Equality and Human Rights Commission Chair calls for pipeline target to increase women on boards

8 Jul 2016 03:00 PM

Targets set by government to increase the representation of women on FTSE company boards show a ‘paucity of ambition’ and don’t go anywhere near far enough, according to the new Chair of the Equality and Human Rights Commission.

Commenting on yesterday’s announcement of the Hampton-Alexander review’s target to achieve 33% of women on boards by 2020 across the FTSE 350, David Isaac said:

"It is very worrying to see that progress has stalled and hit a five-year low. Whilst we welcome this new review to continue progress, the current targets show a paucity of ambition and don't go anywhere near far enough. We desperately need to see new energy and drive to make further progress.

"We will be putting forward a series of policy recommendations to Sir Philip Hampton’s review to lift the ambition."

In his first major speech tonight he will call for a new national target that half of all new appointments to senior and executive management level positions in the FTSE 350 and in all listed companies should be women from now on. This will guarantee a strong pipeline of women for the top jobs.

He will say:

"Without a clear focus and target on improving diversity specifically for senior managers and executive directors and a more open and creative approach to part-time and flexible senior roles and career paths, we will ultimately fail to change the DNA of businesses."

In his keynote speech to the Employers Network for Equality and Inclusion, Mr Isaac will also say that flexible working should be available to men and women as a day one right when starting a new job, unless there is a reasonable justification not to.

He will call on government to develop proposals to encourage employers to offer different forms of flexible working from the start of the contract, rather than having to wait the current six months before they can make a request. He’ll say greater flexibility will enable men and women both to pursue a career and have a family rather than being forced to choose.

He will also call on government to go further in requiring companies to publish more information on their gender pay gaps, and explain the action they will take to drive further progress. Companies that make efforts to remove the barriers to retaining and developing their women employees will find they attract the best talent that will help them retain their competitive edge. A new report to be published by the Commission later this year will show efforts to close the gender pay gap have ‘stalled’ at 19.2% since 2014.

Recommendations will include:

• Part-time pay gaps: A requirement to publish pay gaps so as to compare the pay of women working part-time with men in full-time roles. There is currently a gap of 38.2% in median hourly earning when comparing part-time women with full-time men. Women are more likely to work part-time due to their caring responsibilities but many men want to play an active caring role as well. Part-time and flexible working should not be a cap on fairness or opportunity for both men and women, and part-time work should not be restricted to lower-paid roles.
• Pay gaps by starting salary: Employers should be required to publish the difference between men’s and women’s starting salaries. Our research shows average graduate salaries are higher for men than women, even where the degree is similar. Employers’ decisions on pay at recruitment may create pay gaps that extend throughout an employee’s career.
• Making flexible work and career paths the norm: Employers should offer all jobs flexibly unless there is a reasonable justification not to. At present, employees have to wait six months before they can request to work flexibly.  Our research shows that employers usually approve these requests, but women then experience negative impacts. To make flexible working part of the fabric of British working culture, we call on Government to develop proposals to encourage employers to offer different forms of flexible working from the start of an employment contract, and allow new employees the right to request flexible working as soon as they start a new job.

He will also reiterate that he wants the Commission to be a ‘more muscular’ legal regulator, using its unique legal powers where companies systematically break the law,. This could include ‘lightning strike’ inquiries and investigations into practices that may be unlawful. These might include issues such as paying men higher bonuses than women where circumstances do not justify it or such as not interviewing women of child-bearing age in case they become pregnant.

David Isaac said:

"While there’s been some welcome progress, we can't be satisfied when 60% of FTSE 350 companies have less than a quarter of women on their boards and pay gaps remain so stubborn. We need to guard against complacency and lift our ambitions to deliver real change.

"A lack of diversity on boards is a detriment not only to women with the ability to hold such roles but also to our businesses and the economy. In an ever more competitive and global economy, we cannot afford to overlook the talent of half of our population. It’s simple - companies with diverse boards and diverse workforces get the benefits of the best talent and best ideas."

Notes to editors

For further information on our women on board’s inquiry please visit our inquiry into FTSE 350 board appointments page.