As board diversity stalls, new push to breakdown barriers and improve pipeline

After the initial push to increase board diversity over the past five years, progress appears to have slowed according to two reports published by the UK government and Cranfield School of Management.

The UK government has therefore launched a review focusing on increasing female representation to 33% of boards across the FTSE 350 by 2020. This target was set in the Davies Review report last year which considered the progress since 2010 in achieving the original goal of getting 25% of boards to be made up of women in the FTSE 100. In October 2015 Davies reported that women’s representation on the FTSE 100 had more than doubled to 26% in less than five years.

Sir Philip Hampton and Chair of GlaxoSmithKline, and Dame Helen Alexander, Chair of UBM, are leading the new review and have already begun work by engaging with executive search firms, business leaders, academics and other key parties on how best to improve the female pipeline within the FTSE 350. The government said a key element of the review will also consider current research on how to drive improvements and the obstacles preventing women’s progression. It is expected that findings will be presented to government by the end of 2016.

Corporate Governance Minister Baroness Neville-Rolfe said, “We have seen an increase of 137% in the number of women on boards. Yet 15 boards in the FTSE 350 are still all male and women only count for 7% of executive directors. Philip Hampton and Helen Alexander will examine how to improve the representation of women in the executive layer and champion continued increases in the representation of women on boards across the FTSE 350.This will help to ensure a sustainable talent pool of women for board positions for both executive and non-executive positions in the future.”

The review launch came as the latest Female FTSE Report, by academics at Cranfield School of Management, City University London and Queen Mary University London, shows that the overall percentage of women on FTSE boards has increased compared to March 2015. Yet while the percentage of women on FTSE 100 boards has risen to 26% and to 20.4% on the FTSE 250 boards this year, the rate of progress has slowed since the Davies’ final report in October. As a result board turnover rates have decreased and the percentage of new appointments going to women over the past six months is only 24.7%, the lowest since September 2011.

The report suggests that board turnover rates will need to rise again if the 33% target is to be reached and female representation on FTSE  350 boards needs to reach 27% by the end of the year for companies to be on track to meet the target. The report found that progress among executive ranks and in the executive pipeline remains very slow. Most of the women on boards fill non-executive director positions while female executive directorships stand at 9.7% in the FTSE 100 and 5.6% in the FTSE 250. This shortage of women in top senior roles may make it difficult to reach the new target of 33% women on boards by 2020, the report’s authors said. The research found that women overall hold 19.4% of FTSE 100 executive committee roles, and only 10% of operational and C-suite ones.

The authors report, however, that data on executive committees are not always readily available. They stress the need for more robustness and transparency in reporting gender composition at executive committee level and below, with companies encouraged to monitor and report gender balance across all seniority levels. The report also shows how metrics and targets are effective tools to create a disciplined approach to gender balance and cultural change in organisations. It lays out some principles of target setting and provides case studies of organisations that use voluntary gender targets.

To support the work of getting women into more senior positions of companies the government has announced the new chair of its Women’s Business Council (WBC) as Cilla Snowball CBE, group chairman and group chief executive at AMV BBDO. Snowball will be a member of the advisory group for the Hampton-Alexander review. The government is also expanding the WBC bringing in seven new members from a range of industries – from manufacturing to defence – and from across the UK.

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