02 Feb Women on Boards 2015
In March 2014 when we reported on Lord Davies of Abersoch’s third annual report into the representation of women on board, although it was evident that steady progress was being made, Lord Davies cautioned that there was still some way to go before the target of 25% representation in 2015 was reached. One year on and the 2015 Cranfield Female FTSE Board Report has revealed that the progress reported last year has been sustained with women now accounting for 23.5% of FTSE100 board directors. More pleasingly, the report’s authors consider that with only seventeen more female appointments being required to reach the target, it should be achievable by the end of the year.
The levels of female representation reported place the UK fifth in Europe and ahead of the USA. In fact, female representation on boards in the UK has virtually doubled in four years; proving that the voluntary approach to increasing representation is working.
However, the news is not all good. Although the percentage of female directorships within FTSE 250 companies has also risen, to 18%, the percentage of women holding executive directorships has fallen to 4.6%. This has given rise to concerns that the executive pipeline may still not be delivering the numbers of women required and that this could lead to a stagnation in female representation in a few years time. Commenting on this one of the report’s co-authors, Dr Elena Doldor said “Introducing aspirational and measurable targets for women at all levels is the only way to achieve real progress. Growing the female talent pipeline needs to be high on the agenda for every board, CEO and executive committee.”
So why is it important for boards to have female representation? Quite simply because diversity is seen as “an antidote to the homogeneous nature of corporate boardrooms and the groupthink effect it entails.” Female representation may be the headline measure but boards are being encouraged to review the range of abilities, talents and outlooks which their members bring to the company. The Financial Reporting Council is looking carefully at organisational culture and governance in 2015 and in general the more diverse a board, the stronger its governance is likely to be. In fact, as Vince Cable recently said “The evidence is irrefutable: boards with a healthy female representation outperform their male-dominated rivals.”