Census of UK Women Board Directors Reveals Seniority Differences

By Melissa J. Anderson (New York City)

Ever since Lord Davies of Abersoch released his 2011 report on the shockingly low representation of women on UK boards of directors – 12.5 percent of FTSE 100 directors in 2010 – companies have ramped up their efforts to attract women to these posts. The report recommended that FTSE 100 boards work toward achieving 25 percent representation by 2015. Today about 17.3 percent of director positions are held by women in the FTSE 100 and about 13.2 percent of director positions in the FTSE 250 are held by women.

Initially, companies complained that there certainly weren’t enough qualified women to expand the percentage of women directors. But, a new survey [PDF] by the Ashton Partnership, an executive search firm, shows that boards have found plenty of women non executive directors by broadening their search parameters. Even still, if they are to meet the 25 percent goal in the next three years, they will have to ramp up their search for female directors even more.

According to report authors Nick Aitchison and Bibi Boas write, “In order to pinpoint the talent pool for the next wave of female FTSE 250 NED appointments, The Ashton Partnership set out to understand the earlier Executive career backgrounds of the 183 women appointed by the end of 2012 as NEDs on FTSE 250 Boards.”

Aitchison and Boas found two key differences in the men and women NEDs – and both of them point to the root of the issue. There are fewer women in the pool of executive roles from which NEDs are traditionally found. The result is that companies are looking at a more diverse field of talent for their directors, and given the state of group-think and rubber stamping of risky behavior that contributed to the recent economic crisis, that can’t be a bad thing.

Wider Pool of Talent

TAP discovered several differences between female and male NEDs, but they boiled down to two key areas: career background and board experience.

Compared to the male directors of the FTSE 250, female non-executive directors were appointed to their first board when they were five years younger. They are also more likely to be a divisional or regional CEO or MD – “one step below main board,” TAP explained. As a result, women were slightly less senior than the men. Almost two-thirds (60 percent) of male directors were group CEOs or CFOs, while only 16 percent of female directors had this traditional background. Just over half (54 percent) of female directors in the FTSE 250 had senior private sector leadership roles (usually as a divisional or regional CEO or managing director).

Aitchison and Boas write, “This suggests that significant leadership experience – whether at CEO level or one rung below – remains the most sought-after background when appointing NEDs of either gender.”

Women were also more likely to have come from the public sector, but even still, this wasn’t a common talent source – only 9 percent of the female NEDs had this background, compared with 3 percent of male NEDs. In fact, about half of both women and men NEDs (50 percent and 47 percent, respectively) had come from listed companies, where as 41 percent of women and 50 percent of men worked at privately held companies. The authors add, “further analysis suggests the percentage [of men] from a listed company background is inflated by a relatively high proportion of male NEDs from nonlisted Financial Services or Professional Services firms serving on the Boards of the 35 or so Investment Trusts within the FTSE 250.”

Second, TAP tackled board experience. Aitchison and Boas write, “Given the (clearly erroneous) view sometimes expressed that ‘you can’t get onto someone else’s Board until you have been on your own’, we wanted to know whether the FTSE 250 female NEDs had first served as Executive Directors on their own Main Boards.”

Less than a third of women (27 percent) had served on their own Main Board, while 63 percent of men had. Again, this is likely related to the younger age and experience of female NEDs.

Aitchison says the seniority differences haven’t caused any loss in quality. “Our latest Women on Boards research rejects the traditional misconception that there is a limited talent pool of women for NED roles. Boards are spreading the net more widely and, refreshingly, are appointing from a broader range of career backgrounds, without any obvious loss of quality.”

It remains to be seen what impact, if any, the seniority differences may have on inter-board relations between male and female NEDs. The study also points to the lack of women in Group CEO and CFO roles – if more women were hired for these jobs, we wouldn’t see that age and experience disparity.