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Still work to do to break up old boy networks says Equality and Human Rights Commission

UK companies continue to use personal networks when recruiting board members, which acts as a barrier to women becoming directors, according to an inquiry by the Equality and Human Rights Commission.

The study found that while the overall target set by the Davies review of 25% of FTSE 100 board members being women has been achieved this masks the reality that within individual companies the number of women on boards can still be low. It was found that 45% (45) of FTSE 100 companies and  61% (213) of individual FTSE 350 companies have not reached the 25% target for women board members. (The current target set by Lord Davies last year is for 33% of FTSE 350 board members to be women.)

The Commission also found that three-quarters (79%) of companies have two or fewer women on their board; four in 10 (40%) companies have one or fewer women on their boards and only 6% of the 350 organisations have more than three women on their boards, but 96% have three men or more.

The biggest challenge is in the appointment of female executive directors with the study finding that nearly three-quarters of FTSE 100 companies have no female executive director and 90% of the FTSE 250 have no female executive directors while men also outnumber women in senior management or executive committee positions in the FTSE 350 by a ratio of around 4:1. Nicky Morgan, the government’s minister for women has asked Sir Philip Hampton, chairman of GlaxoSmithKline to review how to increase the number of executive directors in UK companies.

The Commission found that the appointment of non-executive directors is often still via  personal ‘old boys’ networks’ with nearly a third of companies (32%) reporting that they largely relied on the personal networks of current and recent board members to identify new candidates. Almost a third of companies using personal networks did not use any other means of advertising the post, while just 2% of companies publicise non-executive roles on their websites, in newspapers or on social media, the study found.

The diversity of applicants is also potentially being limited by virtually no open advertising of board roles the Commission said. The inquiry also found that job descriptions often rely on vague terms like ‘chemistry’ and ‘fit’ rather than clearly defined skills and experience, limiting the potential diversity of candidate pools and standing in the way of women’s chances of appointment, the Commission believes.

The study also highlighted examples of good practice, including companies assessing diversity in their board evaluations; selecting candidates based on criteria set out in role descriptions; using interviews to assess candidates fairly, consistently and objectively and ensuring their processes encouraged diverse applications. Executive search firms were also setting objectives to increase the number of women in appointment exercises, the study found.

The Commission launched its inquiry on July 23, 2014. The evidence is based on a survey of appointment practices by FTSE 350 companies and a similar survey of executive search firms about appointments made in 2012/13 and 2013/14. The qualitative evidence is based on: interviews with representatives from FTSE 350 companies, executive search firms and candidates and analysis of documents provided by FTSE companies and executive search firms.

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