Comment on the 2012 Female FTSE Board report from Cranfield School of Management
Comment on the 2012 Female FTSE Board report from Cranfield School of Management
Supportive working conditions are needed, not quotas
As the Cranfield report on boardroom diversity is released tomorrow, Pertemps argues that quotas are still not the answer
An influential report is published tomorrow that will announce progress being made in the battle to increase the number of females on the boards of FTSE 100 companies.
The report, which is authored by the Cranfield School of Management, is expected to announce that women now hold around 15% of directorships on FTSE 100 boards.
Carmen Watson, Managing Director of Pertemps Network Group, said, “Although we should be encouraged at the steady progress taking place at director level, we need to ensure there is a diverse pipeline of talent to continue to fill these positions in future. Women already have the capabilities to break through into the boardroom in larger quantities and need the support of much more progressive working conditions instead of being handed positions through quotas.
“It’s certainly healthy that we’re having the debate about whether quotas are needed to generate more female directors. However, using positive action this way could create tension among executives who have reached their position on merit alone, and this ultimately does a disservice to the many talented women we have in the UK. Businesses are starting to realise that change needs to be brought about but until proven strategies are introduced on a widespread basis, the change will never be significant or sustainable.”
Lord Davies shows positive steps but we need more women in exec roles - Helen Wells, Opportunity Now
Helen Wells, director of Opportunity Now, comments:
“The Lord Davies statistics published today demonstrate that a business led approach to increasing the number of women in the UK boardroom is having an impact, with the percentage of women directors on FTSE 100 boards having increased from 12.5% in 2010 to 15.6% in 2012.
“Whilst I welcome the significant increase in the number of non executive roles held by women, real equality would mean women being promoted up through the ranks to executive top jobs as well.
“We still have a big mountain to climb – women make up 49% of the labour market but men hold 84.9% of executive board positions.
“Women in top executive jobs are important for the pipeline of top talent to draw from for non-executive roles. Currently the 163 board positions held by women are occupied by 141 people – we want to see a diverse range of women on boards, not just doubling up.
“Increasing diversity in the board room across both non-exec and exec roles must to be seen as a strategy that delivers commercial advantage. It encourages new ideas and vigorous challenge, helping boards to approach risk in a more robust manner. And it allows boards to escape the herd mentality of group-think. We desperately need all these strengths if we are to recover our global competitiveness and respond to increasingly diverse markets”.
“There are steps all company chairs and boards can take to increase the number of women on their boards. The starting point is to ensure that the board as a whole is clear about their ownership of this agenda. Ensuring a diversity of views and ideas in a boardroom is a task that the whole board is responsible for. Next, once you know your normal board turnover and your skills gaps you can brief your executive search firms to ensure that sufficient women are put forward for shortlist – the board nominating committee must hold the search firm to account. Treating women’s leadership as a dynamic and strategic issue rather than an equal opportunities task will ensure that delivering on women’s equality is good for business.”
CBI RESPONDS TO PROGRESS REPORT ON BOARDROOM DIVERSITY
A year on since Lord Davies’ review of Women on Boards, the CBI today (Tuesday) commented on a progress report on boardroom diversity by Cranfield School of Management.
Katja Hall, CBI Chief Policy Director, said:
“This is an opportunity to recognise the progress that has been made over the past year on boardroom diversity, with more than 100 women appointed onto FTSE boards since Lord Davies’ review.
“The report rightly highlights that this is not just about the increase in numbers, it is also about a change in approach, and a commitment to drive diversity at the top and among future leaders. There is still a long way to go but we are now seeing real progress for the first time in many years.
“The Government must continue to promote the voluntary approach that is starting to bear fruit and resist EU pressure for counter-productive quotas.”
Comment from Tony Vardy, Managing Director of Korn/Ferry Whitehead Mann, the executive search and leadership consultancy, on the 2012 Female FTSE Board report from Cranfield School of Management:
“The Cranfield report is consistent with Korn/Ferry Whitehead Mann’s recent research which shows an encouraging rise in the number of women holding board positions (now 15%, a rise of 2.5% from a three year plateau). An important factor in this improvement, we believe, is that companies and consultancies are increasingly assessing potential candidates in terms of their core skills and competencies rather than focusing almost exclusively on prior experience. For example, according to the Cranfield report, 62% of the new female board appointments have had no prior FTSE board experience.
“The report correctly looks at the question of why not enough women are rising through junior, middle and senior management positions. This is at the heart of the diversity issue. The targets and points made by Lord Davies’ review are valid and welcome, but real change will only be driven when boards and investors genuinely believe in the business benefits of diversity, and consequently drive wholesale cultural change within their organisations. Positive steps could include early assessment to identify women with high potential coupled with development programmes and more flexible working practices.
“It is encouraging that the rate of change is gathering momentum, but it is essential that the Government, companies and consultancies focus not only on the Board level but throughout organisations. We believe that there are clear signs that all constituencies involved are seeing the benefits of diversity (not just in relation to gender) of skills, experience and perspective which add value to the business and mitigate against the risks of & lsquo;group-think’.”
