INCLUSIVE LEADERSHIP Through a Gender Lens Marjorie Strachan Group Head of Inclusion | Royal Bank of Scotland Copyright The Royal Bank of Scotland plc

2 2 Inclusive Leadership: How are we delivering this at RBS? RBS’ ambition is to be the #1 bank for customer service, trust and advocacy, in every one of our chosen business areas, by Being an inclusive bank is therefore integral. Normalising difference, helps promote diversity of thought which, in turn, improves contribution, performance and results. By creating products and services which remove the need to treat people differently, we can be inclusive from the outset, ensuring a level playing field for all our customers and colleagues. This takes time and we’re not fully there yet. However, by encouraging our leaders to be curious and accepting of difference we are making good progress. Our blueprint for lasting success …. … relies on well led, engaged, people serving our customers well Copyright The Royal Bank of Scotland plc

Inclusive Leadership: What is it? 3 Source: Opportunity Now Inclusive Leadership – from Pioneer to Mainstream Maximising the Potential of your People, Jan ‘14 Organisations require leaders from diverse backgrounds that can foster innovation, engage employees and make the most of their potential; leaders who maximise the performance of their people maximise the performance of their business. By encouraging diversity of thought and accepting that ‘their way’ is not the only way, inclusive leaders drive inclusive cultures. The highest performing organisations recognise this as a business imperative. Research has shown that companies ranking in the top quartile of Executive Board diversity: have on average 53% higher ROE have 14% higher EBIT margins are 45% more likely to have expanded market share in the previous year are 70% more likely to have captured a new market demonstrate as high as 80% improved business performance Source: McKinsey : Is there a pay off from top team diversity Center for Talent Innovation, The Business Case for Diversity Deloitte Global report 2012 Emerging markets Collaborative working Increasingly diverse markets Changing communication technologies Doing more with less Productivity and performance Quality and innovation Increasingly diverse customers Legal framework Values, ethics and CSR New ways of working Global markets Business Imperative for Inclusive Leadership Copyright The Royal Bank of Scotland plc

Through a Gender Lens 4 Organisations who are more gender diverse outperform organisations who aren’t by c.30% Coincidently, 30% represents the ‘tipping’ point at which the proportion of women begins to impact behaviour and culture Copyright The Royal Bank of Scotland plc

5 Creating gender balance in action Organisational Design Plan & Attract Recruit & Select for Success Performance Management Develop Capability Leadership Recognise Contribution Engage & Retain Apply rigour and governance to key organisational decisions i.e. one of our 5 org design tests states 'how has this positively impacted gender balance' Clear and transparent career paths at all levels of the org pyramid, that build depth and breadth of experience in order to provide development, reduce bottlenecks and move talent around the bank Continue to enhance ‘public profile’ / reputation through, e.g. HMT’s review into Women in Finance Continued participation in key benchmarks (Opportunity Now and TT50) to check progress Reaffirm and govern our commitment to include one woman on shortlist / interview panel for all 'senior roles’ Clarity around what 'good' looks likes i.e. describing work clearly and without bias, supported by clear assessment and selection parameters (capability, attitude and motivational fit) to enable better balanced recruitment decisions Support line managers and help them develop the confidence to make bolder, and braver recruitment decisions to appoint more women, which may mean taking risks on appointments Drive accountability by cascading the ExCo gender goal to increase the number of 'senior roles' by 2020 to the broader leadership teams Build a gender component through all development interventions and specific female focussed interventions Build the capability and confidence of our talent pipeline by augmenting and cascading known catalysts for gender progression, including: sponsorship, mentoring, role models, etc. Unconscious bias: Bank wide roll out to all employees to educate, raise awareness and mitigate bias Drive ownership and leadership from the top, by continuing to thread a gender optic through key leadership programmes and RBS Purpose, Vision and Values - helping a shift in behaviour and mind- set Gender specific development offerings for our most senior women Proactively addressing any gender pay gap issues. Improved monitoring of female progression at all levels in the business to identify/address ‘hot spots’ Better integration of flexible / agile working across the Bank: Almost one third of our workforce work flexibly >25,000 employees Provide support to enable more women to progress their career on return from maternity leave Our ambition is to have 50/50 gender balance at all levels by To support this, the bank ExCo have agreed a formal gender goal ‘to increase the number of women in our top three layers to >30% by business area by 2020, representing a key step towards creating the change required by 2030 (we already met our goal of 40% in our top 5000 roles). We know that setting targets alone won’t deliver change. Effort must be applied at all stages of the employee lifecycle. Ensuring we have the right enablers in place and understanding their compound nature is key to inclusive leadership. 5 Copyright The Royal Bank of Scotland plc

Spotlight: Family friendly/Flexible working RBS Family friendly policiesRBS Flexible working policies Maternity leavePart time working Paternity leave / Additional paternity leaveJob sharing Shared parental leaveHome working Adoption leave / Fostering leaveCompressed hours Dependants leaveVariable working hours Carers leaveTerm time working Special leaveExcess hours for part time workers 6 With our family friendly/flex working policies, challenge is always consistent behaviours and tight implementation; not the policies per se. For example, offering the same opportunities in our investment bank as we do in our retail operations relies on an inclusive culture. And we have more work to do to ensure this is a reality all of the time. Copyright The Royal Bank of Scotland plc

7 Critical Success Factors Keep it simple Have a clear business led narrative which… …Illustrates the tangible commercial benefits of an inclusive organisation Obtain commitment Agree priorities and measureable outcomes Make it part of the mainstream, i.e. not stand alone (Purpose, Vision, Values, etc.) Be clear on accountability 7 Copyright The Royal Bank of Scotland plc

Our Progress 8 For our employees ­Our female Board level representation is 30% We have met our 2014 aspiration to achieve 30% senior women (top 5000 roles) – now 42% We have raised the bar to achieve >30% (top 3 leadership layers) by 2020 in each business A diversity ‘optic’ has been included in our leadership development programmes Catalysts, e.g. female-specific sponsorship and development options have been introduced Unconscious bias training is encouraging colleagues to become aware of the impact of bias Our employee-led women’s networks have nearly 12,000 members in 32 locations globally Colleagues are beginning to tell us ‘it feels different’ For our customers We have 300 accredited Women in Business Specialists (aiming for 500 by EOY) Our Women in Enterprise initiative has invested c.£1.5m to help over 12,000 female customers to set up their own business ­Our Inspiring Women in Enterprise programme has enabled over 6,000 women to gain skills, knowledge and confidence in enterprise, prompting them to consider setting up a business Benchmarks & Awards (Gender) Retained our Platinum Rating from Opportunity Now for a third year Listed in the Times Top 50 Employers for Women for the eighth year running Early adopters of the recommendations from HMT’s review into ‘Women in Finance’ Copyright The Royal Bank of Scotland plc