The Leaders Club co-hosted a special event on transformational leadership with the University of Kent Business School in Canterbury in May. The second speaker was Linda Crompton from Dallas, Texas, an alumni of the Business School’s first MBA program. Linda was the first woman to head a bank in North America and also to lead a bank that pioneered responsible investment principles. Now she is a leader in gender equality as the CEO and President of Leadership Women, the largest of its kind in the USA.
The Decisions you make have Consequences that Ripple Out
Key achievements for Linda were her initiatives in banking. She started working for Van City Credit Union in Canada, the largest credit union in the world, an extremely progressive organisation. Van City’s particular focus was to help employees to connect their decision making to the community who would be impacted. This was highly novel at the time. They key was to fully realise the impact of your decision.
Once you Connect the Dots .. Your Eyes are Opened and there is no Going Back
The bank encouraged her to return to the UK and study her MBA in Kent. This is where she came across the notion that business and finance and sustainability were all connected. It is arrogant to think that humans are the organising force when in reality, nature is the organising force. The MBA at Kent helped her to realise that it is an illusion to separate your banking decisions from the downstream impact. You cannot pretend those downstream impacts will not happen. This became a watershed moment in her career … she connected the dots to see the bigger picture and was instrumental in directing the rest of her career. She never took up a mainstream job after that … once you know what you know and see how things are put together .. you cannot not know again!
Asking Different Questions leads to Better Outcomes
When she returned to Van City she started to ask different questions, like why were the approval rates for women much lower than they were for men? The answer .. the women don’t just meet the criteria. Then you find out on looking that the criteria are all based on male criteria, which include higher levels of pay for longer periods of time, which of course do not include the interruptions of maternity leave. She could also see what it was costing the organisation when they let go of trained women who left to start a family. There was no provision for that. She set up a new program, copied from Europe, called Return to Work, to provide flexible support for women. The rate of loss was cut down from 70% down to 20%. It was life-changing for so many women.
In 1996, within two years of taking her MBA at Kent she was inspired to create the first electronic bank, and the first one with a social mandate in Canada. There were many obstacles and much resistance but she could see the ways the future would happen. She was on the first Board of Directors for Ethical Investing, where mutual funds were ethically screened. She could see this was the future. They started training people about money itself. When they surveyed their customers they found that people had no idea what happened to their money once it was in the bank …. these were the early days of impact investing. Founding the bank became a vehicle to put into practice the new ideas she learned in her Kent MBA.
Strong Ethics Emerging in Banking and Investing
Linda was headhunted to run the Investor Responsibility Research Centre in Washington, DC. This had been a leader and influential in the anti-apartheid movement, and they continued to do ground-breaking research in climate change and human trafficking.
Linda’s next move was to the oldest and most successful leadership organisation for women in the USA. Latest World Economic Forum report says it will take another 118 years to achieve full gender parity around the world. She is preparing more women to take on leadership roles.
Massive Push for Change now happening in the USA
The hidden blessing of President Trump is that his election has been a catalyst for so many women running for public office. Perhaps Hillary Clinton may have been less of a catalyst in getting women forward! She Should Run, a partner organisation in Washington DC reports a 150% increase in the number of women putting themselves forward for political office. This is a real moment for women in the USA. There is a renewed push for change.
In Canada, so very different to the USA, President Justin Trudeau appointed a 50/50 gender balanced cabinet and brushed off media questions about this with .. this is the way it should be in 2016.
Women Still Lagging Behind
With regard to wage parity, the Financial Times recently reported that in the UK there is a median wage gap of 19.4%, two thirds of of the highest paid staff are men.. the trends are the same in the USA where for every dollar earned by a man, a caucasian woman earns 78 cents, an African American woman makes 64 cents and a Latina earns just 54 cents.
