The strategic logic of diversity

It's a pleasure to be here and a great honour to be invited to speak to you today.

I congratulate both Catalyst and The Conference Board on holding this event, and I'm delighted to see the two organisations working together. We're very happy to have been involved as partners in helping to make this conference possible.

I'm particularly pleased to see this conference being held in Europe. The issues on your agenda have had a great deal of attention in the US - but rather less in Europe. And it is hard to think of a better place than Berlin to talk about diversity.

Now I could give a very personal speech today - reflecting my personal experience and my own reasons for believing in diversity.

The belief goes back to my background.

I was born here in Germany - as the son of an English father and a Hungarian mother - a mother who was herself a linguist, who spoke a number of languages and who had been caught up, and lost her family - my family - in the worst events of the Second World War. In Auschwitz.

My father worked for the Anglo-Persian oil company - the forerunner of BP, and my childhood was spent in a number of different places around the world - including Singapore and Iran.

And I was educated first in England - in Cambridge and then in US - at Stanford.

So my beliefs have been shaped by personal experience.

But what is more important at an event such as this is to talk about what the company I lead is doing.

For BP the issue is no longer about whether diversity is a good thing - we're confident about the strategic logic which I'll explain in a moment.

The issue is how to deliver the strategy. How to take immediate, real actions and most importantly how to develop a practical and sustainable approach to diversity on a global basis.

I'll come back to all that but let me start with the strategic logic.

Our overarching challenge is to be competitive.

We work in a sector which has three tremendously strong global players (and I'm delighted but not surprised to see that all three of us are sponsoring this event).

And we have a host of smaller competitors, who are not always global in scale, but who do excellent work in niches of the market where they hold particular advantages.

We're competing for resources. In our case for access to oil and natural gas. In the deepwater of the Gulf of Mexico, in West Africa, in Indonesia, in the North Sea and in Russia.

And we're competing for markets - for the informed choice of individual consumers and businesses in numerous different market segments across the world. In China.. in America. In South Africa and here in Europe.

And therefore we're competing for talent.

People with ideas, with passion, with the ability to deliver, and with the ethical standards which match our aspirations to be a company which plays a constructive and progressive part in the development of society.

People who understand instinctively what it takes to be a trusted company - in a world where the corporate sector is under intense scrutiny.

People with new ideas. People prepared to think out of the box, and to challenge the status quo. People who can understand the meaning and impact of each decision and judgement they make from many perspectives.

The people we have form our human capital. To me that is a more important corporate asset than all the plant and equipment, all the oil fields and pipelines.

That is the simple strategic logic behind our commitment to diversity and to the inclusion of individuals - men and women regardless of background, religion, ethnic origin, nationality or sexual orientation.

We want to employ the best people, everywhere, on the single criteria of merit.

And the importance of that goal as part of our overall business strategy has grown as competition has intensified.

The logic is clear but the process of delivery isn't simple because of our history.

Historically the oil and gas industry has been predominantly male, white, and Anglo-Saxon.

There are reasons for that.

Our industry is based on science and technology - and historically in some countries fewer women have pursued careers in those areas.

The industry requires professionals with the highest levels of educational achievement - and many people, in many different countries have not had access to that level of education. That applies to men and women alike.

And inevitably because the management of the industry has been predominantly white and male and Anglo - Saxon, those people have recruited and promoted in their own image.

There was a cultural bias which limited the chances of many and no doubt deterred many more.

That's the history. It can't be denied but it can be left behind.

And I think we have begun to leave it behind. And that is where leadership is necessary.

In 1999 when we started on our current journey, just 8 per cent of our top team - our top 450 people were women. Of the top 40 - the Executive and Group Vice Presidents who run the company - none were women.

Just 9% of the top team came from countries other than the US or the UK.

That was the starting point.

Then we took four steps which were all about delivering on the intent.

First, we put in place measures to ensure that we were applying merit standards on a level playing field.

Secondly, we adjusted our selection and development processes.

Thirdly, we began to adjust our working practices and the culture of the company.

And on the basis of all that, we were able to set targets to ensure that the intent was being delivered.

Those steps were designed to ensure that we had a widely diverse set of candidates for jobs - for today and for tomorrow and that we had a leadership which understood what diversity and inclusion actually meant.

The first of those steps was about merit.

Defining merit properly was particularly important to us because we've been through a unique period of growth over the last five years. Through mergers and acquisitions we've combined the old BP with Amoco, Arco, Castrol and now Veba here in Germany.

