Boards are still ‘shockingly’ bad at appointing women and need to be ‘bolder’

13 Oct

It could take 20 years for boards to reach gender targets of one in three directors to be female, according to a report by Deloitte on the ‘shocking’ lack of women on the boards of the UKs FTSE 100 companies.

The report found that a fifth of FTSE 100 companies had no female presence on their boards – and it would take two decades to reach the 30% representation that the 30% Club is aspiring to.

This tallies with the findings of Cranfield School of Management, which has revealed that two-thirds of FTSE 100 companies have ignored recommendations by Lord Davies to set themselves targets for the number of women they will have on their boards.Lord Davies recommended that 25% of board representation should be 25% by 2015 – yet only 21 women have been appointed to board positions out of a possible 93 since he made those recommendations. This is 22.5% of all new appointments.

Yet, according to figures from headhunting firm Augmentum Consulting, 16 of those directorships went to women who were already non-executive directors with another company – suggesting that more work needs to be done to create a talent pool of more qualified and capable women.

Co-author of the Cranfield progress report Dr Ruth Sealy said boards have to be bolder: “While we are very pleased that 33 FTSE 100 companies have set targets for the percentage of women they aim to have on their boards, very few of them are ‘stretching’. The aim of targets is for companies to self-determine what is reasonably achievable within a given timeframe, and to hold themselves accountable for their stated goals. The results from our report suggest the recommendations in Lord Davies’ review have had beneficial effects in terms of reinforcing good practice, but they also demonstrate an institutional inertia, whereby companies persist in their existing approach (or lack thereof) to gender diversity on boards.”

David Cameron has called on UK companies to accelerate their efforts to appoint more women to the board. He said: “I want more to see more companies setting out their plans for women on boards and driving this forward. Important steps forward have been made. But there is still a long way to go to encourage the best to rise to the top of industry, regardless of their background or gender.”

However, there is still some discussion about how companies will achieve more female representation on their boards. The Financial Reporting Council (FRC) has strengthened its stance on ‘comply or explain’, and will required listed companies to report annually on their boardroom diversity policy – and will include gender as one of the factors to be considered.

Baroness Hogg, chairman of the FRC, said: “The changes we made to the Code last year reflected the FRC’s view that gender diversity strengthens board effectiveness by reducing the risk of ‘groupthink’, making fuller use of the talent pool and keeping companies in touch with their customers. The changes we are announcing will reinforce the Code’s principles by requiring companies to report on measurable objectives and progress in this important area. We believe this gives a further opportunity to show that Britain’s ‘comply or explain’, Code-based approach can deliver a flexible and rapid response and is therefore preferable to detailed legal regulation, and we urge companies to demonstrate this as quickly as possible”.

However, much of the debate focuses on whether to introduce quotas or not. Businesses are predominantly against them. Founder of the 30% Club Helen Morrissey – who is CEO of Newton Investment Management – said any moves should be voluntary.

The UK has been and can continue to take the lead internationally in setting high standards of corporate governance, including ensuring boards are sufficiently diverse to bring a range of perspectives and experiences to any issue. It’s a big sociological challenge to get there but the time is right to make sustainable lasting change through voluntary steps driven by belief in the outcome. The 30% Club is all about taking the gender diversity issue beyond the advocacy groups and into the business community, from the periphery into the mainstream, to achieve not just more women on boards but better corporate performance,” she said.

However, there are still calls in some parts of business and the media, where it is believed that only obligatory quotas will ever make a difference. This opinion piece in the Guardian, Women need quotas, not canapes, is a spirited argument for government and business putting its money where its mouth is.


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One Response to “Boards are still ‘shockingly’ bad at appointing women and need to be ‘bolder’”

  1. newbon 13/10/2011 at 8:04 am #

    Interestingly I recently saw Kjell Nordstrom on stage detailing what the firm of the future looks like, IE an open system, non hierarchical, nodal and tribal. Kjell stated that in his business class, he asked his students to identify what type of leader is needed to run these future firms and the answer always came out as a woman. “In 95% of cases, Kjell’s students come to the conclusion it will be a woman at the top of this system because it is complex, its people driven, temporary, and organic.” 

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