The Workforce in Leading Edge Fields is Unbalanced
The USA Bureau of Labour Statistics latest report shows that women now make up 51.4% of management and professional roles yet only 5% of CEOs are female and hold 16.9% of Board seats across the country. In Silicon Valley 86% of the engineers and 74% of the computer professionals who work there are men. Facebook, Google and Apple workforces are 70% male with no female board members. Wall Street is similarly unbalanced. Women of colour are statistically invisible.
A Crisis Point: Has Progress Stalled?
The World Economic Forum says the world is going backwards, the parity gap in wealth, politics, education and the workplace has widened for the first time since records began in 2006. At this rate of progress the gender gap will not close for another 217 years. Aside from human rights, continuing to omit women from the top ranks is the single most important factor in determining a country’s competitiveness in the market. Women must be integrated, as an important force into their talent pool. In the UK, it is suggested that gender parity could add £250 billion to GDP. And closing the gender gap of economic participation by 25% by 2025 would increase global GDP by $5.3 trillion. Social change is glacially slow.
A fourth wave is coming … progress will happen over the next decade.
Countries that have previously excluded women, like Saudi Arabia are starting to make major changes. Generation X and Millennials are visibly energised around this issue. New generations will drive faster change.
The biggest transfer of wealth in history is happening over the next decade
Change will also be driven by women acquiring significant financial muscle. 45% of USA millionaires are women, 48% of estates worth more than $5 million are controlled by women and in 2013 60% of high net worth women made their own fortunes, rather than inherited. Projections show that by 2030 as much as two thirds of all wealth in the USA will be controlled by women. How will this shift in gender wealth influence philanthropy? Significant changes could take place …women’s funds are already working to address inequality with more women seeking to drive change by working at the legislative level and public policy as well as impact investing.
Massive growth in Impact investing
The field of impact investing has the power to bring about a lot of change including making faster progress on gender and race equality. Investment instruments that employ ESG (environment, social and governance factors) have grown 135% in assets under management since 2012, and it has now surpassed $9 trillion in the USA. It continues to grow exponentially, with rapid growth attracting more attention.
Meeting Social Needs Ahead of Profits
She was on the Board of the World Business Academy based in Southern California, which had as its mission to help business to assume responsibility for the whole … recognising that business is the most important force on earth. Nothing else works like business does and the drive for profit. Willis Harman, founder of Institute of Noetic Sciences, was convinced that business needed to return to its roots and provide a public service or to meet a public need. Business charters used to be granted on the basis that you would improve society or individual’s lives. Subsequently profit became the organising principle and that is where things really changed. Profit is good but profit maximisation can do real harm.
New Alliances are Emerging
Hybrid organisations where you not only make profit but achieve social impact goals are on the rise and are exciting. It is in the interest of business to take on societal change because if nothing else, they need to protect their markets.
The way that all these factors are converging .. the rise and power of women, the changing nature of investment, the interest of younger generations in addressing global issues like refugees, extreme polarisation of wealth, the proliferation of drugs … all of which contribute to societal instability, which make the business environment more difficult.
Different values will inform a new kind of leadership
All of these things call for new era leadership meaning more human value systems than the current GDP which are meaningless. In a system that looks more profitable as more people get ill is crazy. There are real limitations to this measurement.
New Era Leadership: Women have an Opportunity to Drive Change
Just simply moving more women into leadership roles to continue to perpetuate all the problematic systems we have now, will not be the answer. Unless women move in there with a better sense of what change needs to be made, it is a huge missed opportunity.
We can’t blame the men .. it is the system we have created. There are many men who are supportive and involved in redressing the gender balance.
The financial system is flawed and nobody has been held accountable for the crash of 2008. Many people are unhappy about this.
There is an opportunity when women move into these positions of power to bring about some change. Women have an obligation to help other women when they have the power and the means.
Linda’s Pearl of Wisdom: remind yourself of any blindspot you have. It is not what you don’t know, it is what you absolutely know with certainty that trips you up. What are the blindspots in your worldview.
Ask a different question
Rather than asking “How much money can I make when I have an MBA?” a better question “What kind of world do I want and what role can I play in making that world happen?”