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UK's Top Boardrooms Look Set To Hit 25% Women Target

This article is more than 9 years old.

Women now make up 23.5% of non-executive director positions on the boards of Britain's top FTSE 100 listed companies. Just 17 more female appointments to these boards are needed to reach the 25% female target by end-2015 set by Lord Davies of Abersoch four years ago in his review for the UK government on the under-representation of women on boards.

"The rate of change that we have seen in FTSE 100 companies over the last four years has been remarkable. The voluntary approach is working, boards are getting fixed" Lord Davies will say at the launch of his report in London today.

“FTSE 100 boards have made enormous progress in the last four years, almost doubling female representation to just shy of 25 per cent.  We must celebrate this outstanding achievement and the change in culture that is taking hold at the heart of British business. The evidence is irrefutable: boards with a healthy female representation outperform their male-dominated rivals" Vince Cable, the UK Business Secretary who commissioned the Davies Review, will say today.

The authors of the Female FTSE Board Report 2015 - who include Professor Susan Vinnicombe CBE, Dr Ruth Sealy and Dr Elena Doldor of Cranfield University's School of Management -  say that if the appointment rate of one woman to every two men appointed is sustained over the coming months, the 25% target should indeed be met before the end of this year.

From the point of less 'groupthink' however, and in view of better corporate governance for business - which is what the gender diversity targets are meant to be all about - it is striking how different the language of the message being delivered is, if its delivery is broken down by gender. Boardrooms take note ?

"We mustn't be premature in congratulating ourselves. Yes, we should hit the target and - as Lord Davies has said, it is remarkable progress....but there are a lot of 'howevers' to consider" says Susan Vinnicombe.

The FTSE 100 has done very well with these targets. Cranfield's report reveals that 41 companies are already at 25% female representation on boards with many far exceeding it.

Leading the way in joint top place of this year's ranking, with 45% female representation, are Diageo and Intercontinental Hotels Group - both consumer-focused businesses. Admiral Group plc, the insurer has 41.7% and Capita plc and Kingfisher both have 40%, which includes two women in executive directorships on their boards.

But the FTSE 100 is  both international in its thinking, and its composition.

Looking at FTSE 250 boards, the percentage of women directors has also risen - to 18% -with 65 companies having met the 25% target.

Some 23 FTSE 250 businesses still have no women on their boards and the percentage of women holding executive directorships has actually fallen back: to 4.6%. "Not to see a pipeline coming through via the FTSE 250 for the FTSE 100 (positions)is really quite sad"  Professor Vinnicombe tells me.

"It is crucial that the momentum that has built up around this issue is maintained" she says, "especially with the support of whoever is in power after the (imminent) General Election."

A graphic from Cranfield provides good perspective.

"It will be difficult to sustain the pace of change without more ambitious and sustainable measures. Our predictions suggest that as we approach 2020, women's representation on FTSE 100 boards is likely to stagnate around 28%. There are still not enough women on executive committees or in the executive pipeline...growing the female talent pipeline needs to be high on the agenda for every board, CEO and executive committee" says Dr Elena Doldor.

For the first time, the report looks at how the UK compares to the rest of the world - and there is good reason to celebrate. Over the past decade the percentage of women on top boards has increased in every country across Europe, varying from 3.7% in Austria to 22.5% in France. The UK registered an increase of 12.6 percentage points and is now fifth in the world.

"It is pleasing to see how far we have come without the need for quotas. But the burning issue remains that not enough women are being appointed to executive director roles in the UK" says Professor Vinnicombe. There are a multiplicity of reasons, and this is one of them.

As William Shakespeare famously wrote in Hamlet: "ay, there's the rub."

Amid the celebration of progress, why should Britain care about a plateauing of female appointments on boards ?

Because, as the report puts it: "This plateauing effect is caused by the high intake of female directors immediately after the Davies Report, but not sustained ever since. What is increasingly clear is that the UK needs to ‘up its game’ as the real goal is 33% women on our boards (or 40% of NEDs being women) by 2020, as set out in the EU proposed Directive. The latter also covers companies far smaller than those listed in the FTSE 350, possibly the top 650 companies in the UK."

In other words, the danger of concentrating on hitting targets and numbers is that you do not always record the ones that fall away while you record the ones who get appointed. A true measure of changing culture would need to record both events at once, and ask why.

The EU is the main reason why Britain embarked on this 'voluntary' route to improving gender diversity in boardrooms of listed businesses: it did not want quotas.

But Germany has just passed a law making it compulsory for the country's biggest companies to appoint more women to their boards. From next year, around 100 of Germany's largest businesses must ensure 30% of their supervisory boards are women.

Norway, Denmark, The Netherlands, Spain and France have embraced quotas for gender diversity.

The European Commission is now seeking support for a 2012 directive that would oblige countries to take concrete steps to establishing a process resulting in gender equality among directors, that does not involve quotas. According to research by Cranfield, around 1000 UK companies would currently fall short of these revived EU requirements for gender diversity, which could be agreed by the end of 2015.

For the EU, the talk has been of 40% female representation on boards by 2020 for quite some time - and that is now just five years away.