Report highlights lack of skills and expertise diversity in top boardrooms

A new report shows continued progress on women on boards, although only 10% of executive board directors are women as it seeks to shine a spotlight on the lack of skills diversity in top executive roles.

woman presenting at board meeting

 

While the number of women on FTSE All-Share boards has continued to rise this year, there continues to be little gender diversity in executive roles, in part due to the lack of skills and diversity of expertise among FTSE All-Share executive board members – both male and female, according to a new report.

New data from Women on Boards UK and consulting firm Protiviti reveals that just 2.3% of executive board members (men and women) hold positions other than CEO, CFO or Company Secretary and only 10% of executive board directors are women.

The Hidden Talent: Diversity & Inclusion in the FTSE All-Share report monitors the gender representation on over 1,000 FTSE All-Share and AIM listed boards. This year is the first time it has looked at the mix of skills and expertise of executives called on to join the board.

The report says only eighty-one (2.3%) executive members across almost 4,800 executive board seats hold positions outside of CEO, CFO or Company Secretary. Furthermore, within this small group of individuals, the report found a further concentration of expertise. The majority of these executives held positions focused on operational efficiency, with 68% either being Chief Operating Officer or Chief Technology Officer. The remainder of roles (less than 30 across almost 600 firms) include Employee Representative; General Counsel (senior legal adviser); Chief Information Officer; Chief Strategy Officer; and Chief People Officer.

Fiona Hathorn, CEO and co-founder of Women on Boards, says: “The responsibilities of the board have continued to evolve over the past decade and yet the focus remains on traditional skill sets such as finance, operations and CEO experience. Skills such as social responsibility, human resources or marketing, show negligible presence in the boardroom. Traditional skills and leadership experience are, of course, desirable but companies must take a more holistic view and ensure an optimal mix of expertise to navigate the changing business landscape. It’s time to redefine “board-ready talent” and by doing so we believe we will also see improvements on diversity targets for gender and ethnicity representation in the boardroom.”

One form of expertise missing is HR, where 60% of the profession is female, although women only account for 39% of senior roles. This compares to just 4.8% of women in FTSE 250 companies who are CEOs. According to the report there are just two executive board members across the FTSE All-Share who have a human resources or people and culture job title. This is despite polling showing a majority of board members think people and culture is a ‘top level’ area for their boards and a ‘significant’ issue. Yet only 27% of board members surveyed said they draw on specialist HR expertise and 40% state that the quality of people and culture discussions were ‘weaker’ or ‘much weaker’ than other topics.

Janet Barberis, Managing Director at Protiviti adds, “Boards today now know how important it is to consider their people and to consciously create a culture that engages them. Driving cultural change within an organisation is complex and requires significant professional skills and experience to achieve. To do so, companies need to look beyond the typical pool of CEOs or CFOs, opening their boardrooms to people with different areas of expertise, including human resources and people and culture.”

The report found that the proportion of women holding boardroom roles across FTSE 350 companies has risen from 9.5% in 2011 to 40.2% in 2023 and that the number of FTSE 350 All-Share companies not achieving a target of 33% women on boards has fallen from 48% in 2021 to 16% in 2023. The FTSE Women Leaders Review has set a goal for 40% female representation and have said that one of the four most influential roles should be held by a woman – these roles are CEO, CFO, SID or Chair. Women on Boards says 19% FTSE 100 do not meet these targets, rising to 36% FTSE 250, 41% FTSE All-Share ex350 and 73% among Alternative Investment Market (AIM) listed companies.

Fiona Hathorn adds: “Since we started these reports three years ago, we’re pleased with the progress made on women non-executive directors outside of the FTSE 350 but just having women in NED roles is not sufficient to have an impact on the executive pipeline. This report is an opportunity for our largest listed companies, FTSE All-Share and AIM to take action and make meaningful changes that will help to transform their business for the better.”



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