London CEO Helena Morrissey leads effort to boost number of female directors

June 3, 2011

Helena Morrissey remembers her worst moment as a woman in the City, London’s financial district. It was almost 20 years ago, when she was the only female on a team with 16 male bond fund traders at Schroders Investment Management. Her young family’s breadwinner, she’d just returned from her first maternity leave and her boss passed her over for a promotion, saying he doubted her job commitment.

“I wanted to know if I’d done something wrong or I wasn’t ready,” says Morrissey, sipping water in a conference room overlooking the London Eye. “The answer came back, ‘Well, you’ve just had your first child, and we’re not sure whether you can make it through.’ The sense was that I was on a different path.”

Morrissey proved him wrong. She quit, joined Newton Investment Management and, seven years later, became chief executive at age 35 when Mellon Financial, now Bank of New York Mellon, took over.

Now 45, Morrissey remains one of the City’s few female CEOs. She oversees $76 billion and almost 400 employees after boosting Newton’s business in Britain and expanding in the United States.

As to her previous manager’s contention that child rearing might sap her work commitment, Morrissey has gone on to have eight more children. They range from age 2 to 19, and seven of them still live at home. Schroders declined to comment.

For years, Morrissey has quietly supported the drive to increase the number of female managers in the workplace. These days, she’s making more noise, and many of Britain’s top bosses are listening. She says she got tired of hearing about diversity and never seeing progress, with women in Britain’s top jobs stuck at about 10 percent.

She decided to focus on the boardroom, where women can shape corporate decision making, help companies boost profits and show other women that they can compete at the highest levels. In November, she formed the 30 Percent Club to press British companies to employ that many female directors, up from 12 percent in 2010. She has persuaded more than 20 chairmen, about half from the FTSE 100 — including Win Bischoff at Lloyds Banking Group and Douglas Flint at HSBC Holdings — to reach for that target.

Her timing is good. European countries are adopting quotas to put women in directors’ seats. Norway started the push in 2002 and is on the cusp of its 40 percent mandate. Spain set a 40 percent goal in 2007 with a target year of 2015. France has required 40-percent-female boards by 2016. Italian legislators are drafting a law with a 30 percent female requirement at listed and state-run companies. Quotas may be coming in Germany, too, unless companies tap more women.

“When I started talking about women on boards, people would either be dismissive or say, ‘Oh, we’ll get there anyway,’ ” Morrissey says. “Now there’s a whole groundswell of focus around it.”

Former British trade minister Mervyn Davies led a government-sponsored review, released in February, that concluded that women should make up 25 percent of FTSE 100 boards by 2015. Davies, a former chairman of Standard Chartered, said he’ll back legislation for quotas if things don’t change in two years.

“It’s not just about gender equality,” he said. “It’s about improving the performance and productivity of companies.”

‘Passionately against quotas’

Morrissey’s 30 percent goal may stave off quotas. She has met with search firms and worked with the Professional Boards Forum to develop a trove of qualified women.

“I personally am passionately against quotas,” she says. “They undermine women with the sense that you can’t get there on merit.”

Some female executives say the board battle is misplaced. The real issue isn’t the dearth of female directors, says Barbara Judge, a dual British-U.S. citizen — it’s the lack of women with experience.

Judge, 64, is chairman of the British government’s Pension Protection Fund and sits on four boards, including that of Norway’s Statoil. She was the youngest commissioner appointed to the U.S. Securities and Exchange Commission.

“If you don’t give a woman a chance to be an executive, she’ll never get a board seat,” Judge says. “It’s a perfect Catch-22.”

Morrissey says boards can be a starting point for lifting women into senior management. The financial meltdown further convinced her that women have a role as directors. Lehman Brothers, which filed the world’s biggest bankruptcy, had one female director, as did the 18-member board of Royal Bank of Scotland Group, which took a British government bailout in 2008. Investors criticized both boards for failing to challenge management.

“The financial crisis has called into question a lot of the status quo, including how decisions are made, composition of company management teams, and boards,” she says.

