Address to the 'Women in Leadership' Conference - Director General Derville Rowland

Speaking at the Women in Leadership Conference, University College Dublin.

Introduction

Ladies and Gentlemen

It is a real pleasure to be with you this morning, and I’d like to thank UCD and Arthur Cox for the kind invitation.

Empowerment is a central aim of this conference and, in my remarks, I’ll tell a little of my own personal journey, and the women who inspired me along the way.

However, if we are to smash that metaphorical glass ceiling, rather than just chip it or crack it, empowerment for me is just the first of three key steps that form a virtuous circle.

You’ll forgive the lawyer in me, but I’m a sucker for evidence. That’s the second step.

And being both a lawyer and a Central Banker, what I prize most of all is outcomes – the right outcomes. That is the third step.

This morning, I will explain why these three key steps – empowerment, evidence and outcomes -- are critical to achieving true equality and delivering a better world.

Michelle Obama: Empowering through Inspiration

When she was First Lady of the United States of America, Michelle Obama made a point of speaking to young people about what it meant to be marginalised by race and gender.

Whether visiting schools at home or abroad, she wanted to send a message of hope to people like her younger self. People like the girls at the Elizabeth Garrett Anderson school, a London inner city comprehensive which she visited on a trip to the UK. A school where 92 per cent of pupils were from a black or minority background - including 900 refugees.

She told them that she “knew they’d have to push back against all the stereotypes that would get put on them, all the ways they’d be defined before they’d had a chance to define themselves. They’d need to fight the invisibility that comes with being poor, female and of colour.”

The mentoring she started that day continued for several years. After the initial visit to the school, in the following years she also arranged to bring some of the pupils on visits to Oxford University and to the White House. Her idea was to demonstrate both to the girls themselves and to the wider world that they too could aspire to leadership roles.

This inspiration, combined with the students’ own hard work, appears to have paid off. When an economist from a British university later studied the test performances of Elizabeth Garrett Anderson students, he found their overall scores jumped significantly after Obama started connecting with them – the equivalent of moving from a C average to an A.¹

Many in this room today will recognise the importance of having inspiring role models to attract women to positions of leadership, even if progress is not always as fast as we would like.

But empowerment alone won’t achieve that progress. I fervently hope that most of us in our careers will work in organisations that cherish equality for equality’s sake. However, it can help our cause if we can also show that equality brings broader benefits. Which is where evidence and outcomes have a critical role to play, and why, for me, the Michelle Obama story is such a good example, because it’s all there.

A Tale of Empowerment: When a Minister Visits Your School

1918 was the first time Irish women were permitted by law to vote and stand in parliamentary elections, an important milestone which the Central marked with the launch of a silver commemorative coin last year.

However, it is an extraordinary fact that, while Countess Markievicz was appointed a government minister in the first Dáil in April 1919, it would take a further 60 years before a woman was appointed to senior ministerial office.

Indeed, of all the senior ministers appointed in the ensuing 100 years, just ten per cent have been women. Little wonder that journalist Martina Fitzgerald has remarked that “it has been a very long and painstakingly slow journey from 1919.’’²

Fortunately, however, some of those pioneering women ministers are with us today to inspire us with their stories of how they made it to the top, to share their experiences and to provide role models for the next generation.

I will come shortly to the influence that one of those Cabinet Ministers would have on me.

But first, let me set the scene.

I grew up living over a small business on Main Street in the West of Ireland where I was surrounded by strong female role models. Like my mother, many women on our street ran the family businesses – the pubs, the chemists and the haberdasheries, while also managing often very large families.

Those women might not have described themselves as such, but they were effectively business leaders juggling both work and family.

My mother had, in turn, grown up in the rural Ireland of the 1950s at a time when many people were still subsistence farmers. Like many of her contemporaries, she wanted something more. And so she moved to England to train as a nurse and midwife before returning home.

She instilled in me the importance of having a career for yourself.

So I guess I was fortunate to grow up with an expectation that I would work and have a career even if I also had a family.

Still, I was surprised when a minister came to visit my school and even more surprised to find that the minister was a woman. The minister in question was Mary O’Rourke, who would later go on to become the first woman deputy leader of Fianna Fáil.

Of course, I was already aware that women could sometimes make it to the top – this was, after all, the period when Margaret Thatcher was British Prime Minister. But what I found so inspiring was to see a woman from the Midlands of Ireland at the Cabinet table. I would feel the same way when Mary Robinson, a Mayo native, became the first female President of Ireland.

In short, these women created as sense of possibility for me as a younger woman and for that empowerment, I am very grateful.

