Only 48 more female members are needed to meet the 25% target on the boards of the top FTSE companies, as set out in The Davies Report. However, are we still setting our sights too low for equality in the upper echelons? Asks Rhian Morgan
There has been some good news for women leaders in the press lately. Firstly, the fact that the new Bank of England Deputy Governor for Markets and Banking is a woman should be shouted from the rooftops, as she has broken through the glass ceiling of one of the hardest sectors for women.
In a further rush of positivity, there are now 20.7% of women on the boards of FTSE 100 companies, according to the 2014 Cranfield Female FTSE board's recent report, which reveals that the number of women on the boards of FTSE 100 companies has risen from 17.3% in 2013, with 15.6% now on FTSE 250 boards (up from 13.3% in 2013).
There are now just two FTSE 100 companies with all-male boards, a considerable turnaround from 2011 when one in five boards were all-male. The FTSE 250 now has 48 all-male boards, down by well over half on three years ago.
Our politicians were pleased. The Rt Hon Vince Cable MP commented: "Now 98% of FTSE 100 companies have at least one woman on their board." However, he goes on to say "there is clearly a lot more to do to increase the length and breadth of diversity."
The Cranfield report forecasts that, if the rate of female appointments to FTSE 100 boards progresses as it has done over the past six months, Lord Davies's target of 25% women on boards by the end of 2015 is achievable.
Thirty-six companies in the FTSE 100 have already reached the 2015 target and a further 15 have between a fifth and a quarter female directors. Today, there are 205 women holding 231 directorships of 98 of the UK's top 100 boards. Just 48 more female directors are needed to hit the 25% target of getting females on FTSE 100 boards.
Lord Davies commented: “The rate of change that we have seen at the heart of our biggest companies over the last three years has been impressive.
“The voluntary approach is working and companies have got the message that better balanced boards bring real business benefits. We are finally seeing a culture change take place at the heart of British business. “However, the eyes of the world are on us as we enter the home straight. They are judging us as to whether the voluntary approach, rather than regulation, will work – we need to now prove we can do this on our own.”
Indeed, there is still a long way to go. For instance why, when women make up around 51% of the population, and 46% of the UK workforce, are there still all-male boards? I'm guessing Lord Davies is looking for an achievable target, and arguably as the figures go up, it's all a step in the right direction. But still, we are in the 21st century, so the fact 85% of boards in the top 250 companies are still dominated by men is, frankly, shocking.
Of even more concern is the fact that, of the 51 new female appointments to FTSE 100 boards in the past year, only five were executive director positions. The remaining 47 were non-executive directorships, which, worryingly, looks like companies are doing the bare minimum to reach targets.
Professor Susan Vinnicombe OBE, report author and Director of the Cranfield International Centre for Women Leaders, commented: “While it is extremely encouraging to see the overall figures moving in the right direction, and the 25% target in sight, the issue still remains that women are not being appointed to executive positions, despite there being a wealth of suitable candidates.”
Over the past year there were 52 new female appointments to FTSE 100 boards – representing 27% of all appointments. Of these, only five were Executive Director positions and the remaining 47 were Non-Executive Directorships.
Professor Vinnicombe went on to say: “We currently have the highest number of NED positions ever at 826 and the lowest number of ED positions ever at 291.These figures show that the likelihood of women being appointed to ED positions is decreasing.
“Therefore, while it is important to meet the 25% target; we need sustainable change that will ensure diversity on our boards in executive positions as well as NED roles.”
It is important to recognise that some companies have not just reached the magic 25% but have exceeded it, racing towards equality with finesse. In joint top place of this year’s ranking, with 44.4% female representation on their boards, are Capita and Diageo. (However, the latter is no surprise as Lord Davies of Abersoch, author of the eponymous report, is the Senior Independent Director).
In third place is Royal Mail (a new entry to the FTSE 100), with 36.4% of women.
There are four more new entries to this year's top 10: Unilever (up from 16th to fourth), SSE (up from 28th to fifth), WPP (up from 66th to eighth), and InterContinental Hotels Group (up from 12th to ninth).
Disappointingly, some business sectors are still stuck in the bad old days of the old boys' club. And, despite Nemat Shakik’s new deputy governor role, banking still lags behind other, more progressive companies. Take ILM’s research, sponsored by RBS, into the banking sector last year. ILM investigated why so few women are promoted to senior management positions in banking and identified the challenges they face.
It was found that nine out of 212 senior executives are women, even though 55.5% of bank employees are women. Of 91,000 managers, just 30% are women.