Norway started the female-director push in 2002 and is within half a percentage point of its 40 percent mandate.

“Norway put the issue of women on boards on the global agenda,” says Elin Hurvenes, who founded the Professional Boards Forum in 2003 to help Norwegian companies find qualified women.

“The number of women on corporate boards has become a measure for how well women are doing in society,” says Susan Vinnicombe, a professor at London’s Cranfield School of Management and a member of Davies’s steering board.

In Western Europe, women on average hold about 13 percent of board seats, Vinnicombe says. American boards are about 15 percent female.

Morrissey says a 2009 Goldman Sachs luncheon about diversity in London sparked her idea to set up the 30 Percent Club. Everyone was lamenting how women seemed stuck at 10 percent of senior levels even as companies said they were promoting diversity. Morrissey contacted Mary Goudie, a member of the House of Lords who had also attended the lunch, to suggest their own gathering in April 2010.

Worried it would end as another talking shop, Morrissey sent an e-mail beforehand suggesting the setting of a concrete goal for board representation as a start for building gender balance throughout management. She approached Roger Carr, chairman of British energy supplier Centrica, and tapped Diana Brightmore-Armour, head of corporate banking at Lloyds, to speak with Bischoff. With two FTSE 100 bigwigs on board, she persuaded others to join the campaign.

Morrissey, with her flowery dresses, chunky jewelry and quick laugh, doesn’t come across as a feminist firebrand. She says a woman can work reasonable hours and succeed. Active fund management, which revolves around times when markets are open, is great for anyone who needs to be judged by results, not hours spent at a desk, she says.

Morrissey, who excelled in math and physics in high school, can cite compelling statistics. U.S. firms with three or more female directors produced an average 45 percent higher return on equity and sales, according to a study by Catalyst, which promotes women in business.

McKinsey & Co. found that companies with the greatest share of women on executive committees have a 41 percent higher return on equity than those with all-male groups, based on its survey of 279 companies in Europe, Brazil, Russia, China and India from 2007 to 2009.

One prominent example in London is luxury retailer Burberry Group, whose board is 37.5 percent female — the highest proportion in the FTSE 100. Burberry stock surged 109 percent in the 12 months through May 23, compared with a 15 percent rise for the FTSE All-Share Index.

“We now have enough data to show that women on boards make a difference to performance,” says Gay Huey Evans, one of two women on the London Stock Exchange board. “That appeals to men who are bottom-line guys.”

Men-only boards

More than three decades after Britain elected its first female prime minister, Morrissey didn’t have to look far for fertile ground for change.

Fourteen FTSE 100 companies have men-only boards, down from 21 when Davies issued his report, the Professional Boards Forum says.

Boards are far from the only laggards. Women haven’t cracked the top echelons of corporate management, law or medicine — even though they make up more than 60 percent of college graduates in Europe and the United States. After propitious beginnings, women stall.

Extended maternity leaves are partly to blame, says Philippa Rose, founder of the headhunting firm Rose Partnership. She says managers have told her off the record that they’re reluctant to appoint a woman in her 30s — unless she’s single — if there’s an equally well-equipped man.

“Most businesses simply cannot cope with a year-long absence of a key executive,” she says.

Simon Murray, chairman of Glencore International, may be one of the few to say publicly what chiefs think privately.

“Pregnant ladies have nine months off,” Murray said in the Sunday Telegraph. “Do you think that means when I rush out, what I’m absolutely desperate to have is young women who are about to get married?”

Murray later apologized.

Morrissey says strong support at home helps women get back to work. She has had the same nanny for all of her children and has taken off as little as six weeks with her younger ones. Her husband, Richard, a former journalist, is a stay-at-home dad.

“A year’s leave makes it harder for companies to plan,” she says. “Six months is a better deal all around because it’s much more a temporary situation.”

Morrissey, the daughter of teachers in Chichester in southeast England, attended a state high school. She studied philosophy at Cambridge University.

Schroders hired her as a graduate trainee and, within a week, offered her a posting in New York to use her math skills analyzing the U.S. bond market.