As we went through those combinations we had to make sure that we were getting the best talent - that we were making appointments to the new organisation - the new BP - on the basis of merit.

To do that we decided to put each of our top team - about 450 people in total - through an objective external assessment designed and managed by respected external recruitment consultants.

That involved two days of testing and interviews for every leader.

The purpose was to see if our ranking of the people matched theirs.

When it came to individuals many of our judgements were confirmed, but there were also quite a few differences which surprised us.

From all that we've learnt that merit isn't about style, or how people present themselves or about background. It is simply about the ability to do the job required.

We recruit on the basis of our judgement of an individual's potential. Having recruited someone our task is to support and develop that individual so that they can reach their fullest potential. And there must be no barriers to that aspiration right up to the boardroom.

The second step was to adjust our recruitment and development processes - ensure that wherever we worked we had access to the best people - men and women.

We've made great progress. Last year almost 40% of our recruitment at the graduate level worldwide was of women.

We've developed a conscious policy to recruit in every country in which we operate. Not just recruiting local staff but recruiting for an international cadre - recruiting people with the ability to work and to run our operations in any country across the world.

That is already working through with tremendous results.

Closely linked to that, we had to ensure our selection processes - the means by which people are promoted and given the chance to prove themselves - and weren't distorting the chances of any of the people we were recruiting.

We've done that by ensuring that every selection panel for every appointment throughout the company was diverse.

That system is in place and working well.

Then thirdly we had to look at our working practices - at the way we operate on a day to basis - to ensure that our culture matched our strategic objective.

The purpose of all those steps is inclusion.

If we want to recruit and retain the best women we won't succeed if we tolerate what one commentator has described as "a golf club culture" which can implicitly, if not explicitly, exclude women and sometimes minorities as well.

If we want to be an employer of the most able people who happen to be gay or lesbian, we won't succeed unless we offer equal benefits for partners in same sex relationships.

If we want the best women to be part of the leadership team at every level we won't succeed if we tolerate those old tired phrases - "I'm not sure it would be in her own best interests to be promoted at the moment". "Wouldn't it be better to have someone we know".

Exclusion, of course, takes many forms.

We demand a lot of people, particularly those who have to travel, and we have to be sensitive and flexible and to understand that great people do not define themselves simply through their employment. For all of us, there are things in life more important than work.

Gail Rebuck is right. One of the real barriers to progress for women is the issue of balance - the stress caused by a culture which doesn't recognise the realities of combining work and family.

Well great companies should be in the business of offering new choices.

We shouldn't accept that there has to be a trade off between holding a demanding job and having a full and rounded life.

We have to offer all our staff the possibility of finding the balance which suits their lives.

We have to trust people to deliver - to do their job in their own way.

We have an annual survey of staff opinion, conducted for us by a very experienced external firm.

In 1999 only 40% of our staff thought that the work life balance was well managed and acceptable to them. Last year that figure had risen to 65 per cent, which puts us in the top 10% of companies surveyed. That view is held equally by both women and men.

Exclusion can also come through a requirement for conformity, when if we really believe in a diversity of ideas we don't want conformity from men or women - we want creative difference in support of common objectives. We want people who have the intellectual confidence to question and challenge.

And exclusion can also come by accepting boundaries without question. Without testing what is possible.

It was often said for instance that we couldn't appoint a woman to a senior post in the Middle East.

Two years ago we appointed a woman as our Head of Group Security covering 24 countries in the Middle East and Central Asia - including Saudi Arabia, Kuwait, Pakistan. She has a done a tremendous job, and her work has been indispensable in maintaining our security in the aftermath of September 11th.

It was also said that we couldn't appoint a woman to head our Shipping business - working in a industry which had a reputation of being a bastion of the old style. Well we have - and her appointment has been a great success.

So on the basis of all those actions, we set some initial targets and we put in place the appropriate performance measurement systems.

All that is work is progress and it has been driven forward by leadership because in the end it is leadership, rather than rules, which really determines what happens in any organisation.

The key leadership steps were to set the initial targets and to establish the new ways of working - removing the barriers and changing the culture. That is what I mean by setting the tone.

And of course the most important act of leadership is to stick to the intent in the face of the inevitable challenge and opposition, particularly when you get to the hardest choices. That is the point at which the courage of leaders is tested.

The result is progress. Today we're more diverse than we've even been.

