25 September 2013
Pressure Is On For Female Appointments To UK Company Boards
It is increasingly apparent that there is a serious ‘disconnect’ between words and action in the UK when it comes to placing women on boards of publicly listed companies. Prime Minister David Cameron and the coalition government first indicated their commitment to the issue by launching a review led by Lord Davies of Abersoch in February 2011. Yet almost three years later, the rate of progress has been agonising – and now appears to have stalled.
The most recent statistics from the Department of Business, Innovation and Skills (BIS) suggest that women now account for 17.4% of FTSE100 directorships. That figure represents 22% of non-executive directorships and just 5.6% of executive directorships. Since March 2013 women have made up 12% of all board appointments – and 14% of new NED roles have gone to women. But there have been no new executive director appointments made.
The difficulties around promoting women to senior executive positions in business are not restricted to the UK. Overcoming barriers of underepresentation by gender means dealing with a multiplicity of issues from defning the job and identifying its needs to flexible working around family considerations to raising awareness around ‘unconscious bias’ – and more. Even the most enlightened business is not going to be able to do it overnight.
But the non-executive director role is a very different one. It requires strong analytical skills, professional experience and the ability to challenge as well as support– but it does not necessarily require a sophisticated level of technical expertise. In talking to those with substantial experience of chairman and non-executive director (NED) roles in UK companies, it is clear that the main obstacle to more female appointments remains one of attitude – the ‘job description’ for NEDs being created by UK plcs by definition excludes women.
As long as business continues to demand ‘must have experience of a listed company board’ from its NED candidates nothing will change. Since February 2011 much has been made of the important role of the executive search firms – the headhunters – in all this. But the nitty gritty of the appointments process, and their part in it, also needs to be closely scrutinised.
Vince Cable, the UK’s Business Secretary, appears to have come to just that conclusion. On September 9th he announced a three-month review to be conducted into the board appointments process by Charlotte Sweeney, a diversity and change management specialist with a financial services background. Ms Sweeney will be interviewing chairmen, NEDs, directors, investors and headhunters.
Time is of the essence, particularly for the UK’s finance sector. A binding European Union Directive says most big financial firms will have to set a target for the number of women on their board of directors from 2014. As well as setting a target, big banks, building societies and investment firms will also have to explain how they are going to meet their goal.
The UK’s finance sector still has the highest number of all-male boards of any sector in the FTSE 350. Vince Cable has tried the ‘naming and shaming’ approach but there are still 63 companies below 25% women on board.
A few days before the review was announced BIS hosted a private round-table on this issue alongside the Confederation of British Industry (CBIs) the UK’s main lobbying group. Mr Cable asked senior representatives from the finance industry: “Where would you go from here if you were me’? There were no immediate practical suggestions. For a sector that relies on innovation for its growth, the response was clearly not deemed good enough.