Amid news that the European commission is to push for quotas for women on boards to address the slow progress of gender equality, we take a fresh look at diversity in the boardroom. In a report published earlier this year, Deloitte tracked the efforts of 64 countries to promote gender diversity in the boardroom. Unsurprisingly, women are still largely underrepresented on company boards across the world, with the UK in 12th place (after an increase from 2015 figures of 15 per cent representation, to 20 per cent). The global average is currently 15 per cent, up from 12 per cent in 2015.
Bottom of the list is the United Arab Emirates on two per cent while Norway comes out top with 42 per cent (Norway introduced quotas as early as 2003). Other countries that score highly include France on 33 per cent and Sweden on 32 per cent. A quota system became effective in France in January 2017 while, notably, there are no legislative quotas in Sweden. New Zealand has seen the fastest growth with a 10 per cent increase over the last two years to a current 27.5 percent.
In some other interesting statistics, the report finds that in organisations with female leadership, board gender diversity is double that of companies led by men. So in companies with a female CEO 29 per cent of board positions are held by women, compared to only 15 per cent in companies with a male CEO. Although the number of organisations led by women is still low, these figures indicate that diversity and inclusion on boards is likely to accelerate as the number of companies with female leadership – hopefully – continues to grow. The figures also help bust the long held myth that senior women leaders pull up the career ladder behind them.
At least as far as the UK is concerned, real progress has been made since Lord Davies’ review in 2011, which set a voluntary target of 25 per cent representation of women on FTSE 100 boards, and an increasing number of companies now recognise the strong business case behind achieving not just gender diversity but broader aspects of diversity too. However, there is still much work to be done. The proportion of women in executive, rather than non-executive, positions is still shamefully low at only eight per cent in FTSE 350 companies, and there are signs that women’s board participation in the top companies has stalled.
So what can be done to build on what has been achieved to date and continue the momentum?
One important initiative is the Hampton-Alexander review, which launched last year and which recently published its record report. It focuses not only on increasing the number of women on boards and on executive committees by setting new voluntary targets for FTSE companies, but also on transparent reporting on the gender balance on boards and increasing female executive pipeline. Significantly, it talks about transparency of data as a critical step towards identifying barriers to women’s progression, and to take action to remove them.
It is hoped that, through the new UK gender pay gap regulations, transparency of data will help reduce the gender pay disparity – thought to be partly due to the lack of women in the most senior positions – by forcing employers to take action or face possible damage to their reputation, and impact the recruitment and retention of talent.
And in listed companies in particular, investor groups are playing an increasingly important role by recognising the business case for diversity. For example, Hermes EOS, which manages £264.2 billion, now makes it a policy to vote against any board in the FTSE 100 that has “materially less than 25 per cent women without a credible plan for adding them”, according to Bloomberg. Among slightly smaller companies, Hermes will vote against those with no women on their boards.
Perhaps the most vital piece, however, is unlocking bias. To a large extent unconscious, this is arguably the biggest undermining factor of all diversity efforts. The concept of unconscious bias has come to the forefront of diversity work in recent years. They are essentially prejudices we have but are unaware of, split-second mental shortcuts based on social norms and stereotypes.Everyone has them and takes them into the workplace, and scores of studies have shown that they influence workplace decisions, skew performance reviews, affect recruitment and promotion and can unknowingly shape culture.One way that organisations can address this issue is through awareness training designed to make these unconscious biases conscious.
Gender diversity in business leadership (as we discuss here) is not just good for company performance, productivity and trust, a larger proportion of women leaders also produces a trickle-down effect – it challenges stereotypes, encourages girls and young women to pursue careers in business, including in male dominated sectors, and helps to break down the pay gap. It is imperative that progress continues.