By the end of this year we'll have almost twice as many women in our global leadership team - our executive cadre- as we had three years ago.

Four years ago, as I said, there were no women on my own senior team - our top 40. Now we have five.

And we have increased by 50% the number of individuals in our global leadership from outside the Anglo Saxon world. And that proportion is rising.

This year we'll recruit nearly 50% per cent of our university recruits from some 25 different countries beyond the Anglo-Saxon world.

And we are beginning to develop a rich feeder pool of talent - people in their 20s and 30s who are gathering experience through the company and across the world.

Those steps are confirmed by the trend of opinion within the company.

We also asked people whether they believed development opportunities in BP were open to all on merit. In 1999 38 per cent said yes. Last year 51%.

The tone of the company has changed in response to the leadership acts but we have unfinished business.

The numbers are too small and we're not yet the meritocracy that we want to be.

Having met some initial targets we can now begin the process of setting new targets - which will be the logical outcome of the meritocratic system of recruitment and development we've put in place.

We can build on the track record and as we benefit from having this sort of meritocracy we can continue to improve our performance.

We exist to deliver wealth and value for our shareholders by competing and that's why it is in our direct interest to do anything which helps us to compete more effectively.

That is the basic strategic logic behind our commitment to diversity.

And there's a wider logic as well which is also very powerful.

The world is deeply distrustful of companies, especially big companies and particularly multinationals.

The world is also distrustful of the process of globalisation.

Not just the protestors on the streets of Seattle or Genoa or Barcelona. But many ordinary people, who are not activists but who feel destabilised and disadvantaged by a process which they don't understand, but which they feel is beyond their control.

Big companies are thought to be simply serving their own interests, and because of the failures in corporate governance I mentioned a moment ago they are thought to be doing so in ways which are dishonest.

In one recent poll in the United States only 16 per cent of people said they would trust the word of a big company.

I don't think the negative caricature of companies is true but it is undeniable that we are beneficiaries of globalisation.

We won't remain beneficiaries, however, if we can't rebuild trust and if can't demonstrate to the overwhelming majority of people that globalisation in general and the activity of big business in particular is to their benefit, as well as ours.

If we can't demonstrate that everyone can gain, then our prospects will be diminished.

Business will be constrained; trade and investment flows will be limited.

For a company like BP that would be a terrible loss of potential because we need open markets for trade and investment if we are going to be able to compete for business in the growth markets of the world - in China and India and Russia and Latin America.

Of course, there are many aspects to the challenge, but I believe that one of the most important things we can do to regain trust is to achieve diversity and inclusion.

A genuine meritocracy should be seen as a proof point of the positive value of business activity in general and of globalisation in particular.

One of the most striking characteristics of the old historic economy - the 20th century economy - was that by restricting competition - it limited the need for meritocracy.

That is changing, and modern companies are at the heart of the change.

If companies are meritocratic they open doors which have been closed. They build ladders and they set an example. They show what is possible.

That's a very constructive thing to do, because a society in which everyone - every woman and every man can rise to the limit of their potential - is a more healthy society.

As we've seen from numerous examples around the world and from the academic work of people such as Amartya Sen - societies in which women as well as men have the incentive to make the effort to succeed and in which there is real mobility on the basis of talent are much more likely to be economically successful than those where talent is stifled or ignored.

So Ladies and Gentlemen, there is much to do.

We've begun to establish merit as the sole basis of recruitment, remuneration, benefits and promotion - regardless of nationality, ethnic origin, gender or of any factor other than the ability to do the job.

We've begun to remove the barriers, including creating a new culture which removes the barriers which for so long have limited the chances of women and others.

Now we can do more.... And we will.

We have to go beyond discrimination and that's why for instance we endorse measures such as Employment Non Discrimination Act in the US.

We have to show that we are a company which great women want to join... and to lead.

We have to demonstrate that as we grow our business in 100 different countries around the world we can work as part of every society in which we operate - not just as a foreign implant.

The process is not complete, but we understand that to compete we have to reinvent our business as a genuine meritocracy.

And that is what we've done, and will continue to do.

Let me finish where I began. With a personal perspective.

My personal ambition is that my successors as Chief Executive of BP should be drawn from the widest possible pool of talent on the basis of proven ability.

And that in each case her or his appointment should be celebrated without reservation throughout the company by a community of people which has moved beyond prejudice and which has become genuinely inclusive.

Thank you very much.