CEO of Women on Boards, Fiona Hathorn, explains why diversity is key to good business

Fiona Hathorn has strong views about board diversity – “you’re never too young or too old to be in the boardroom” – and believes board experience early in a career contributes to successful leadership.

“The boardroom matters. People who get to the top in C-suite jobs, either as directors or executives, are usually different in some way,” she says. “They may be connected. They have knowledge. They may have lived overseas. They may have had single parents. They have something that makes them unique. But interestingly, if you look at people such as Alison Rose [NatWest] or Carolyn McCall [ITV], they’ve all had exposure to the boardroom, usually at quite a young age.”

Hathorn was four when she went to her first board meeting. Her father’s background had been underprivileged, having grown up in a poor area in Stoke-on-Trent, but his intellect and ambition were nurtured by the power combo of a strong mother and inspiring teacher. After the RAF, he went to university and developed an interest in the boardroom: community boards, council boards, police boards, magistrates boards.

“I got dragged into them because my mother was working as a teacher and they couldn’t afford childcare,” says Hathorn. “Dad took me everywhere. I’d sit in the corner of various boardrooms in the evening, with my colouring book, unaware of what I was soaking up.”

Hathorn went on to a successful career in finance, working senior roles at Hill Samuel, Old Mutual and Corcordia, then becoming an angel investor, before specialising in diversity and governance services. It was while working as an angel investor that her lightbulb moment (or moments) arrived. This was Women on Boards UK: the organisation she founded and now serves as CEO, alongside a portfolio career that includes advisory boards at King’s College London and the Financial Reporting Council, soon to be replaced by new regulator, the Audit, Reporting and Governance Authority, about which she is appropriately guarded.

“There’s no question that the regulator needs more teeth and rigour with regard to the audit process,” she says. “It has been too interconnected and it had to change. I am definitely in favour of reform but they’re still working on how it will be structured.”

Different strokes

Hathorn’s Women on Boards journey began not through a personal injustice, but via a woman who pitched to her at an angel investor roadshow.

“The pitching teams were mostly men, as were the decision-makers. One day we had 10 pitches scheduled and one was by a female entrepreneur. At the end of the day we discussed every pitch to decide whether to see them again. Some were awful, some were very good. However, we didn’t discuss the woman at all,” she says. “I said, ‘Hold on, we’ve discussed the rubbish male pitches, why aren’t we discussing this woman? She has a great idea, she’s launched a business before and she’s exited.’ They laughed at me, saying, ‘We don’t invest in female entrepreneurs – she might have a baby.’  I’d had two children and it never occurred to me that there was this issue. I was stunned.”

This was in 2010 when the conversation around women on boards and gender balance was growing louder. “There was also data coming out of the States about how only 4% of angel investment goes to female entrepreneurs,” Hathorn recalls. “That was so shocking.”

One evening, Hathorn went to a networking event that included a panel discussion about the gender barriers that existed. The co-founder of Women on Boards Australia, entrepreneur Claire Braund, was a panellist. “She listened to the discussion, stood up and just said: ‘This isn’t good enough – you’ve listed all the negatives and just put the whole audience off.’ She implored everyone to feel empowered and to be made aware of the boardroom, whether it was company boards or community boards. That was my second lightbulb moment and one of the reasons why we work with so many corporates – it’s planting seeds.”

Fast forward 10 years and Women on Boards has more than 30,000 members (women and men) and has helped more than 3,000 people get board positions – eight of its members secure a non-exec role in an average week. “We also work with boards to understand how to recruit for diversity, and to connect with quality candidates outside the usual suspects,” she says.

Mind shift

Hathorn believes passionately that diversity of thought is better for business: “People going into discussion with someone who isn’t in their echo chamber work a lot harder.” She cites a case study published in Organization Science that supports this. The participants, a mixture of Republicans and Democrats, were set a project in which they had to argue their corner. Those who were told they had to convince someone from the opposing party prepared far better than those who needed to convince someone on their own side. “Diversity jolts us into cognitive action in ways that homogeneity simply does not,” wrote co-author Katherine W Phillips.

“It’s the same in the boardroom – diversity brings better performance, better thinking,” adds Hathorn. “But we have to recruit differently. Think of a FTSE 100 [company]: if you recruit in the same way you’ve always recruited, ie somebody who’s been a previous FTSE 100 CEO, 95% of them are men. We need different skill bases, different backgrounds. Those individuals will work harder – they will see and hear things in different ways and their contributions may be unexpected.”

Hathorn sees the input of external stakeholders as a conduit for change: shareholder and client questions are focused not on gender or ethnicity, but performance. But there is now an understanding that all are interconnected. Hathorn quotes the Bank of England and the Financial Conduct Authority’s statement on their websites about culture, and diversity and inclusion (D&I), which says the way a firm handles non-financial misconduct “is potentially relevant to our assessment of that firm, in the same way that their handling of insider dealing, market manipulation or any other misconduct is”.

Hathorn adds: “Nearly everyone in senior positions of influence in the City today believes that managing culture and inclusion is business critical to the success of London as a financial centre. Advancing the D&I agenda isn’t a slogan. It is an essential part of how anyone goes about their work and manages their business.”

She points to Credit Suisse research analysing 30,000 senior executives at over 3,000 companies worldwide. Companies in which women represent 20% or more of management had a better ESG score and enhanced share price performance compared with companies where they constituted 15% or less of management. Similar findings were found among corporate boards: companies in which women were 10% or more of boards outperformed the rest.

“This is different from showing causation,” Hathorn cautions. “Businesses don’t succeed due to one factor alone and we shouldn’t infer that women are intrinsically ‘better’ in some way. What these robust studies tell us is that diversity is a good sign of a well-managed company where promotion is more likely to align with performance.”

As 2022 unfolds, culture is at the top of Hathorn’s mind. “The main change I want to see is culture and talent management being discussed and owned by the boardroom,” she says. “Recruiting a diverse team doesn’t change anything – if you can’t manage a diverse team, you will go backwards. Diverse teams are harder to manage: you need to understand individuals’ diverse backgrounds and accept people think and work in different ways. If we’re going to deal with conscious inclusion, that’s a leadership issue. And I still don’t see a lot of support from the boards to the exec: they need time, training and resources to help them manage to be consciously inclusive.”

Hathorn is positive about the year ahead. “And that’s because diversity of thought is getting treated and talked about very seriously in the boardroom,” she says. “The investor is getting involved, the regulator’s getting involved and that is leading to the change that we’re seeing. I’m very optimistic.”

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