The 2014 Cranfield Female FTSE board report launched today (26 March) reveals that the number of women on the boards of FTSE 100 companies has risen to 20.7% (from 17.3% in 2013) and 15.6% on FTSE 250 boards (from 13.3% in 2013). There are now just two FTSE 100 companies with all male boards, a considerable turnaround from 2011 when 1 in 5 boards were all male. The FTSE 250 now has 48 all male boards down by well over half on three years ago.
In joint top place of this year’s ranking, with 44.4% female representation on their boards, are Capita and Diageo. In third place is Royal Mail (a new entry to the FTSE 100), with 36.4% of women on their board. There are four more new entries to this year’s top ten: Unilever (up from 16th to 4th), SSE (up from 28th to 5th), WPP (up from 66th to 8th) and InterContinental Hotels Group (up from 12th to 9th).
The Cranfield report forecasts that if the rate of female appointments to FTSE 100 boards continues as it has done over the last six months, Lord Davies’ target of 25% women on boards by the end of 2015 is achievable. Thirty-six companies in the FTSE 100 have already reached the 25% target and a further 19 companies have between 20 and 25% female directors. Today there are 205 women (holding 231 directorships) on 98 of the UK’s top 100 boards.
Professor Susan Vinnicombe OBE, report author and Director of the Cranfield International Centre for Women Leaders commented: “Whilst it is extremely encouraging to see the overall figures moving in the right direction, and the 25% target in sight, the issue still remains that women are not being appointed to executive positions, despite there being a wealth of suitable candidates.”
Over the past year there were 52 new female appointments to FTSE 100 boards – representing 27% of all appointments. Of these, only five were Executive Director positions and the remaining 47 were Non-Executive Directorships.
Professor Vinnicombe went on to say: “We currently have the highest number of NED positions ever at 826 and the lowest number of ED positions ever at 291. These figures show that the likelihood of women being appointed to ED positions is decreasing. Therefore, while it is important to meet the 25% target; we need sustainable change that will ensure diversity on our boards in executive positions as well as NED roles.”
The report authors recommend a number of strategies for organisations to adopt in order to not only reach the 25% target but to achieve the deep cultural change that is necessary to manage the whole female talent pipeline. They include:
- Chairmen and executive search firms to consider women from outside of the corporate sector.
- FTSE companies to review the size of their boards and increase them to 11 (if currently less than that) and aim to appoint women in the new seats.
- Chairmen to review the tenure of those currently in NED roles (82 males in NED positions on FTSE 100 boards have held their seats for over nine years which contravenes the Higgs Corporate Governance Guidelines).
- FTSE companies increase the number of women at senior executive level, as this is the direct pipeline to the board.
Minister for Women and Equalities, Maria Miller said: “It makes clear economic sense for women to be able to rise to the top. Good progress is being made in Britain through a cultural shift that promotes on merit, not through the mandatory quotas advocated by others. The workplace was designed by men for men. Women don’t need special treatment they just need a modernised workplace that gives them a level playing field. Supporting women to fulfil their full potential should be a core business issue; for the long term sustainability of our economy.”
This year’s report takes a closer look at the processes and practices that companies use to identify, develop and manage their talent. The authors conducted interviews with talent experts in 12 major UK companies to ask them how they are ensuring that women are treated on an equal footing with men.
“The most enduring gap between male and female board seats and appointments remains at the level of Executive Directorships. In order to close this gap and generate a sustainable talent pool, companies must invest more effort in developing the pipeline of female talent”, said report co-author Dr Elena Doldor, Visiting Fellow at the Cranfield International Centre for Women Leaders.
She went on to say: “Effective talent management will only happen if leaders and managers are held accountable for supporting women’s careers by introducing performance targets related to developing female talent and linking them to remuneration. Organisations should also ensure that women have not only mentors, but also sponsors, who advocate for them and pave the way to career-enhancing opportunities. We want all FTSE companies to ask themselves are talented women within their organisation able to get to the top and around the boardroom table? If not they must review their talent management processes to enable this.”
The report includes a practical checklist of steps organisations can take to make sure they manage their female talent in a strategic and sustainable way.
Lord Davies commented: “The rate of change that we have seen at the heart of our biggest companies over the last three years has been impressive. The voluntary approach is working and companies have got the message that better balanced boards bring real business benefits. We are finally seeing a culture change take place at the heart of British business. However, the eyes of the world are on us as we enter the home straight. They are judging us as to whether the voluntary approach, rather than regulation, will work – we need to now prove we can do this on our own.”
Gaenor Bagley, executive board member and head of people at PwC, commented on the report: “While it is encouraging that more women are progressing to the most senior levels of companies, we still have a long way to go before work opportunities are truly equal for men and women.
“We need to ensure that we don’t fall into the trap of assuming that only men have ambition and are aspirational because they articulate it in a certain way. This is about companies challenging the norm, measuring women against their own goals rather than enforced stereotypes and asking why more women aren’t coming through to promotion. Only through closer monitoring and challenging of gender differences at every stage of careers will companies understand what changes they need to make to bring about sustained change. This isn’t about positive discrimination; this is about making sure opportunities to progress are open to all.”
Once more the Cranfield report includes a list of ‘100 Women to Watch’. The authors have identified 100 women who are currently on the Executive Committees of FTSE 250 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 list highlights the many qualified women whose experience comes from sectors other than exclusively or primarily corporate. Six of the women identified in the 2013 list gained a FTSE 350 board position during the last 12 months, including Olivia Garfield, who was appointed CEO of Severn Trent in November 2013.