Women on boards: address the director pipeline, not the quotas, says leading headhunter firm
Norman Broadbent Board Index says Lord Davies targets will miss deadline
Leading executive search firm Norman Broadbent today launches its quarterly board index, the Norman Broadbent Board Index&trade, which tracks changes throughout the FTSE 100, 250 and Small Cap component companies over the past year on a number of issues, including average age, time spent in roles, gender, and the number of new board members attaining their first position.
Sue O’Brien, chief executive of Norman Broadbent, said: “We consult with boards and executives regularly and wanted to demonstrate that the issue of cross functional and diverse boards is being addressed across not just the FTSE 100 but across the broader FTSE. However, it is a long term project and the Norman Broadbent Board Index&trade will provide an objective and true measure of progress to 2015. The succession below board will provide the pipeline to provide further women executive directors, in addition to the increasing number of women non –executive directors being appointed.”
Based on existing rates of change, the FTSE 100 will miss the Lord Davies’ 25% target for 2015 for the female composition of boards by two years. FTSE 250 companies will miss it by four years
Across all three FTSE indices, only one in 18 executive directors is female
In the FTSE 100, 26% of NED appointments in the past year were female, and 9% of executive directors In the FTSE 250 24% of new NEDs were female, and 7% of executives and in the FTSE Small Cap 17% of new NEDs were female, and 7% of executives.
The best performing sectors on gender balance at board level have been Retail, Technology & Media, and Health all male boards are prevalent within the Industrial sector.
The Norman Broadbent Board Index&trade for women on boards for Q4 is 116.4 for the FTSE 100, 118.2 for the FTSE 250 and 127.9 for the FTSE Small cap
The percentage of women on boards across the three FTSE indices has increased: FTSE 100 by 16% to 14.9% FTSE 250 by 18% to 9.4% and FTSE Small Cap by 27.9% to 9%.
The proportion of non-executive directors (NEDs) versus executive directors has increased in the past 12 months
The average time in roles and the number of NED roles held has stayed constant over the year
The average age of executive directors and NEDs remains largely unchanged over 12 months
Krystyna Nowak, managing director of the Board Practice at Norman Broadbent, said: "While supporting having gender targets to aim for, we want to ensure that the focus for boards remains finding first class, high calibre directors. If that first class director is a woman, even better. Our role as board search consultants is to search beyond the obvious and to find those first class, high calibre women to meet our clients' requirements. But in the final decision, boards should choose the best fit for their needs at the time, with diversity taken into account, but not necessarily being a trump card."
Barry Dinan, a veteran of the board landscape who joined Norman Broadbent’s Board Practice last month after 23 years at Hanson Green, added: “There is a perceived limit to the supply of candidates. The brief for the appointment must align entirely with the board’s growth strategy, and that will provide hiring opportunities across gender, sector, and most importantly geographies. There are so many talented women at executive level that would make superb NEDs and yet we have to fight to get them on short lists. Boards need to ensure that the female they appoint is the right one, not just a gender hire or token.”
Responding to the Industrial sector’s prevalence for male directors, Neil Holmes of Norman Broadbent’s Board Practice said: “We are finding that women are appearing on shortlists, but the supply on the executive side is still lower than it should be and this requires companies to invest in long term cultural changes to ensure that in the future, women vying for executive roles have the depth and breadth of experience that is today more prevalent among their male counterparts this must be about quality derived from retention and experience, and not about tokenism.”
Norman Broadbent has tracked the progress of board composition over the past year, looking not only at FTSE 100 companies but also at FTSE 250 and FTSE Small Cap constituents. The research shows an increase in the number of women appointed both to non-executive and executive roles across all sizes of businesses. Each quarterly index will examine different trends and the next is likely to highlight “new-to-board” appointments and the functional diversity of those appointments.
Mr Dinan added: “We need to be conscious that NEDs fulfil a vital function in safeguarding shareholders’ interests and the sustainable development of companies. While it is totally understandable and appropriate that there has been a drive to recruit more women to non-executive positions, we should not lose sight of the need for more women throughout executive and senior management roles within business such planning should be a clear element of a company’s growth strategy.”
The Norman Broadbent Board Index has been calculated from data supplied by BoardEx. Quarterly percentage movements in board composition covering a number of factors are measured against the composition of boards in January 2011, prior to the launch of Lord Davies’ review. The changing composition of each index as a result of the London Stock Exchange’s quarterly review is also taken into account. The data is taken from the first working day of each quarter (January, April, July and October) and compared with a base period being the composition of the FTSE 100, 250 and Small Cap boards, as of the beginning of January 2011. The data takes into account the changing composition of the FTSE 100, 250 and Small Cap as defined by the FTSE.
In Lord Davies’ report on Women on Boards early in 2011, he recommended that UK listed companies in the FTSE 100 should be aiming for a minimum of 25% female board member representation by 2015. He further recommended that chairmen of all FTSE 350 companies should set out the percentage of women they aim to have on their boards in 2013 and 2015.