The Lehman Sisters Hypothesis – The Evidence

If women have been under-represented in politics, they have also been seriously under-represented in the financial services sector. Indeed, when the financial crisis erupted with the fall of Lehman Brothers more than a decade ago, some commentators blamed the crash – at least in part - on a lack of diversity in the financial services sector.

The Managing Director of the International Monetary Fund (IMF), Christine Lagarde, is famously of the view that if it was Lehman Sisters rather than Lehman Brothers, the world might well look a lot different today.³

Importantly, there is an emerging body of evidence, some more robust than others, that suggests gender diversity matters.

Research on the attitude to risk – both firm-based and experimental studies – tends to show that on average women take less risk than men – something you would expect is important when it comes to thinking about financial stability. Related to this, there are plenty of research papers showing how female leaders have more balanced management skills than men and are rated as better leaders.⁴

An Australian study found that an increase in women’s representation on company boards was associated with a decreased probability of fraud and recommended their findings to policy makers interested in enhancing board governance and monitoring.⁵

Other research has found that management teams with an equal gender mix perform better than male-dominated and female-dominated teams in terms of sales, profits and earnings per share.⁶

That is why I speak of a virtuous circle. Empowering women to believe in themselves is critical. But so too is the evidence that shows why diversity matters. And as that evidence is increasingly accepted, it will drive better outcomes – in the public and private sectors – that can only benefit us all.

The Central Bank View

The former US Government Press Secretary Dee Dee Myers once said she was endlessly fascinated that playing football is considered a training ground for leadership, but raising children isn't. Which is just another way of saying that leaders tend to appoint people like themselves to senior positions.

Let me be very clear that the Central Bank considers a lack of diversity at senior management and board level to be a leading indicator of heightened behaviour and culture risks in financial institutions.

We want the firms we regulate to be sufficiently diverse and inclusive, particularly at senior level, to prevent group-think, guard against overconfidence, and promote internal challenge.

This is why when we examined the behaviour and culture of the five Irish retail banks last year, we also conducted diversity and inclusion assessments. Our analysis and inspection work evidenced that the banks are at an early stage of development in their approach to diversity and inclusion.

It is striking that women remain seriously under-represented at senior levels in the banks (and across financial services), despite the fact that, when it comes to diversity and inclusion, the banks are focused on improving gender diversity.

For example, to the end of 2017, men had been appointed to more than nine out of 10 of the most senior and influential roles in the banks (chairpersons, chief executives, chief finance officers, heads of business lines and so on).⁷

And it isn’t just about gender. Many of these appointees have similar backgrounds, education and experiences. In other words, there is an acute lack of diversity in those senior roles that are central to how banks make their decisions, set their risk appetites and treat their customers. The issues identified in the banks are also evident across the financial services sector.

Following on from the Behaviour and Culture Report, we told each bank to submit a diversity and inclusion strategy supported by an implementation plan by November last year.⁸ We have found varying levels of commitment demonstrated in the plans we have received in to date. But we are keeping up the pressure. Why? Because the evidence points to better outcomes.

Diversity and Inclusion – The Outcomes

It is often said that we must be the change we wish to see in the world. And, in that regard, I am happy to report that the Central Bank is striving to lead by example when it comes to diversity and inclusion.

It wasn’t always that way, of course. The first Central Bank Commission comprised only men. And as recently as 20 years ago, there were no women in leadership roles at the Central Bank.

Things began to change when, in 2001, the first female Head of Division was appointed. Significant progress has been made since then.

Today women make up almost 50 per cent of our total workforce, one third of our board, nearly 40 per cent of our executive committee and over 40 per cent of our leadership team.

We have led by example by publishing our Gender Pay Gap Report on our website, though we are not legally required to do so.⁹ Our gender pay gap stood at 2.7 per cent in favour of men at 1 January 2018.

While this figure is well below the national and European averages of 13.9 and 16.3 per cent respectively, we have more to do and we are committed to doing it.

And to emphasise, it isn’t just about gender. We want a workplace that is genuinely diverse and inclusive.

In 2017, Governor Philip Lane launched the Rainbow Network, an employee network to support LGBTQ colleagues, while in 2018 the Central Bank flew the Pride Flag outside its main building and participated in the Dublin Pride Parade.

We also participate in programmes to promote access to the labour market for graduates with disabilities. On the educational front, we have recently launched a Central Bank Scholarship Programme in conjunction with Griffith College Dublin aimed at school leavers who may want or need to earn while they are studying.

