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Number of women in Britain's boardrooms plateaus for third year running
Report authors call for changes to the appointments process
The 2010 Female FTSE report from Cranfield School of Management has revealed another year of barely noticeable change in the number of women in leadership positions of the UK’s top 100 companies.
There are just 135 female-held directorships out of 1,076 on the FTSE 100 boards. Today’s figure of 12.5% highlights a three year plateau (12.2% in 2009 and 12% in 2008) signifying a situation of stagnation when it comes to diversity in British boardrooms.
This year’s incremental increase is due to three additional women on FTSE 100 boards taking the total to 116 women holding 135 positions. One of the other more positive results is the number of companies with no female directors has decreased to 21 (from 25 in 2009). However, of the 135 new appointees to FTSE 100 boards in the past year (12.5% turnover), only 18, just 13.3%, were women.
The company in top place this year is Burberry with three out of eight female board members (37.5%). In Burberry both the Chief Executive and the Chief Financial Officer are women, and there is also a female non-executive director (NED).
Report co-author Dr Ruth Sealy commented: “There is still too much female talent not making it to the boardroom. Eighty-two of the FTSE 100 companies have women on their executive committees. These women are a rich resource pool for future board directorships. This pipeline of women continues to grow each year – there are now 2,551 women on the corporate boards and executive committees of all FTSE listed companies.”
Equalities Minister Lynne Featherstone said: “While I’m pleased to see the number of female-free boardroooms continuing to fall, it’s worrying that women – who make up more than 50 per cent of the population – still account for just one-eighth of FTSE 100 directors. Making boards more diverse is not about political correctness - it's about making sure companies draw senior staff from the widest possible pool of talent, which is good for business, good for staff and good for customers. That’s why the Government is committed to working with employers to boost the number of women in Britain’s boardrooms.”
This year the report takes a retrospective look at companies who have consistently performed well on gender diversity and those that have failed to make any progress.
An analysis by sector proves that it does not account for the polarising trends regarding gender diversity of boards.
Professor Susan Vinnicombe OBE, co-author of the report said: “In our view chairmen overplay how the small size of boards can constrain gender diversity. Our report clearly demonstrates there is no correlation between board size and diversity. The top two companies in the Female FTSE 100 list are Burberry and Alliance Trust who have only eight and nine on their respective boards, yet manage to have three women directors each. Further afield, nearly 30% of new appointments to Australian boards this year, of which the average size is seven, have gone to women.”
The research also turns the spotlight on the FTSE 250 companies, where an unacceptable 52.4% (131) of companies have no women on their boards. Just 7.8% of FTSE 250 board directors are women.
The focus of this year’s report is a series of interviews carried out by the report’s authors with 14 of the FTSE 100 Chairmen (representing 17 companies), asking about: their role in the NED appointment process, their response to the new UK Corporate Governance Code’s principle of paying ‘due regard to diversity on the board, including gender’ and how the challenge of getting more women on boards might be addressed.
It is clear from the interviews that the threshold for NED applicants is extremely high for both men and women. Chairmen commented on how the quality of candidates had risen and how the process has become more rigorous over the past few years. Most chairmen talked about the task of not just replacing the skills and knowledge of departing NEDs, but taking the opportunity to review NED requirements in the context of current business priorities and challenges for the company, and in the light of the mix of skills and experience already in existence around the boardroom table.
Key themes from the interviews include; Agreement that there is tangible value in having women on the board; that board evaluations do not take diversity into account and that the development of women already in the pipeline is crucial.
Combining the feedback from these interviews with the Centre’s research from the past 12 years, the report concludes with the following calls to action to open up the appointments process and increase the number of women in Britain’s boardrooms:
Strengthen the new principle on diversity in selection to ‘Comply or Explain’. Any Chairman with less than 20% women on their boards and executive committees needs to explain why this is the case in their annual reports. This should apply to all FTSE 350 listed companies. The 20% should be reviewed in three years time with a view to lifting it to 30%.
Advertise all NED positions in the private sector.
Require search consultants to produce balanced candidate lists.
Continue to make the appointments process as rigorous and objective as possible through use of skills audits.
Use peer-to-peer pressure from FTSE 100 Chairmen to encourage FTSE 250 Chairmen to seek female candidates for their boards.
Once more the report includes a list of ‘100 Women to Watch’. The authors have identified 100 women who are currently on the executive committees of FTSE 350 companies or in major financial institutions, who are poised and ready for a board position. These are just 100 of the 2,551 women mentioned in the main report who search consultancies and nomination committees should be considering. From the 2009 ‘100 Women to Watch’ list, six of the women have gained a FTSE 350 board position.
Hear the report authors discuss the 2010 findings in the latest podcast on the Cranfield Knowledge Interchange
Notes to Editors:
The report from the International Centre for Women Leaders at Cranfield School of Management is co-authored by Professor Susan Vinnicombe OBE, Dr Ruth Sealy, Jacey Graham and Elena Doldor with contributions from Patricia Pryce.
The 2010 findings are announced at a business breakfast held in London on Thursday 2 December.
A copy of the report will be available online from 10am on 2 December
Or from Alison Southgate, International Centre for Women Leaders at Cranfield School of Management. T: 01234 751122 Ext 3801, or E: email@example.com
The report is sponsored by Barclays a major global financial services provider engaged in retail banking, credit cards, corporate and investment banking and wealth management with an extensive international presence in Europe, the Americas, Africa and Asia. With over 300 years of history and expertise in banking, Barclays operates in over 50 countries and employs nearly 147,000 people. Barclays moves, lends, invests and protects money for 48 million customers and clients worldwide. For further information about Barclays, please visit www.barclays.com.
Cranfield School of Management is one of Europe’s leading university management schools renowned for its strong links with industry and business. It is committed to providing practical management solutions through a range of activities including postgraduate degree programmes, management development, research and consultancy. www.som.cranfield.ac.uk
The International Centre for Women Leaders at Cranfield is committed to helping organisations to develop the next generation of leaders from the widest possible pool of talent. www.som.cranfield.ac.uk/som/research/centres.
For more information or to arrange an interview, please contact: Marie McCormack, Media Relations, Cranfield School of Management on: T: +44 (0) 1234 754425 or E: firstname.lastname@example.org