March 27, 2014 Women on Boards 2014
Lord Davies of Abersoch’s third annual report into the representation of women on boards reveals the progress which has been made in strengthening board balance. As of March 2014, women account for 20.7% of FTSE 100 boards and 15.6% of FTSE 250 boards, up from 12.5% and 7.8% respectively in 2011. However, it does have to be said that the majority of this improvement has come via non-executive directorships and that the proportion of women executives on FTSE 100 boards is still low at 6.9%.
In a foreword to his report Lord Davies comments that “We are finally seeing a culture change take place right at the very heart of British business” adding “We have seen that increasing the number of women at board level is significantly impacting the way companies look at the talent pipeline; opening up new opportunities for women in the organisation.”
However Lord Davies does caution that there is still some way to go before the target of 25% representation in 2015 is achieved and that strengthening the executive pipeline is a long term task for boards. Accordingly he calls on companies to grasp the opportunities presented by the voluntary framework and to show the Government and the wider world how voluntary codes can outweigh the need for legislative quotas or EU intervention. This is particularly important in view of the European Parliament’s vote in favour of quotas last November; a process which is currently in deadlock in the European Council. Accordingly, whilst the steering group will be focusing on harnessing the power of CEOs and investors, it will also be looking for action by boards to move representation forward.
Looking at the ten action points originally identified in 2011, just three are on track with some progress being made in five others. The two action areas which are still deemed to be at risk relate to the role which investors play when engaging with company boards and the recommendation that non-executive board positions are advertised to encourage greater diversity in applications. In fact diversity and being able to pick from the widest talent pool are identified within the report as key drivers of gender diversity. Others include the ability to be more responsive to market by aligning more closely with a diverse customer base and the ability to “achieve better corporate governance, increase innovation and avoid the risks of ‘group think.”
Commenting on the report the Business Secretary, Vince Cable, said “These latest figures show that businesses are getting the right mix of talent around their boardroom table and understand the importance of this.”