The Future for Women on boards: Milestone or Millstone?
13 March 2012
The 2012 Female FTSE report from Cranfield School of Management urges the UK’s top companies to ask themselves the question: Milestone or Millstone? when it comes to increasing the number of women on their boards.
Download the report here
The Lord Davies’ review into women on boards, recommended that the UK’s FTSE companies voluntarily increase the number of women on their boards, instead of the Government taking the action that some European neighbours have of introducing legislation to achieve gender equality at board level.
The Cranfield report, published to mark the anniversary of the Lord Davies’ review, reveals a significant move in the right direction. The number of female-held directorships has risen to 15.6%, an increase on what was a three year plateau of 12%.
There are now 141 women holding 163 FTSE 100 board seats (out of 1,086 board positions). Encouragingly the number of companies with no women has dropped to 11 and the number of companies with more than one woman on the board has increased to 50.
The Davies’ review recommended a minimum target of 25% female representation on the boards of FTSE 100 companies by 2015. In the year to January 2012, 47 new appointments (25%) out of 190 were made to women. If this pace of change continues to gather momentum, as predicted by Cranfield, 26.7% of directors could be women by 2015 and 36.9% by 2020. This will exceed the targets set in the Davies report.
Of the 47 new female appointments, 29 of the women (62%) have had no prior FTSE board experience. This suggests that the appointment process is beginning to open up to new women and the search and appointments process is becoming more creative.
Professor Susan Vinnicombe OBE, co-author of the report said: “The past 12 months have seen a significant amount of global activity around diversifying boards. After a decade of incremental increases in the UK, we are pleased to be reporting improvements that are more substantive. If the momentum we have seen since the Lord Davies’ review continues we could achieve 30% women on boards in less than four years, which would be a terrific achievement. We urge chairmen, chief executives, executive search firms, investors, journalists and women to stay focused and use this momentum to change the status quo permanently.”
Home Secretary and Minister for Women and Equalities Theresa May said: “I’m delighted by this unprecedented progress. While there’s still much to be done, today we should celebrate just how far we have come. It is particularly encouraging that this progress has been led by businesses. Government has put in place the framework, but it’s companies themselves who are seeing that they simply cannot afford to ignore the skills and talent of half the population.”
Lord Davies said: “Over the last year some excellent progress has been made. We’ve seen a significant increase in the percentage of female board appointments and the number of all-male boards has halved. I believe we’re on a steady journey towards our 25% target, but the reality is that a lot more still needs to be done. We’ve got to keep up the pressure on business - particularly on FTSE 250 companies. And at the same time CEOs must try and improve the gender balance of their executive committees, because this isn’t just about equality, it’s about performance. And the simple fact is that the more diverse your team, the better it performs.”
The company at the top of this year’s ranking is Diageo with four women making up 44.4% of their board. In second place is Burberry, with three women out of eight directors. They are also one of only three FTSE 100 companies to have two female Executive Directors (EDs) with both the Chief Executive and Chief Financial Officer roles held by women. In third place is Pearson, who have had two female EDs for a number of years and have recently added a second female Non Executive Director, (NED) taking their total to four (33.3%).
Although the figures are moving in the right direction, the report does highlight the increasingly wide gap between the numbers of women NEDs (143 women, 22.4%) compared with the numbers of women EDs (20 women, 6.6%).
Report co-author Dr Ruth Sealy commented: “Whilst the overall percentage of women on boards has begun to increase at an encouraging rate, it is hard to ignore the fact that most of the increase is occurring amongst NED directorships. Whilst the increase in the numbers of female NED positions is important, it is imperative to ensure that as much focus is placed on improving the female executive pipeline. This is requisite for better balanced boards and senior leadership going forward. Companies who are addressing this demonstrate a true commitment to changing organisational cultures and sustaining genuinely meritocratic environments.”
This year the report takes a closer look at the pipeline to the top and reveals a mixed picture. Worryingly many of the companies were unable to supply information on the women they employ at junior, middle and senior levels, because the data are not recorded. What the report did find was the numbers of women at senior executive level varies dramatically.
“If you do not have an accurate picture of your workforce, you cannot manage your pipeline successfully. Data on women at all levels of an organisation are essential to building a sustainable talent pipeline and ensuring that capable women do not miss the opportunity to rise to board level,” said report co-author Dr Ruth Sealy.
Professor Susan Vinnicombe OBE went onto say: “From our research it is clear that many of the FTSE companies are successful at attracting women at entry level, and developing them and retaining them after maternity leave, but are still spectacularly unsuccessful at promoting them to executive level.”
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Once more the report includes a list of ‘100 Women to Watch’. The authors have identified 100 women who are currently on the executive committees of FTSE 350 companies or in significant roles of other major institutions, who are ready for a board position and should be considered by search consultancies and nomination committees. The authors are pleased to announce that ten of the women identified in their 2010 list have now gained a FTSE 350 board position.
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Notes to Editors:
The report from the Cranfield International Centre for Women Leaders at Cranfield School of Management is co-authored by Dr Ruth Sealy and Professor Susan Vinnicombe OBE.
The 2012 findings are announced at a business breakfast held in London on Tuesday 13 March.
A copy of the report is available online www.cranfield.ac.uk/som or from Alison Southgate, Cranfield International Centre for Women Leaders, T: 01234 751122 Ext 3801, or E: a.southgate@cranfield.ac.uk
The report is sponsored by Barclays a major global financial services provider engaged in retail banking, credit cards, corporate and investment banking and wealth management with an extensive international presence in Europe, the Americas, Africa and Asia. With over 300 years of history and expertise in banking, Barclays operates in over 50 countries and employs nearly 147,000 people. Barclays moves, lends, invests and protects money for 48 million customers and clients worldwide. For further information about Barclays, please visit www.barclays.com.
Cranfield School of Management is one of Europe’s leading university management schools renowned for its strong links with industry and business. It is committed to providing practical management solutions through a range of activities including postgraduate degree programmes, management development, research and consultancy. www.cranfield.ac.uk/som
Cranfield’s International Centre for Women Leaders is committed to helping organisations to develop the next generation of leaders from the widest possible pool of talent. www.som.cranfield.ac.uk/som/Research
For more information or to arrange an interview, please contact: Marie McCormack, Media Relations, Cranfield School of Management on: T: +44 (0) 1234 754425 or E: sommediarelations@cranfield.ac.uk
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