A Tale of Two Halves!
7th October 2021
Cranfield School of Management has today (7 October) published its Female FTSE Board Report, an annual analysis of the progress of women directors on FTSE 350 corporate boards. Their findings have once again put a spotlight on our own poor track record in this regard as we ask ourselves – is it now time for legislative gender quotas on boards? It’s a YES from us!
Deputy Emer Higgins (FG) and National Women’s Council of Ireland have both put strong cases forward for legislative gender quotas on boards and have gained support from the wider community. Yesterday, during Dáil debates, Deputy Higgins brought forward the Irish Corporate Governance (Gender Balance) Bill 2021: First Stage, which went unopposed to progress to the second stage (Private Members Time).
“It is my ambition that this Bill will pave the way for balanced representation of both men and women in leadership roles in business. Currently, we use soft targets to measure and drive the representation of women in the boardroom. It is a welcome start, and I commend the work done by bodies such as Balance for Better Business and the 30% Club.
Unfortunately, however, gender balance in our boardrooms is not improving quickly enough.
Women accounted for only 22.4% of board members in Irish listed companies as of September last year. Shockingly, one in five Irish listed companies have no female directors at all,” said Deputy Higgins.
So how does this compare with Cranfield’s recent report findings?
The latest figures show that, while the number of women on FTSE 100 and FTSE 250 boards continues to rise (38% and 35% respectively), there remains considerable variance between companies, with the overall figures boosted by the efforts of several leading firms. Some 21% of FTSE 100 companies and 32% of FTSE 250 companies have yet to meet the Hampton Alexander target of 33% women on boards by 2020,
prompting the authors of the report to question whether more forceful measures may be needed to encourage businesses to comply.
The Female FTSE Board Report 2021: Headline figures
•Women hold 393 directorships across FTSE 100 boards, and 688 across FTSE 250 boards.
•The percentage of female non-executive directors (NEDs) on FTSE 100 boards is at an all-time high at 44%, with 14% women Chairs, 25% women Senior Independent Directors (SIDs) and 35% women chairing board committees.
•However, the percentage of female executive directors has flatlined for a second year at 13.7% (11.3% for the FTSE 250).
•On the FTSE 100, 31 women hold executive roles in 27 companies. Eight are CEOs, and 15 CFOs or finance directors.
The 2021 report spotlights the role of the Chair in the appointment and development of NEDs, and in the appointment of the CEO and the executive team, and therefore emphasises the importance of accelerating the appointment of women into Chair roles.
It finds that simply having a critical mass of women on a board does not result in a critical mass of women in executive roles, and stresses that it is key that women hold influential board roles.
Professor Sue Vinnicombe, Professor of Women and Leadership at Cranfield School of Management and lead author of the report, said:
“Women on boards encourage the appointment of women into executive roles, and the other way around. Talent management and robust succession planning are vital if women and other diverse people are to be promoted into executive roles.
“There is clearly now a pipeline of experienced women NEDs, so why are so few of them promoted to leadership of the board? I am sure that all Chairs and CEOs of FTSE companies understand the business case for gender diversity at an intellectual level, but do they really believe in it, and are they willing to invest serious effort into achieving it?
“Experience tells us that removing barriers to gender diversity is key to encouraging diversity in all its forms. But,
until women hold influential roles such as Chair, senior independent director (SID), CEO, CFO, or are interlocked board directors, businesses will not reap the benefits. Eight women CEOs across FTSE 100 companies in 2021 simply does not add up.”
Inclusion Works for Everyone
The 2021 Female FTSE Board Report is sponsored by EY, and this year dedicates a large part of its focus to diversity and inclusion, exploring how organisations can implement initiatives to promote belonging while still valuing and encouraging the different opinions, outlooks and experiences a diverse workforce brings to the table. The authors explore what makes a truly inclusive organisation, how to value uniqueness, and the impact individual leaders can make in this area, and concludes that quality of implementation is key to making a success of inclusion initiatives.
Professor Karen Holford, Chief Executive and Vice-Chancellor of Cranfield University, said: “Every time I work with someone with a different viewpoint, my capacity and opportunity for innovation increases. Above and beyond the proven benefits for our customers, our partnerships, and our institutional success,
I know that being in a diverse group makes me better as an engineer, a leader and a person.
“I’m proud to be part of an institution that continues to focus on this kind of research, that has a real impact on businesses across the world and provides a meaningful pathway for differences to be valued.”
Alison Kay, EY’s Managing Partner for Client Service in the UK & Ireland, said: “The conclusion could be drawn that gender diversity on boards has been achieved, but it’s clear that we are far from that point and indeed there is a great deal more work to be done.
“Businesses have a responsibility to accelerate change in their own organisation, but also wider society. Tracking and measuring diversity against targets are now a bare minimum on this agenda for all companies, but
steps to uncover the invisible barriers to career progression for women and drive inclusion are the real game-changers.”