And we also participate in a programme to get young North Inner City adults work-ready.
The Central Bank has adopted a more focused and structured approach to diversity and inclusion over the last number of years because we recognise the many important outcomes that a diverse and inclusive workplace can bring including:

• Attracting and retaining a wider talent pool
• A more open culture
• A reduction in groupthink
• Increased levels of challenge
• Improved decision making
• Greater innovation
• Increased productivity and organisational performance

Furthermore, we are aware of our responsibilities as a large public service organisation, and indeed of the need to hold ourselves to the standards we expect of regulated firms. In short, we believe that creating a more diverse and inclusive workplace is both the right thing to do and the smart thing to do.

While we are proud of our achievements to date, we are far from complacent and recognise that creating and maintaining a healthy, inclusive culture is an ongoing job of work.

Regulating Financial Conduct in the Public Interest

I came to the Central Bank through a slightly circuitous route.

Though I grew up surrounded by strong women, there were few enough women role models in the professions. When I moved to London and qualified as a barrister, I found the UK to be a more pluralist society and perhaps more welcoming from a gender perspective than Ireland then was. I found myself drawn to the law partly by inspirational role models such as the human rights barrister Helena Kennedy QC. She demonstrated to me that being an outsider was no barrier to pursuing important work that served the greater good.

I built up expertise in public and criminal law in the UK, including white collar crime, before returning to Ireland to work at the Central Bank - I arrived just before the financial crisis hit. When I was later appointed Director of Enforcement, I led a team of lawyers – many of them women – who were determined to help build a strong enforcement division that would contribute to building better standards of behaviour and restore public trust and confidence.

More recently, I was appointed Director General, Financial Conduct. I lead a team of about 500 people who regulate financial conduct with the aim of ensuring that the best interests of consumers and investors are protected and that markets operate in a fair, orderly and transparent manner.

Much of the work we do policing financial institutions is done behind the scenes. It sometimes involves challenging the boards and senior leadership of some of the largest financial institutions in the country. We may be asking firms to put right a wrong, we may be fining them for misconduct, we may be refusing people permission to take up senior positions in financial institutions because of concerns we have about their prior behaviour.

Sometimes our work is very much in the public eye, such as when we forced banks to return €647 million to 39,800 customers. Those customers had been denied a tracker mortgage or put on the wrong interest rate with often devastating consequences for them - up to and including the loss of their homes and properties in some cases.
In short, there is some tough talking to be done and some tough action to be taken on behalf of the public whose interests we serve.

I’m proud of the fact that, in the Bank, we don’t select people for these challenging jobs based on whether they are men or women: we select them based on their capability.

Conclusion

In conclusion, I am sure that it came as no surprise to this audience that the Fearless Girl statue, which was originally placed opposite Wall Street’s Charging Bull to celebrate International Women’s Day a few years ago, has continued to prove a draw for women all over the world.

The bronze girl, who stands with hands on hips and chin held high, is seen as a symbol of female empowerment. At the feet of the statue there is a plaque that reads: “Know the power of women in leadership. SHE makes a difference.’’

To the young people in this room today, I would say you are facing in to a world where the prospects for women in leadership are probably greater than they have ever been – certainly here in Ireland. Against that background, I would urge you to be ambitious for yourselves, to be ambitious for others and to be the change you wish to see in the world.

Thank you.

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1 Becoming by Michelle Obama and https://theconversation.com/how-michelle-obamas-visit-to-a-london-school-helped-boost-students-grades-61694

2 Madam Politician: The Women at the Table of Irish Political Power, by Martina Fitzgerald

3 https://blogs.imf.org/2018/09/05/ten-years-after-lehman-lessons-learned-and-challenges-ahead/#more-24394

4 Irene van Staveren; The Lehman Sisters hypothesis, Cambridge Journal of Economics, Volume 38, Issue 5, 1 September 2014, Pages 995–1014, https://doi.org/10.1093/cje/beu010)

5 https://journals.sagepub.com/doi/abs/10.1177/0312896215579463

6 Hoogendoorn, S., Oosterbeek, H., van Praag, M., 2013. The impact of gender diversity on the performance of business teams: evidence from a field experiment Manag. Sci. 59, 1514–1528.

7 https://www.centralbank.ie/docs/default-source/publications/corporate-reports/behaviour-and-culture-of-the-irish-retail-banks.pdf?sfvrsn=2 & https://www.centralbank.ie/docs/default-source/publications/gender-analysis-paper.pdf

8 https://www.centralbank.ie/docs/default-source/publications/corporate-reports/behaviour-and-culture-of-the-irish-retail-banks.pdf?sfvrsn=2

9 https://www.centralbank.ie/docs/default-source/careers/policies/gender-pay-gap-report-2018.pdf

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Acknowledgements:

I would like to thank Kathleen Barrington, Susan Eaton, Claire Lanigan, Reamonn Lydon, Antoinette McDermott, Paul O’Brien and Karen O’Leary for their help with this speech.