In the six months since Lord Davies launched his independent review into women on boards, only 33 FTSE 100 companies have heeded his recommendation to set themselves targets for the number of women they aim to have on their boards. Of these 33, only ten have set themselves targets of greater than a 10% increase.
front coverThe Lord Davies’ review (published in February) recommended that UK listed companies in the FTSE 100 should aim for a minimum of 25% female board member representation by 2015.
A progress report published by Cranfield School of Management has revealed that since the review, 21 women have been appointed to board positions out of a possible 93. This represents 22.5% of all new appointments, some way short of the 33% recommended in the Davies report.
The number of women now holding FTSE 100 board directorships is 155 out of a total of 1,092 positions (14.2%). This is up from the 12.5% published in the 2010 Female FTSE report from Cranfield (December 2010).
Professor Susan Vinnicombe OBE, co-author of the Cranfield report said: “Our review reveals that the number of women in board positions is beginning to creep up albeit quite slowly. There are however some very encouraging signs. Fourteen out of the 21 FTSE 100 new appointees (67%) and 20 out of the 28 FTSE 250 new appointees (72%) had no prior FTSE 100 or FTSE 250 board experience. This suggests the appointment process is beginning to open up to new women. This is very positive and indicates that some Chairmen and search consultancies are following Lord Davies’ recommendations to broaden the talent pool.”
The FTSE 250 has seen 28 (18%) out of a possible 158 new FTSE 250 board appointments go to women. One hundred and thirty three FTSE 250 boards now have female-held directorships. For the first time, it is a minority of FTSE 250 companies who have all-male boards.
There has been no change in the typical turnover of directors on either the FTSE 100 or FTSE 250 boards during this period, indicating that boards are not creating new board seats for women, but are adjusting their appointments behaviour.
Co-author of the progress report Dr Ruth Sealy from Cranfield commented: “Whilst 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.”
In the FTSE 100, Lloyds Banking Group and Rolls Royce stand out for boldly aiming to increase their female representation by 20-23%.
Dr Sealy added: “It is so important that our top companies set the standard for achieving better representation on their boards. A lack of role models is one of the greatest barriers to women’s career success, because they provide a symbolic representation of the meritocracy and support within a given organisation and are evidence of the ability to progress.”
In addition to analysing the number of companies that have set gender targets, Cranfield also conducted a qualitative assessment of the stance companies have adopted towards the Davies review. Sixty-one FTSE 100 companies made statements that acknowledged issues surrounding gender diversity on corporate boards.
Fifty six percent of FTSE 100 companies reported having a policy on boardroom diversity; the comparative figure for FTSE 250 companies was 35%. However these policies are not generally supported by measurable targets or clear reporting, although a number of companies made clear their intention to do so in the future. The Cranfield authors have welcomed the Financial Reporting Council’s new guidelines on such reporting.
Commenting on the report Lord Davies of Abersoch, CBE said: “This report is very important in providing evidence and a fact base that the market can reflect on. This is about good business practice; it is also about securing performance. You need engagement and diversity in teams to achieve success. Too many UK boards and executive teams do not have it. We are working to change that.”