U.K. Hails Gender Diversity Numbers As FTSE 100 Nudges Towards 40% Women On Boards

In a week when the U.K. government is counting its successes, and the economic data shows business activity expanding at its fastest pace for eight months amid the taming of Omnicron, there is good reason to cheer the news that almost 40% of FTSE 100 board positions are now held by women. But although there is joy in any and all celebration as pandemic survivors, it is worth looking closely at the granular realities of the achievement. This is especially true if the original intent of the ‘women on boards’ drive was diversity and inclusion for all women in their progression to leadership roles.

It has not been easy to get to a near 40% of women in non-executive roles in the FTSE 100 boardrooms. The FTSE-250 has posed (and still poses) a much greater challenge than the FTSE 100. Board Talk knows that, as it was launched around the U.K. government drive headed by Mervyn Davies in 2010 to boost the numbers of women in the boardroom. It learnt very quickly that ‘carrot and stick’ can work in the U.K, but culture change is incredibly difficult to achieve.

There have been many unsung heroines and lauded heroes along the way to this success. There has also been Brexit and a pandemic en route to distract British business from the need for diversity and inclusion as an essential part of better corporate governance, productive business and a dynamic, reflective relationship between business and society.

The Government-backed FTSE Women Leaders Review (formerly the Davies review and the Hampton-Alexander Review), led by an indefatigable CEO in Denise Wilson, today published data it describes as demonstrating “a major sea-change in attitudes to getting women leaders to the top table of business in the United Kingdom.”

It does not, however, have any breakdown of the new appointments by representation - race, ethnicity and social class amidst the broad category of gender. There are also many companies yet to hit the former 33% gender target set by the Hampton Alexander Review, a reality acknowledged by Kwasi Karteng, British business secretary, as he hailed the achievements.

Women on Boards, United Kingdom 2022 via FTSE Women Leaders Review, London, February 2022

While we celebrate the progress on the rankings - the Boardex 2021 data below shows the global picture before Britain’s leapfrogging exercise -the U.K. Business Secretary is clear on the work yet needing to be done.

Image via Boardex, Global Gender Balance Report 2021.

“There are over 700 more women in Leadership roles in the FTSE 350 companies this year, increasing women’s representation to 31.5%………while there has been remarkable progress at boardroom level, the report also shines a light on areas where there is still more to do. For example, only one in three Leadership roles and around 25% of all Executive Committee roles are held by women and there are very few women in the CEO role” said Kwasi Karteng.

FTSE Women Leaders has lost no time in setting out new recommendations “to firmly shift focus in this next phase to women in leadership roles at the top of the organisation.”

New targets set to achieve that goal:

• A voluntary target of a minimum of 40% of women’s representation by the end of 2025 for FTSE 350 boards and leadership teams.

• At least one woman in the Chair, Senior Independent Director role on the board and /or one woman in the CEO/Finance Director role by end 2025 for FTSE 350 companies

• An extension of the scope of the FTSE Women leaders review beyond FTSE 350 companies to include the largest 50 private companies in the U.K. by sales.

Meanwhile, in recent weeks there has been a rising tide of voices on the need for a strong focus on better diversity and inclusion in Britain as we come out of the pandemic to build back better. Social background and class remains a major barrier to progression, as research from the Chartered Management Institute (CMI) shows, and yet it is not high on the diversity agenda of many organisations.

“There is so much talk about levelling up when it comes to place. But really, what we need is levelling up when it comes to people” said Ann Francke, its CEO, recently, talking about Britain’s boardrooms. The CMI has called on the government to bring in mandatory reporting of employees’ socio-economic background, just as they are required to report on gender diversity.

On race and ethnicity too, there is little data and disclosure, while we still await the government response to the 2018 consultation on mandatory ethnicity pay reporting. The Parker Review of 2016 aimed to improve race and ethnicity in boardrooms but stalled on its targets before being updated last year. It is expected to report on progress in the next few weeks. The Spencer Stuart 2021 UK Board Index provides valuable insights on ethnic diversity in boardrooms.

Given its success, it is a shame that the U.K.’s drive for better gender diversity in its boardrooms did not approach gender representation as part of a larger drive towards inclusion in the first place, rather than adopting an ‘add-on’ approach to race, ethnicity, and other factors that would broaden the focus from an established recruiting pool. If it had, it might have avoided the entrenched ‘groupthink’ that has repeatedly been highlighted after failures of corporate governance have hit the media headlines.

In an opinion piece around shareholder capitalism published in the Financial Times this week, Geoffrey Owen, a former FT editor now with the think-tank Policy Exchange wrote : “If companies want to retain a loyal and committed workforce, they need to demonstrate that their values are aligned with those of their employees.”

Board Talk would like to piggy-back on that thought to say that they also need to demonstrate that they are truly representative of their employees and stakeholders, and reflect those fundamental (ESG) values in their boardrooms. That would mean looking at gender diversity targets through a much broader wide-angle lens better suited for 2022 to include race, ethnicity, and social class as all a part of the whole, instead of treating each factor apart, and so inevitably resulting in incremental progress.

But today’s news represents a huge achievement for all who have been involved in a determined drive over the past decade. New Chairs for the FTSE Women Leaders Review will shortly be appointed by the government, and the corporate sponsors for the next phase of four years are KPMG UK and Lloyds Banking Group.

Main image credit: Nic Low on Unsplash.