Is the voluntary approach to boardroom gender diversity working?

Anna Scott

Two reports into the presence of women in UK boardrooms have been published this week.

Lord Davies’ annual update into the progress of gender diversity on company boards on behalf of the Department for Business, Innovation and Skills found that women now account for just over 20% of board positions in the FTSE 100. That equates to 231 out of 1,117 board positions.

This figure is up from 12.5% in 2011 and 17.3% in 2013, and of this, women account for 25.5% of non-exec directorships and 6.9% of executive directorships. Two organisations still have entirely male boards: mining companies Glencore Xstrata and Antofagasta.

Cranfield School of Management released its 2014 Cranfield Female FTSE Board report at the same time, which ranks companies according to the female presence on their boards. In joint top place in 2014, with 44.4% female representation on their boards are Capita and Diageo. New FTSE 100 member Royal Mail comes third, with 36.4% of women on its board.

If the rate of female appointments to FTSE 100 boards continues as it has done over the last six months, the target set by Lord Davies in 2011 that a quarter of boards will be female by 2015 looks like being reached.

As far as the government is concerned, this is proof that the voluntary approach to increasing diversity at the top is working. According to Davies, “Companies have got the message that better balanced boards bring real business benefits. We are finally seeing a culture change taking place at the heart of British business.”

Unsurprisingly, business associations from the CBI to the REC, agree that a mandatory quota for female board members will be damaging for industry. Recruiter Robert Half points to the fact that it should be the best person for the job appointed to any senior position.

There is a wealth of female candidates for board level positions, but they are simply not being promoted, says Professor Susan Vinnicombe, author of the Cranfield Report. So a deep cultural change is needed to manage a “female talent pipeline”. This includes search firms playing their role in considering women outside the corporate sector, and FTSE companies increasing the numbers of women at senior executive level, one rung down from the board.

Chairmen must review the tenure of their non-executive directors, who should not have their seats for more than nine years. FTSE companies could consider increasing the size of the boards to appoint more women. Mentors and sponsors need to be able to act as advocates for female high performers. Performance targets linked to remuneration should be introduced in order to hold leaders accountable to appointing more women to the board.

Minister for women and equalities, Maria Miller, says that women don’t need special treatment, just a level playing field. But creating this level playing field is an enormous hurdle to overcome in what is ultimately a patriarchal corporate world.

It is unlikely that any government would bring in female boardroom quotas, but gender diversity at the top has become such big business for corporations that it will be interesting to see how many bring in such transparent performance measures.