Morrissey returned to Schroders in London about three years later as a fixed-income fund manager. After having her first child at 25, she’d expected to pick up where she left off. Instead, following what she took as an unfair presumption about her commitment, she found a mentor in Stewart Newton, who hired her at Newton Investment Management in 1994 as a bond fund manager.

After a year, Newton let her run the fixed-income funds on her own when a colleague left to have a baby.

“He gave me lots of attention,” she says. “I would have to go in at 4 p.m. and talk to him about what I’d done in the funds. He’s a phenomenal investor and taught me about lateral thinking.”

Morrissey repaid Newton’s faith when she made a big call ahead of the Labour Party’s taking power in 1997. She bought gilts when everyone was panicking about deficits and ran that position from about 9 percent yields to less than 4 percent. Her Newton International Bond Fund posted a 17 percent return in 1998.

“She got to where she is because she produced outstanding results,” says Newton, now a director at Veritas Asset Management in London.

Newton appointed Morrissey to head fixed income in 1999. When Mellon took over in 2001, he stepped back and the management team left. Ronald O’Hanley, who was running Mellon’s investment business, chose her as chief executive. She was 35 with five children, the youngest of them ages 1, 2 and 3. “I jumped into the deep end and had to learn quite quickly what the CEO did,” she says.

O’Hanley says Morrissey was selfless. She handed out almost the entire year-end bonus pool to staff, leaving nothing for herself.

“I’d have to go back and redo that so I could pay her,” O’Hanley says.

Morrissey also understood how to motivate people.

“She had a discerning way of understanding the facts and hard issues but also the softer ones — what would it take to get this group rallied around the new business model?” he says.

Under Morrissey, Newton’s assets under management have more than doubled to 47 billion pounds. She secured 4.5 billion pounds from U.S. institutional clients, fruits of a five-year effort. She opened a U.S. outpost in 2006.

Morrissey sees her CEO role as being a consensus builder. She’s on Newton’s investment committee, where she guards the firm’s thematic approach that sets big-picture ideas to guide managers in picking stocks and bonds.

Just how Morrissey juggles her 30 Percent campaign, CEO responsibilities and family is a bit of a mystery, even to her.

She sometimes spends the whole day on Newton issues and catches up on club-related e-mails at night.

Dad at home

Even so, squeezing it all in can be challenging. When her 5-year-old son made a speech competition final, her husband recorded it on his iPhone and she watched later. She leaves Newton at 5 p.m. After a family dinner, Morrissey works and tries to resist her BlackBerry.

The kids are used to Dad at home. When she asked one of her three sons what he wanted to be, he said he wanted to stay home, like Dad. “I said, ‘Well, that’s a good option. Just find a woman who wants to work!’” she says, laughing.

Morrissey’s battle now is to convince chairmen that there are qualified women who can take charge. To hit her 30 percent target, she says, FTSE 100 companies will have to add about 200 female directors.

Companies hiring women will have to go beyond the safe bet, which often has meant tapping an American who’s more likely to have executive experience or a board seat elsewhere.

“There’s an unfortunate perception that unless you’ve been a major player with a certain amount of gray hair and been on a certain number of boards, it’s very difficult to get a seat,” says David Peters, London-based managing partner of the CEO and board recruitment practice in Europe for Heidrick & Struggles.

As women come on board, hundreds of men may lose their seats. In France, many headhunters no longer consider men.

“They can’t possibly fill the quotas unless they only talk to women,” Peters says.

Morrissey is trying to practice what she preaches at Newton. She’s chairwoman and the only female on the firm’s five- member board. Yet women occupy 26 percent of senior professional roles as analysts, fund managers and salespeople.

Morrissey says putting women in the boardroom is one step on a long path toward equality — and better profits.

“If we change the board makeup and get better gender representation, then that opens people’s eyes up,” she says. “Then women can say, ‘Well, maybe I can do it.’ ”

The full version of this article appears in the July edition of Bloomberg Markets magazine.

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