UK Companies Stalling on Female Board Appointments

By Melissa J. Anderson (New York City)

UK companies aren’t moving fast enough to hire female board directors, revealed a new report released yesterday by the Cranfield School of Management. Professor Susan Vinnicombe, co-author of the report said, “Our review reveals that the number of women in board positions is beginning to creep up albeit quite slowly.”

Six months ago Lord Davies of Abersoch presented an independent report discussing the state of gender diversity in the UK’s top companies. The review suggested that firms were not doing enough to attract and retain women in top positions.

As a solution, Davies called for British companies to set targets for the percentage of women they aim to have on their boards, and recommended that FTSE 100 companies set a 25% target for women on boards by 2015.

The new review by the Cranfield School of Management showed that the percentage of women on boards has grown from 12.5% to 14.2% in 2011. And, the Financial Times notes, “Since the Davies report, women have accounted for 22.5 per cent of appointments – below the 33 per cent he recommended.”

The Cranfield review revealed that only 33 companies on the FTSE 100 are aiming for the 25% target recommend by Davies. According to the Telegraph, in fact, a full two-thirds of blue chip companies have yet to even set out their plans for getting more women on boards. Dr. Ruth Sealy, co-author of the Cranfield report, commented:

“The results from our report suggest the recommendations in Lord Davies’s review have had beneficial effects in terms of reinforcing good practice, but they also demonstrate an institutional inertia, whereby companies persist in their existing approach – or lack thereof – to gender diversity on boards. It is so important that our top companies set the standard for achieving better representation on their boards.”

In his initial report, Davies suggested that if companies fail to set targets to increase the representation of women in the boardroom, the government should enact quotas similar to those in Norway, France, and Spain. Prime Minister David Cameron is reported to be writing letters to the members of the FTSE 350 who have not set targets to encourage them to do so – before government intervention is necessary.

The Race for Global Competitiveness

Helen Wells, Director of Opportunity Now, explained that the push for women on boards is not solely an issue of civil rights. Attracting the best and brightest to serve on the UK’s top boards is a matter of global competitiveness, she said.

“Increasing diversity in the board room should 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.”

Lord Davies explained, “This is about good business practice; it is also about securing performance. You need engagement and diversity in teams to achieve success. Too many UK boards and executive teams do not have it. We are working to change that.”

One road block that some companies, such as Rolls Royce, have identified is a lack of qualified women in the pipeline – which suggests that a holistic approach to gender equality is needed, such as setting targets at the top, changing internal workplace cultures, and bringing more women in at the entry level. Emphasizing female board directors is a meaningful place to start because of the impact role models have on women at every level. Dr. Sealy said:

“It is so important that our top companies set the standard for achieving better representation on their boards. A lack of role models is one of the greatest barriers to women’s career success, because they provide a symbolic representation of the meritocracy and support within a given organisation and are evidence of the ability to progress.”

Other organizations are working to change the workplace cultures that keep women from advancing. Opportunity Now, for example, recently released a report which detailed why companies can and should invest in leaders that create inclusive workplace cultures. Wells explained, “The most powerful takeaway on this report is that inclusion is a commercial imperative… It’s about absolutely maximizing the potential of your people in a tough time.”