got this message yet.
I would say, we think the men really are in three different groups. There’s a group, that’s probably 20-30%, that are very active sponsors. And that’s actually grown a lot in the last 10-20 years. So, people, members of the 30% Club and people who are strong advocates for our message. I think on the other side of the continuum, there’s people who don’t get it, never will get it. Don’t care to get it, don’t want to get it. And you know, you see that in the newspaper from time to time, who those people are. These are the people that just, in our book we say, these are the people who, when you bring this issue up say well our business is about more than that. Our business is about pumping oil or our business is about mining gold or our business is about widgets. Well no, you have a place in society actually. And you’re under-performing because you don’t consider this an important issue.
There’s another big group in the middle. Could be 50-60% of men, who they don’t have anything against this. They kind of believe this. And they wish the human resources department all the success that they can possibly have in achieving it. But it’s not their issue. They’ve got other things to do. That’s the large group of people.
So we want to try to shift more of those people into the active sponsors. And that’s what will change the world, if more of those people become active sponsors of this message and act on it, that will change the world.
Roddy: And so what is it that those people in that large central group ought to be doing in practical, pragmatic terms, that can really shift the needle?
Richard: Well, I think, first of all, we need to make them believers that by sharing power and influence with women is actually in their interest. It’s in their career interest and it’s in their organization’s interest. So that’s first.
Secondly men, and by the way, I would say the same thing to women but I’m only speaking to men. Men need to question what they’re doing and why they’re doing it. Because all of us are filled with biases and prejudices that we are built with since birth. And you’re doing things today, most people are doing things today, they don’t even know why they’re doing them. They just always do them, right? So for example, men tend to hire men. People tend to hire people who are like themselves. And yeah. So you have to question everything you do.
And that’s what I learned. If I’m going to believe this, then everything I do, every action I take, every time I recruit somebody, every time I interview somebody, every time my staff is doing the same thing, every time I create my management team under me, I have to always question myself. Why am I doing this? What have I … Am I employing the things that I’ve learned?
And it’s not easy. It’s not natural in some cases. Now, once you begin to do it and you start to see the benefits, you say, hey why didn’t I do this before. But it’s not the normal way and it’s not the way anything’s taught at business schools, that’s for sure. They don’t teach this kind of stuff at business schools.
Roddy: But a lot of it’s awareness and knowing yourself, which is core leadership. I mean, that’s sort of leadership 101 isn’t it, leading oneself? So if people can take that step outside themselves and look back at how they’re operating and how they’re performing then perhaps that becomes clearer.
Richard: Absolutely. And they will benefit personally and their organisations will benefit. And of course then, that larger group of people called women will benefit as well. Because they’ll be fully engaged in all aspects of business.
Roddy: In your book, you build up, or reference, the gender propensity index. Can you just take a few moments to describe what that is and what impact it can have?
Richard: Well, what we were trying to do is try to look at whether there is publicly available data that could be gleaned across public companies to tell us what is the likelihood that they are going to increase or decrease the presence of women in leadership positions and/or board positions. And so we took a look at a variety of different publicly available items. For example, is the chair today a woman or a man? Is the CEO a woman or a man? In most cases it’s a man, right?
But then we started to look at things like the percentage of the board that was made up of women today. Because we’re looking whether to demonstrate a correlation. We also looked at how many women were on the top management team as a percentage. We also looked at the number of women in powerful positions on the top management team. Because there’s a propensity actually to have women in non-line roles, in some companies. So we’re looking for women in really line revenue producing roles.
And then other items such as a stated diversity policy, stated diversity targets. These are publicly … Are they talking about this issue? And then disclosure around how they’re performing over time at all levels of the organisation. So what we did was we took a look at the TSX60, which is the top companies. It’s like the, essentially the S&P 500 but it’s for Canada because I had access to the Canadian data. And we looked back 15 years of data. And we started to look at a whole bunch of different things. But we came up with an index, which actually ranked the companies in terms of their gender propensity index. And it was some really interesting findings.
Roddy: Is that an index that you expect to repeat?
Richard: Well, I think we’re debating that right now. I think that I would like to start producing that index. It could be very useful for companies to really encourage them to act. As we know, companies and boards tend to act on things that they’re seeing being measured and that’s why they’re very focused on financial statements and regulatory reports and things like that. But there’s nothing out there today which says, here’s how you’re performing in terms of gender, that is public. They have private information, but there’s not a lot of public information.
So I think boards would be very interested in this. I think shareholders would be very interested in this. Because if you agree with the research that says greater gender diversity means better performance, then you really should be looking at the gender diversity of a company and not only where it is today but where it’s going. Because stock prices are forward looking instruments. And so what you really want to see is, is this company going to add more women or is it going to stay where it is?
And of course, employees would be interested in it, new graduates would be interested in it. So we are pursuing it. We’re being very cautious because, of course, it’s not … It’s based on … It needs more work in terms of, well, you’ve got a gender propensity index, but does that prove that the company is going to first of all, add more women into leadership positions? And number two, is that going to then lead to better performance? We need to follow this for some time. So we didn’t want to make it as some of these other kinds of …
They just get put out there and they’re really done for publicity. We wanted to make sure that this would be helpful. So I suspect we’ll probably use it on a more private basis with companies that are interested.
Roddy: Fantastic. So if people listening wanted to find out more about that and indeed about the book Results at the Top, where should they go?
Richard: Well the best place is to go to Barbara Annis’s, my co-author’s website, genderintelligence.com. There’s a lot of information there. Barbara has been working in this field for 25 years, at least. And really knows why these things are happening and works with me closely in terms of, I knew what was happening, I knew what I observed, and I knew what worked. And what didn’t work. She actually knows all of that plus she knows why these things are happening.
And that’s what the book really tries to explain. And then the book ends with really some practical things. You spend your time on this because it’ll be effective. Don’t spend your time on that because it won’t be effective. And so it’s really a road map on how to be effective. So Barbara, I would go to her website to get any additional information.
Roddy: Fantastic. Thank you very much. That’s a brief but a really useful introduction and explanation as to how this issue is currently, and how, we hope, it will unfold as we go forward. So, Results at the Top: Using Gender Intelligence to Create Breakthrough Growth. If people want to search for it online. Richard, thank you very much indeed for sharing that with us and spending some time talking to me.
Richard: Thank you.
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