New Class of First Time UK Board Directors: More Diverse, Less Experienced

By Melissa J. Anderson (New York City)

A new Korn / Ferry Institute study shows that first time board-appointees in the UK are getting younger and are more likely to be female than ever before. According to the report, 47 percent of first-time directors in the FTSE 350 last year were women. That’s a huge leap from just 2007, when a miniscule 11 percent of first-time appointees were female.

On average, last year’s class of first-time appointees was 52.6, four years younger than the average for all appointments to the FTSE 350 in the year. It’s a year younger than the 2007 class of first-time appointees.

In fact, the report authors, there’s more than demographic diversification taking place. UK director positions are also opening up to people in roles outside the traditional commercial background to people with human resources, marketing, and legal expertise. Additionally, first-time appointees were more likely to have international experience, with more than half having lived or worked abroad.

The downside to all this diversity amongst non-executive directors (NEDs), the report says, is less executive director experience.

Fresh Perspectives

The vast increase in the percentage of female first-time appointees can be attributed to the push from the public to promote more women to leadership positions. In particular, the push for more women on boards can be attributed to the Lord Davies report, published in 2008, which called for companies in the FTSE 100 to increase their proportion of women board directors to 25 percent by 2015. Groups like the 30% Club have also led the charge to increase the gender diversity on boards.

It’s likely that at least some of the other diversity factors within last year’s class of first-time board appointees were been driven by the need for companies to reach beyond their traditional circles to find women to fill these positions. Korn / Ferry indicates that the gender and age factors may be linked to some extent. But as for the other areas of diversification, it may simply be a case of the UK’s biggest companies realizing they need new views and broader areas of expertise in order to stay competitive. The report says:

“Analysis of NED appointment trends in 2012 makes it clear that companies are increasingly looking to refresh their boards by adding more diverse talent among NEDs. Whether this diversity is through discipline, gender, nationality or knowledge of the internet economy, it is both broadening the skill base of FTSE 350 boards and driving the age of board directors down.”

Nevertheless, this diversification does come at a cost, Korn / Ferry says. The 2007 sample of first-time directors had significantly more people with executive-director experience. “In 2007, 46 percent of first-time NED appointees had executive director experience gained on a quoted company board, including 24 percent with a FTSE 350 company. This dropped to 29 percent among The Class of 2012, and only 11 percent with a FTSE 350 company.”

Tips for Getting on a Board

The report provides a few suggestions for women who are interested in NED roles. First of all, it seems that international experience is becoming much more important than it was in previous years. Over half (54 percent) of first-time appointees had worked or lived abroad, while in 2007, only 43 percent had international experience. “The upward shift is particularly clear in the banking sector, where four in five of the first-time NEDs had international experience, perhaps reflecting a need for local market experience on the boards of multinational financial institutions,” Korn / Ferry says.

Additionally, the report suggests that a P&L management background can be particularly useful for women who want to secure their first board appointment.

“Whilst finance is a well-represented discipline among women in The Class of 2012, comprising 17.5 percent of female first-time appointments, women were more likely to have come from a P&L management background (20 percent). The incidence of strategy and consulting backgrounds was also much higher among women (13 percent) than men (8 percent), suggesting that boards are increasingly looking to commercial directors or strategy consultants in addition to finance professionals as a source of female board talent.”

The report also notes that networking is also an important factor in getting on a UK board. “Interestingly, 15 percent took on the NED role because of an existing relationship with the Chairman or other board member, which implies that networks remain an important route to securing a board position.”

That’s supported by another key piece of information revealed by the report: over half of first-time appointees said they saw their first directorship as just one step in their career. “Of the new NEDs, 53 percent saw this first FTSE 350 appointment as an important step in the development of a plural career. Additionally, 58 percent saw a NED role as a way to broaden their business understanding – particularly through exposure to an international business environment and different corporate strategies – and thereby improve their executive career options.”

First-time board appointees clearly see directorship as way to meet people and gain career experience. Hopefully boards will remain open to a more diverse view of who a business leader can be moving forward.