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Progress in appointing women to board-level roles has slowed, according to a new report from Cranfield School of Management.
The latest report from the Cranfield International Centre for Women Leaders shows that in the first six months since the last report in March 2012, the pace of change was “extremely encouraging” with 44% of new FTSE 100 board appointments going to women and 36% on FTSE 250 companies. However, those high levels were short-lived, it says, and over the past six months they have dropped to 26% and 29% respectively, showing a considerable gap from the 33% required to reach Lord Davies’ recommendation of 25% women on boards by 2015.
There are now 194 female-held directorships in 93 of the FTSE 100 boardrooms (held by 169 women) which equates to 17.3%, a slight increase on last year’s figure of 15%. The number of FTSE 100 companies with all-male boards has now dropped to seven and two thirds (67%) of the FTSE 100 have more than one woman on their board.
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Dr Ruth Sealy from Cranfield School of Management, co-author of the report, said: “Lord Davies’ target for FTSE 100 companies is still in sight, but only if the rate of new appointments going to women regains momentum promptly. Only a quarter (25%) of FTSE 100 companies have already achieved the target and the drop in the last six months is worrying.”
Top of this year’s ranking is Burberry with three women directors out of eight (37.5% of the board). It is the only FTSE 100 company that has two female executive directors, with both the Chief Executive and Chief Financial Officer roles held by women. In second place is Diageo with four women directors out of 11 (36.4% of the board). In joint third place are Capita, GlaxoSmithKline and Standard Life, each with 33.3% of their boards being female.
The report’s authors predict that if the FTSE 100 companies regain the momentum they achieved in the first half of last year, with one third of all new appointments going to women, then the target of 25% female FTSE 100 board directors should be met in 2015.
The report says there are positive signs from the FTSE 250 companies, with 13.3% women on boards (up from 9.4%). Seventy-three per cent (183 companies) now have women in their boardrooms, a substantial increase from last year’s figure of 54%, it adds.
Cranfield School of Management has appealed to Chairmen, Chief Executives, Executive Search Firms, the Government, investors and women to stay focused in order to drive the changes that are needed to prevent enforced quotas.
Professor Susan Vinnicombe OBE, co-author of the report, said: “At Cranfield we have stood steadfast against quotas on the basis that Chairmen must understand the benefits of gender diversity and commit to achieving it. Undoubtedly a number of Chairmen do get it and see a gender balanced board as the ‘new normal’. Unfortunately too many Chairmen choose to ignore the issue in the false hope that it will go away. Viviane Reding’s demanding legislation is on its way and it goes far beyond Lord Davies’ recommendations. It is becoming a matter of urgency for those companies that do not have a gender balanced board to let go of their board stereotypes and appoint more creatively.”
The 2013 Cranfield Female FTSE board report includes analysis of the 48 women who took up new directorships on FTSE 100 boards. Of the 48, 31 women had no prior FTSE 350 board experience. However, with the exception of the two Executive Director appointments, almost all the women had held board seats in other major companies, often on foreign listings such as S&P, ASX, or on other UK listings.
Dr Sealy added: “This evidence counters any suggestions that chairmen are placing inexperienced women on their boards. However, it is disappointing to see that women from outside the ‘corporate mainstream’, including entrepreneurs, academics and civil servants are still not being considered for FTSE board positions.”
The 2013 report shows that the executive pipeline remains a challenge, particularly for Executive Director positions. Women currently hold 21.8% of FTSE 100 Non-Executive Directorships and only 5.8% of Executive Directorships. Whilst in the FTSE 250, women hold 16.6% of Non-Executive and only 5.4% of Executive Directorships. This means there are only 18 female FTSE 100 Executive Directors compared to 292 males, and just 32 female FTSE 250 Executive Directors compared to 558 males.
Further analysis shows a drop in the number of women on FTSE 100 Executive Committees, from 18.1% (in 2009) to 15.3% today. “It is therefore not surprising that no progress is being made in the number of women holding Executive Directorships,” said Professor Vinnicombe. She added: “Despite women dominating the fields of Human Resources, Law and Marketing, this is not reflected at Executive Director level, where the positions are still going to men, who are being promoted internally over experienced female candidates.”
The Cranfield study revealed that only 48% of FTSE 100 female Executive Directors were internally promoted, compared to 62% for men. The report concludes that this “significant bias” is forcing women to seek promotion outside of the FTSE companies and in order for this to stop CEOs must review their talent management strategies.
Business Secretary Vince Cable said: “The argument for more women in our boardrooms is clear – they bring fresh perspectives and ideas, talent and broader experience which leads to better decision-making. This is not just about equality at the top of our companies. It is about good business sense.
“Some progress has been made in the last three years. Today 94 of the FTSE 100 companies count women on their boards as do over two thirds of all FTSE 350 companies. However, the momentum appears to be slowing and there has been much less progress in executive appointments at the top.
“Government continues to believe that a voluntary-led approach is the best way forward. But today’s report also serves as a timely reminder to business that quotas are still a real possibility if we not meet the target 25% of women on boards of FTSE companies by 2015.”
The report includes a list of ‘100 women to watch’. The authors have identified 100 women who are currently on the Executive Committees of FTSE 350 companies or in significant roles of other major institutions, who are ready for a board position and should be considered by search consultancies and nomination committees. Seven of the women identified in their 2012 list have now gained a FTSE 350 board position.