Women on boards: the latest
Time is running out to achieve Lord Davies’ target for 25% female representation on FTSE 100 Boards by 2015. Vince Cable has urged leading UK companies to try harder with their voluntary efforts, and fast, or risk facing European-imposed mandatory quotas.
So how far off Lord Davies’ target are we? Actually, not far at all. Back when his report was published in 2011, the landscape was far bleaker. He quoted statistics from 2010 which revealed women made up just 12.5% of FTSE 100 boards, up from 9.4% in 2004. Roll on four years and the latest figures show women making up 23% of FTSE 100 Boards. Given that the tally has almost doubled since 2010, it must be achievable to hit 25% by the end of 2015, which would seem to represent progress.
But aren’t we missing something? Whilst companies may be edging closer to Davies’ targets, the bare statistics ignore the fact that most of the growth has been in non-executive roles, women still account for only 8.4% of executive director roles in FTSE 100 companies. And even if that distinction is ignored, is 25% really anything to be celebrated when the junior ranks of most industries paint a far more balanced picture? The current situation among FTSE 250 companies is even worse, with only 17.4% female directors and just 5.1% female executive directors.
So why should companies care? The key is to recognise that board diversity isn’t just about being good corporate citizens. As Lord Davies pointed out, boards perform better when they include the best people from a range of perspectives and backgrounds. He quoted numerous studies in support of this, including one which found that companies with more women on their boards were found to outperform rivals with a 42% higher return in sales, 66% higher return on invested capital and 53% higher return on equity. Faced with these benefits, companies should be finding ways to promote and retain women at all levels within the organisation to ensure the pipeline of talent is protected up to board level. Companies that are serious about stepping up to the challenge should gather relevant data and make sure they have a clear view on when and why women are leaving the organisation to identify the barriers to promotion. This might reveal that accommodating new ways of working, such as agile working patterns, family friendly policies and making better use of technology, could make a difference, along with the introduction or improvement of mentoring schemes. It might reveal issues of unconscious bias which can be addressed by more transparent and objective promotion policies and appropriate training.
Of course, gender is just one aspect of boardroom diversity. If elected in the spring, Vince Cable has also promised a Davies-style review and the introduction of voluntary targets to increase the number of black, Asian and ethnic minority directors. Companies will clearly have their work cut out in achieving better gender and ethnicity diversity, but if the board performance and profitability studies are to be believed, companies which are successful in expanding their talent pool will be laughing all the way to the bank.
In 2014, Sophie set up a grassroots women’s legal network alongside four other associates from London law firms called Women in Law London (WILL).