The greater barriers to promotion for females, according to staff, are attitudes of the male senior executives (72% of women believe this, 53% of men); that there is a greater proportion of men in senior roles (70%, 54%); the current organisational culture (61%, 52%); lack of flexible working opportunities (56%, 41%); and lack of suitable female role models (41%, 33%).
ILM’s solutions were to attract more female graduates who should be tracked along a clear career progression, transparent performance management processes to ensure promotion on merit, measurements of diversity, the encouragement of flexible working, and an increased visibility of female role models with a good work/life balance.
“The most enduring gap between male and female board seats and appointments remains at the level of Executive Directorships. In order to close this gap and generate a sustainable talent pool, companies must invest more effort in developing the pipeline of female talent”, said report co-author Dr Elena Doldor, Visiting Fellow at the Cranfield International Centre for Women Leaders.
She went on to say: “Effective talent management will only happen if leaders and managers are held accountable for supporting women’s careers by introducing performance targets related to developing female talent and linking them to remuneration. Organisations should also ensure that women have not only mentors, but also sponsors, who advocate for them and pave the way to career-enhancing opportunities. We want all FTSE companies to ask themselves are talented women within their organisation able to get to the top and around the boardroom table? If not they must review their talent management processes to enable this.”
The Davies Report's annex, meanwhile, states that the reasons women are held back in their careers are said to be down to “bias, prejudice, or stereotypical behaviour”, with a company's work culture exacerbating this.
While, in the book I discussed in a previous blog, The Invention of Difference. The Story of Gender Bias at Work, authors Binna Kandola and Jo Kandola quote a headhunter they spoke to who said, once a company has reached this magical number of 25%, all interest in recruiting women dissipates. They can then stand proud, saying they show no gender bias as they have hit the target.
And when women take up these roles, will their colleagues respect them, or will they say they only got there due to positive discrimination?
However, once women start breaking through the glass ceiling, hopefully these archaic views will die out. But it's still a pity that we need a Davies report in the first place.
Eugene Burke, Chief Science and Analytics officer at advisory company CEB, commented: “The report demonstrates encouraging progress but all-male boards are still in double-digit numbers in the FTSE250, meaning there is still considerable work to be done.
“The UK may be on track to hit the Davies review targets but the reality is that for many women, board appointments are still a long way off.
“It’s not an issue of ability. CEB data shows that the on-the-job abilities of women and men are very similar, but females are becoming increasingly demotivated as they progress to senior business leadership roles – the stepping stones to board appointments. “This has to change if UK companies are to compete successfully in the global economy. Our research shows that one in 15 people globally have the rare mix of talents to be effective leaders. By not making positions attractive to female candidates, organisations increase those odds to 1 in 30.”
The Cranfield report authors recommend a number of strategies for organisations to adopt in order to not only reach the 25% target but to achieve the deep cultural change that is necessary to manage the whole female talent pipeline. They include:
• Chairmen and executive search firms to consider women from outside of the corporate sector.
• FTSE companies to review the size of their boards and increase them to 11 (if currently less than that) and aim to appoint women in the new seats.
• Chairmen to review the tenure of those currently in NED roles (82 males in NED positions on FTSE 100 boards have held their seats for over nine years which contravenes the Higgs Corporate Governance Guidelines).
• FTSE companies increase the number of women at senior executive level, as this is the direct pipeline to the board.
Minister for Women and Equalities Maria Miller said: "It makes clear economic sense for women to be able to rise to the top. Good progress is being made in Britain through a cultural shift that promotes on merit, not through the mandatory quotas advocated by others.
“The workplace was designed by men for men. Women don’t need special treatment they just need a modernised workplace that gives them a level playing field. Supporting women to fulfil their full potential should be a core business issue; for the long term sustainability of our economy.”
While CEB executive director Jean Martin added: “In order to succeed in the long term, UK businesses have to build greater intelligence about the next generation of leaders, consider their aspirations and motivations and adapt boardroom culture to reflect that.
“There are stark differences in the motivational factors that drive senior individuals across the world and corporations need to take those into account if they are to break down gender barriers.
“Moving away from an organisational culture framed by fear of failure to one founded on recognition for contribution and performance will be a stronger attraction for potential female leaders.”
The Cranfield report includes a list of 100 Women to Watch. The authors have identified 100 women who are currently on the Executive Committees of FTSE 250 companies or in significant roles of other major institutions, who are ready for a board position and should be considered by search consultancies and nomination committees. Let’s hope, with women like Shafik as our role models, that even more progress will be made in the years to come.