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The headline progress of achieving 25% women across the boards of Britain’s biggest companies is masking a reality in which more than 60% of individual FTSE 350 companies failed to meet the target, according to a major inquiry.
The report by the Equality and Human Rights Commission says fewer than half of companies increased their female board representation over the period covered by the inquiry, while 46% of boards either remained the same or even decreased the proportion of women. Of the companies that increased the proportion of women on their boards, almost one third’s overall board size was reduced, rather than more women being appointed.
The inquiry claims to be the most detailed examination carried out into board level recruitment and appointment practices in the 350 FTSE companies. It examines the reasons why many companies have continued to fail to improve gender diversity and meet the targets set by Lord Davies.
It says outdated personal ‘old boys’ networks’ are still being used widely. Nearly a third of companies reported largely relying on the personal networks of current and recent board members to identify new candidates. Almost a third of companies using personal networks did not use any other means of advertising the post, it says.
The report states that the diversity of applicants is also potentially being limited by virtually no open advertising of board roles – just 2% of companies publicise non-executive roles on their websites, in newspapers or on social media.
The inquiry also found that job descriptions often rely on vague terms like ‘chemistry’ and ‘fit’ rather than clearly defined skills and experience, limiting the potential diversity of candidate pools and standing in the way of women’s chances of appointment.
Despite the headline progress for the Index as a whole, the inquiry highlights an ‘inexcusable and unacceptable’ variation when it comes to individual company performance. It says too few companies are taking action for improvement such as setting targets or encouraging applications from women.
For executive roles, the report says the position remains even more stark. Nearly three quarters of FTSE 100 companies and 90% of FTSE 250 companies had no female executive directors at all on their boards during the period surveyed by the Commission.
The inquiry says that, despite this, there has been progress made and welcomes the increase in the number of women in board positions. This number is now greater than ever before.
It also highlights examples of good practice, including companies assessing diversity in their board evaluations; selecting candidates based on criteria set out in role descriptions; using interviews to assess candidates fairly, consistently and objectively and ensuring their processes encouraged diverse applications. Executive search firms were setting objectives to increase the number of women in appointment exercises.
Laura Carstensen, Equality and Human Rights Commissioner said: “Despite welcome progress and vital work by Lord Davies, our top Boards still remain blatantly male and white, with inexcusable and unacceptable discrepancies between companies.
“The good work of a forward thinking minority masks that many top businesses are still only paying lip service to improving the representation of women on boards. The best companies are showing that having talented women on their boards is boosting both performance and fairness. Unfortunately the recruitment practices of too many businesses still remain trapped in permafrost and that’s holding back women and ultimately the companies themselves.
“The recruitment process to the boards of Britain’s top companies remains shadowy and opaque and is acting as a barrier to unleashing female talent. Our inquiry calls for more open, fair and transparent recruitment to tackle an alarming disparity in performance across the FTSE 350.”