- The focus on developing a critical mass of women on boards has been an important step, but it simply ‘isn’t enough’, says report published today.
- ‘It’s time to apply pressure’ to companies with a lack of gender diversity on their boards says report. After ten years of voluntary targets it is not a case of lack of awareness.
- ‘The tiny numbers of women CEOs signal a longer-term problem’ - women are not being identified early enough. Report calls for urgent attention at board level of succession planning.
A new report out today reveals UK FTSE 350 boards have made progress on gender diversity, but there are still too few women in senior leadership positions, including Chair, CEO and CFO.
The annual Female FTSE Board report, conducted by Cranfield University’s School of Management and sponsored by EY, finds that FTSE 350 companies have continued to meet and exceed the target of 33% women on all boards, set by the Hampton-Alexander Review.
While individual boards have met the voluntary target in varying degrees, the research suggests that it is not enough to have a critical mass of women on boards. It highlights the importance of serious talent management and succession planning for women to receive broad experience across the business, which they need in order to be considered for executive roles such as Chair, CEO, Senior Independent Director and CFO.
Alison Kay, EY’s Managing Partner for Client Service in the UK & Ireland, says: “The conclusion could be drawn that gender diversity on boards has been achieved, but it’s clear that we are far from that point and indeed there is a great deal more work to be done.
“The lack of female representation in executive roles is particularly striking, especially when the presence of women in senior positions, critically the role of CEO and Chairperson, was noted to be a strong and influential driver. Interestingly, the report raises the valid question – ‘the progress in executive roles is actually far more of an important metric than the number of women on boards as a whole’.
“Businesses have a responsibility to accelerate change in their own organisation, but also wider society. Tracking and measuring diversity against targets are now a bare minimum on this agenda for all companies, but steps to uncover the invisible barriers to career progression for women and drive inclusion are the real game changers.”
The report recommends that more companies prioritise succession planning and talent management on their board agenda to improve the appointment of women into more executive roles. Taking a meritocratic approach to succession planning can naturally lead to more gender balance across organisations, and this becomes even more critical as executive development takes years.
Female FTSE Board Report findings
The report, which focused on the 12 months up to 20 July 2021, found:
- Women hold 393 directorships across FTSE 100 boards, and 688 across FTSE 250 boards.
- The percentage of female non-executive directors (NEDs) on FTSE 100 boards is at an all-time high at 44%, with 14% women Chairs, 25% women Senior Independent Directors (SIDs) and 35% women chairing board committees.
- However, the percentage of female executive directors has flatlined for a second year at 13.7% (11.3% for the FTSE 250).
- On the FTSE 100, 31 women hold executive roles in 27 companies. Eight are CEOs, and 15 CFOs or finance directors.
Professor Sue Vinnicombe, Professor of Women and Leadership at Cranfield School of Management and lead author of the report, said: “Women on boards encourage the appointment of women into executive roles, and the other way around. Talent management and robust succession planning are vital if women and other diverse people are to be promoted into executive roles.
“There is clearly now a pipeline of experienced women NEDs, so why are so few of them promoted to leadership of the board? I am sure that all Chairs and CEOs of FTSE companies understand the business case for gender diversity at an intellectual level, but do they really believe in it, and are they willing to invest serious effort into achieving it?
“Experience tells us that removing barriers to gender diversity is key to encouraging diversity in all its forms. But, until women hold influential roles such as Chair, senior independent director (SID), CEO, CFO, or are interlocked board directors, businesses will not reap the benefits. Eight women CEOs across FTSE 100 companies in 2021 simply does not add up.”
The Women to Watch supplement to the Female FTSE Board Report is also published today and highlights 100 inspiring senior women business leaders who are ideally suited to board positions on FTSE 350 companies now or in the near future.
Inclusion works for everyone
The 2021 Female FTSE Board Report dedicates a large part of its focus to diversity and inclusion, exploring how organisations can implement initiatives to promote belonging while still valuing and encouraging the different opinions, outlooks and experiences a diverse workforce brings to the table. The authors explore what makes a truly inclusive organisation, how to value uniqueness, and the impact individual leaders can make in this area and concludes that quality of implementation is key to making a success of inclusion initiatives.