The number of women on the boards of FTSE 100 companies has reached 22.8% and 17.4% for FTSE 250 companies according to the latest Women on Boards Interim Report. This is significant progress for gender equality/diversity at the top level of business, marking an 82% increase in the number of women on FTSE 100 boards and a 124% increase for FTSE 250 companies.
The progress report was launched by Nicky Morgan and Jo Swinson, MPs and compiled by me and my colleagues at the Cranfield School of Management. It monitors how the UK’s largest companies are complying with the Financial Reporting Council’s updated Corporate Governance Code.
Introduced in October 2012, changes to the code meant companies are now required to now include levels of diversity in their annual reports. Companies are now required to report on their boardroom diversity policy, any measurable objectives and progress against these objectives. Diversity was also to feature as part of the board evaluation process.
From measuring the reality of the statistics on women in leadership and board positions across the top FTSE 350 companies, we aimed to comment on the extent to which gender diversity is becoming an integrated part of corporate strategy.
In March 2011, the Davies Report into women on boards identified a number of actions required to redress the significant gender imbalance in organisations’ leadership. This is still a major problem when there are women obtaining better qualifications than men, but not being rewarded for their work commensurately. In some professions this has been the case for more than 20 years.
Lord Davies set what was considered a stretch target of 25% women on boards by 2015, as the figure had plateaued at around 12% for a few years. His report cites a number of the many business case arguments for a better gender balance in company leadership teams. The strongest one for me is that of optimising how talent is managed and ensuring that the UK’s largest listed companies really are being run by the most talented individuals.
It is undoubtedly clear that significant progress has been made in the past three and a half years on increasing the overall proportion of female-held directorships in FTSE 350 companies. It was only in June this year that the last all-male board in the FTSE 100 finally appointed its first woman director and now only 28 out of the FTSE 250 boards remain all male.
With little more than a year left to reach the 25% target set by the government, the number of women now on FTSE 100 (22.8%) and FTSE 250 boards (17.4%) marks good progress after years of inertia. The momentum that has gathered is a testament to the many people involved in making this happen, but there is still some way to go.
What is also encouraging to see is the substantial number of companies reporting thoughtfully and in detail on various aspects of their diversity strategies. Some of the best examples of managing the talent pipeline cited in the report come from those companies in traditionally male sectors, such as engineering, mining and resources. In the FTSE 100, the numbers of companies complying with some aspects of the amended Code have increased substantially in the past year.
The emphasis on clear and transparent reporting of gender metrics, measurable objectives and best practice across the boardrooms and senior management teams of our largest organisations is beginning to have an effect. This demonstrates that gender diversity is becoming an integral part of corporate strategy, which is only a good thing for businesses.
However, many fall far short of the code’s new guidelines and those companies with less than 25% of women on their boards need to take action now. They can learn from the number of their peers who have developed policies to prevent bias in recruitment and promotion and make an effort to increase the number of women executives.
We strongly recommend that all premium-listed FTSE companies continue appointing one in three new directorships to a female candidate. All companies should also aim for 25% or more of their board directors to be women. They should continue to measure, monitor and report on gender diversity at all levels of the organisation and ensure it is promoted as part of an integrated talent management strategy.
Gender diversity at all levels of businesses is crucial if we want to see businesses reflect their customers and clients, and ultimately prosper. The data from female FTSE reports shows that ignoring the status quo or believing things will get better in time is not the answer – a targeted approach is needed.