Increase in women appointed to FTSE boards
The firm’s “Class of 2014” report, which analyses all the first-time non-executive director (“NED”) appointments to FTSE 350 companies, reveals that 39% of first-time appointees in 2014 were women, up from 28% in 2013 and just 11% in 2007, the first year analysed by Korn Ferry.
Overall there were 434 NED appointments to the FTSE 350 in 2014, of which 233 were first-time appointments (54%). The proportion of appointments given to first-timers has increased steadily from 48% in 2012 and 53% in 2013.
This upward trend of bringing “new blood” into the boardroom is driven partly by the push on gender diversity, but also by the return of IPO activity over the past two years. There were 15 FTSE 350 IPOs in 2014, contributing to 32 first-time appointments. In 2013 the same number of IPOs contributed 55 first-time appointments.
Boards have also brought in new blood from private companies, with the proportion of appointees with executive director experience on the boards of private companies increasing from 12% to 27% between 2007 and 2014. In contrast, the number of first-time appointees that have previous experience as executive directors of FTSE 350 companies has decreased from 24% to 15% over that period. This is a symptom of a trend of migration of top class leadership talent towards private equity-owned companies over the period.
Richard Emerton, managing partner board and CEO services, Korn Ferry, commented, “Gender balance has seen the most significant shift in the first-time NED appointments in recent years. The combined efforts of politicians, chairmen, pressure groups and executive search firms have had a substantial impact, and should this trend continue, the UK will achieve the target set by Lord Davies in 2011 of 25% representation on FTSE boards by the end of this year.
“Another key medium-term trend is the steady increase in appointments of people with no past listed company executive board experience. This is evidence that boards are casting the net wider and looking for new blood, but it also puts pressure on chairmen to ensure that these & lsquo;inexperienced’ appointees are thoroughly inducted and carefully mentored as they learn the craft of public company directorship.”
The proportion of female appointees from the two core disciplines of general management and finance grew significantly, with 52 women from these backgrounds achieving first-time appointments in 2014 compared to just five in 2013. The report says this could reflect a deepening pool of female general managers and finance experts and hopefully could indicate the arrival of a long-awaited increase in gender diversity in the executive pipeline. This may translate into a future increase in the number of women achieving executive board positions as chief executives and finance directors.
While gender diversity is improving, other elements of diversity have stagnated or declined. The proportion of non-British non-executives has steadily decreased since 2007, potentially due to the increasing time requirements facing NEDs, particularly in the financial services sector, and the logistical challenge for boards that need to coordinate the travel of those residing outside the country.
However, whilst diversity of nationality is declining, this is offset by an increase in British appointees with international experience, up from only 43% in 2007 to 55% in 2014.
Richard Emerton continued, “Though there are many positive signs evidenced by this report, there is still progress to be made to ensure a breadth of experience and viewpoints. Of course, neither boards nor individuals want a situation where appointments are made on the basis of tokenism, so much of the challenge lies in identifying, supporting and developing the talent pipeline so that company leaders rise from a truly diverse talent pool.”
The full “Class of 2014” report profiles individuals who were appointed to their first FTSE 350 plc non-executive directorship during 2014. The report is available on request.