Targeting Diversity

Targeting Diversity

Lord Davies of Abersoch’s five-year mission to improve gender diversity in UK boardrooms has not only been hailed as a success for boardroom diversity but has also acted as a springboard for greater diversity across organisations. When he set out on his journey, Lord Davies admitted that his target of achieving 25% female representation on FTSE 100 boards was a stretching one; but the fact that female representation is now at 26.1% in FTSE 100 companies and 19.6% in FTSE 250 companies is a testament to the tireless work which Lord Davies has undertaken.

In his final report, Lord Davies makes a series of recommendations which are designed to ensure that the momentum continues. These recommendations include the formation of an independent steering body to support, monitor and report on progress over the next five years. Lord Davies believes that the voluntary approach which has worked well over the last five years, will continue to drive progress and that therefore there is no need for compulsory legislation at the current time.

However, he counsels that the UK cannot afford to be complacent and although the country currently stands ahead of many who have imposed quotas, unless the current momentum is maintained, the UK is in danger of falling down the league tables. Certainly this is a concern with a separate report from Audeliss suggesting that levels of female representation may fall over the next year as directorships come up for review. Commenting on that report, Audeliss Chief Executive Suki Sandhu said that “the pipeline of female talent is currently too slim to sustain the past years’ progress.”

There are two headline recommendations within Lord Davies’ final report. Firstly, he recommends a new target to achieve a 33% female representation level for all FTSE 350 companies within the next five years. But in order to achieve that level of representation, more women have to be given experience of leading at executive level. Accordingly, Lord Davies recommends that FTSE 350 companies extend their focus on diversity through to executive and senior leadership levels.

Some have asked whether diversity targets are simply a nod towards equality. Evidence has shown that this viewpoint is far from the truth. As one FTSE chairman was quoted within the report as saying that the more that companies adopted diversity the more they saw that “actually the boardroom dynamics improved.” This comment was echoed by KPMG vice-chairman Melanie Richards at the release of Lord Davies final report when she said that “By tackling homogeneity, boards should make more robust, balanced decisions and no longer run the risk of echoing the voices of the few.”

Alison Griffiths
alison@gerranium.co.uk
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