Written By: Sinead Moore 1/2/16
The UK’s largest companies are appointing more women as non-executive directors (NEDs) but failing to improve diversity in leading director roles, a report found
The report from the Quoted Companies Alliance, Norman Broadbent and BDO revealed that although there is more female representation on boards, few women are actually leading their companies in executive director roles.
Over a quarter of board level directors in FTSE 100 companies are now women and there are no all male boards left on the FTSE 100, the report found.
However, the number of women holding executive director positions in FTSE 100 companies is much lower at 9.43% and lower again in FTSE 250 companies at 4.98%.
Women represent 12.36% of all quoted company directors.
The report also revealed that the majority of chairs are men. Only 3.06% of FTSE 100 chairs and only 4.39% of FTSE 250 chairs are women.
The number of non-executive directors on FTSE 100 boards has increased by 7.5% in the last five years while the number of executive directors has decreased almost 20%. There are currently over three NEDs per executive director on FTSE 100 boards.
In 2015, almost a third of all FTSE 100 NEDs and a quarter of FTSE 250 NEDs were women.
The report questions whether the increase in NEDs is “a response of companies’ determination to meet government gender targets through appointing more female non-executive directors.”
The report revealed that women are best represented on company boards as remuneration committee chairs. Holding 15.2% of all remuneration committee chair positions.
CBI director-general Carolyn Fairbairn spoke out about the need for more women leaders, not just women on boards, during her first keynote speech on diversity last week.
Fairbairn acknowledged and applauded that the target of 25% of board positions held by women, set by Lord Davies, was met last year but called for more women in executive roles – “the sleeves-rolled-up leaders in our society”.
She added that less than 10% of the executive leaders of our top companies are women and highlighted the differences between NEDs and executive directors.
“Non-executive directors and even chairmen are part-time. They attend between 4 and 10 board meetings a year. They approve strategy, are guardians of values, challenge decisions and help manage risk. These are very important roles.
“But they are not running organisations on a day-to-day basis,” she pointed out.
“They are not hiring most of the people, taking daily decisions, shaping and defining strategy, forming cultures and habits through their everyday choices and the examples they set.”
She added, “We just don’t have enough women who are executive leaders in the UK.”
“We don’t have enough women running things.”
According to Fairbairn, there are just nine more female directors on FTSE350 boards today than in 2010 and the number of female chief executives in the FTSE 100 remains the same as five years ago.
“Let’s not fool ourselves that the boardroom victory will somehow lead inevitably to victory at the management level. It won’t,” she said.
“In my view, the countries that work out how to bring the extraordinary untapped wealth of female talent into their leadership teams – in business, politics, the arts, everywhere – will have a real competitive advantage,” Fairbairn said.
“There’s no doubt in my mind that developing more women leaders will make a real difference to the success of the UK economy, our productivity and the UK’s future place in the world.”
Fairbairn believes the UK business world isn’t changing fast enough. “Too much of UK business is still geared up for men, in terms of its social habits, its small talk, its clubbiness,” she said.
She suggested a new voluntary target of 25% female senior executives in major UK companies to increase the number of women who are actively running businesses, and not just sitting on boards.
“The success of Davies shows us just what can be done through sheer energy and commitment, and the clarity of a target. And how important it is that it is not compulsory.”
“Voluntary, business-led targets can inspire firms to see diversity as an opportunity and find the right answers for their sector,” she added.
New research by McKinsey claims tackling gender equality could add $12trn to the world economy.
“The issue of women on boards is both a social issue and one which has the capability to improve the financial performance of companies. And promises of improved profitability should be enough to whet the diversity appetite of boards which have yet to tackle the issue,” the report said.