One Year After the Davies Review: Progress for Women in the Boardroom

By Melissa J. Anderson (New York City)

This week marks the one-year anniversary of the report by Lord Davies of Abersoch on women in the UK boardroom, which argued that companies should take action now to increase the number of female board directors. The report called for a target of 25% women on boards by 2015. In order to do this, it suggested, 33% of board appointments would have to go to women over the next year. The Davies report catapulted the issue of boardroom gender diversity into public discourse and for the past year, companies have been urged to diversify their table of power.

This week Lord Davies released “One Year On,” a review of progress made over the past year, in conjunction with Cranfield School of Management’s annual “Female FTSE Board Report,” revealing that many UK companies have stepped up to the challenge.  Davies wrote:

“In the three years prior to my report the number of women on boards had effectively plateaued, stalling at less than a single percentage-point rise year-on-year. Over the past year, however, we have seen the biggest-ever reported increase in the percentage of women on boards.”

Research produced over the past year had shown that companies were not making progress fast enough to meet Davies’ 2015 target – but a twist in the data indicates that the UK may just meet that goal. He added, “…should we maintain this momentum we would see a record 26.7% female board representation by 2015. This is great news, and demonstrates how a voluntary business-led approach can work.”

Increasing Momentum?

According to Davies and Cranfield, within the FTSE 100, women hold 15.6% of all directorships (compared with 12.5% last year) and accounted for 47 board appointments this year (27% up from 13%). Last year there were 21 all-male boards in the FTSE 100, and this year, there are only 11 left.

The numbers aren’t quite as encouraging for the FTSE 250, but still positive. Women hold 9.6% of all directorships (compared with 7.8% last year) and 26% of all appointments went to women. Nevertheless, 112 FTSE 250 companies still have all-male boards.

While the numbers fall short of the 33% of board appointments Davies suggested for this year in order for companies to achieve the 2015 goal, a surprising bit of data is revealing a trend toward upward momentum that may propel companies forward even faster. According to the Cranfield report, the sharp increase in general board turnover this year means that companies may reach the Davies target sooner than expected. The Cranfield report explains:

“Interestingly, over and above the increase in the percentage of new appointments going to women, in the year to January 2012 there has been an increase in the turnover of board seats, which now stands at 17.5%, which will, of course, also affect the pace of change. In the original model shown in the Davies Report, with a predicted turnover of 14%, a male/female split in new appointments of two thirds/one third was going to produce 50 new women directorships in the following year. In the year to January 2012, 47 new appointments were taken by women, so this is almost on the target of 50 and a substantial turnaround of behaviour from those involved in the appointment process.”

If turnover increases at the same rate, companies will surpass the original goal, reaching 26.7% by 2015.

On the other hand, the corporate response to one of Davies’ key recommendations does give cause for concern. Last year’s Davies review recommended that companies publicly set their own targets for achieving better gender diversity – and, this year’s report noted, only 34 companies on the FTSE 100 (and 38 FTSE 250 companies) did so.

While some companies avoided making plans because they felt they were already on track to meet the 25% target set by Davies, it’s also likely that many did not want to put down numbers they may ultimately be held accountable for. This lack of transparency and action may mean that companies are only waiting for the hubbub about gender diversity to die down before reverting back to business as usual.

The Pipeline for Director Talent

The other area for improvement that the report highlighted was the need to keep a continued focus on the pipeline – the acquisition, development, and retention of female talent through the ranks to the top. By measuring progress accurately and keenly focusing on the development of female talent, companies can be more successful at promoting talented women. The Cranfield report explained:

“Many companies seem to struggle to identify the women they employ at junior, middle and senior levels! Others vary dramatically in the numbers of women at senior executive level. It is clear now that many major corporations are successful at attracting women at entry level, at developing them and retaining them after maternity leaves, but are still spectacularly unsuccessful at promoting them to executive level. Like many other researchers, we have written about the importance of social capital and the link between ‘old boys’ networks, power and promotion to the top. It is surely time that management takes this research more seriously.”

While gender diversity is still an uphill battle in many companies, these two reports show that, by and large, many UK firms are trying. What’s important is that companies don’t focus solely on the top layer of talent to meet these goals, but also focus on developing women at every rank.

As Helen Wells, director of Opportunity Now, commented, “We still have a big mountain to climb – women make up 49% of the labour market but men hold 84.9% of executive board positions.”

By finding and implementing solutions the work/life issues and unconscious biases that are often the culprits behind women’s slow progress toward parity, we’ll all benefit in the long run.