Only 9% of board members of top companies are women

Women make up just 9% of all board members in FTSE 350 companies, up only 4% in 10 years, according to the latest Board Structure and Non-executive Directors’ Fees report from Deloitte, the business advisory firm. 

Women make up just 9% of all board members in FTSE 350 companies, up only 4% in 10 years, according to the latest Board Structure and Non-executive Directors’ Fees report from Deloitte, the business advisory firm. 

At the time the data for the report was compiled, 13% of board members in FTSE 100 companies were female and 7% in FTSE 250 companies, the majority holding non-executive positions. 

Just 5% of executive board members are female, compared with 12% non-executive and almost half of all FTSE 350 companies have no female board members. 

The report found this varies quite significantly by company size: 20% of FTSE 100 companies have no female representation on the board, compared with 55% of FTSE 250 companies.

Carol Arrowsmith, partner in the remuneration team at Deloitte, said: “The number of companies where there are no female board members is quite shocking.  It is of particular concern that the proportion of women on boards has only increased from 5% to 9% in 10 years.  At this rate, it would take 30 years to reach the position of 30% female board representation, which is the aim of the 30% Club [a group of businesses who are pushing for greater representation of women at board level].

“There is a wealth of research which demonstrates companies with women in senior positions perform better.  Where organisations invest in the development of women, the results can be both profound and dramatic.  The 30% Club aims to motivate and support chairmen to promote more women to their board.  This is not about political correctness, but improving board effectiveness and business performance.”

There have been various moves since the publication of the Lord Davies' review on boardroom diversity in February. For instance, Department for Business, Innovation and Skills has just released a consultation document on the changes to narrative reporting proposing that companies are required to disclose the proportion of women on the board and the proportion of women in the whole organisation. 

The Association of British Insurers (ABI) has also recently published guidance for companies on board effectiveness which focuses, among other things, on board diversity and signals that this is an area where shareholders want to see greater progress.

Deloitte says there are signs that the current focus being given to this issue is having an effect.  Of the 250 board appointments made in FTSE 350 companies (excluding investment trusts) since the publication of Lord Davies’ report, almost one in five was a women.  Just under a quarter of non-executives appointed were women and around 10% to executive positions.

Arrowsmith said: “While we would have liked to have seen more significant change over the past 10 years, this response is very encouraging and hopefully signals this initiative is going to have a significant impact. 

“Many non-executive directors recruited to the boards of large companies are, or have been, executive directors in other companies.  It is vitally important that we focus on the pipeline below board level and ensure that women have the knowledge, contacts and experience necessary to move into senior executive and board level positions.  We also need to acknowledge that women who have the capability to take non-executive positions may need specific support to build knowledge and understanding of board dynamics and the challenges they may face as women when moving into a board position.

“The massive growth of women as consumers means that we need the perspective of both men and women on the boards of UK companies and I absolutely believe that it can only benefit companies to make better use of the talents of a large proportion of their workforce and that it can, and will, improve performance.”

Deloitte says that over the past 10 years, there has been a significant increase in the number of non-executive directors appointed to the boards of FTSE 350 companies.  In 2001, there were broadly equal numbers of executive and non-executive directors on the boards of FTSE 350 companies.  In 2011, there are twice as many non-executives as executives. Deloitte says the time required to perform these roles effectively has also increased and there is still discussion about whether the level of time commitment is sufficient, particularly when a company is facing difficulties.

Arrowsmith said: “Our research suggests although the number of board and committee meetings tends not to change from year to year, the amount of time spent preparing for them has substantially increased.  Our discussions with non-executive directors suggest the time they commit to a given role has increased in the region of 30% to 50%.”

“This has two potential consequences.  Firstly, many non-executive directors do not feel fee levels have kept pace with the increased time requirement.  Second, non-executive directors are likely to take on fewer roles, forcing companies to look to a wider pool of talent.  Our discussions with non-executive directors suggest fee levels are an area companies may need to address.  Almost half of those responding to a recent survey consider this issue could prevent them accepting a position.”

Typically, says Deloitte, non-executive fees are not reviewed every year, but in many companies, fee reviews have been further postponed.  It points to an analysis of fee levels which shows more than three quarters of non-executive directors received no increase in 2009 and over half received no increase in 2010.  It says that in 2011, more than half the non-executive directors in FTSE 350 companies have received, or will receive, a fee increase, with a median of 3%.  However, it adds, fee increases in FTSE 100 companies overall have increased by only around 2% in the last three years and by around 7% in FTSE 250 companies.  





Post a comment

Your email address will not be published. Required fields are marked *