Report calls from more action on building the female pipeline

Voluntary targets have boosted gender diversity on UK boards, but mainly through non-executive directors rather than more women being in senior leadership positions, according to new research by Cranfield University’s School of Management.

The annual Female FTSE Board Report, sponsored by EY, finds that, although the FTSE 350 has reached its 33% target for women on boards before the December deadline set by the Hampton-Alexander Review, this has mainly been achieved through non-executive directors [NEDs]. Moreover, this is just an average – not all individual companies have reached 33%. In the FTSE 100 the percentages range fro 17% to 56%.

The percentage of non-executive directors on FTSE 100 boards is 40.8% [up from 38.9% last year], but this compares to the percentage of female executives which stands at only 13.2%, up from 10.9% in 2019. Just four CEOs were female.

Sue Vinnicombe, Professor of Women and Leadership at Cranfield University and lead author of the report, said: “This year our research establishes that it is not sufficient just to have a critical mass of women Non-Executive Directors on a board in order to increase the number of women in the executive pipeline. There need to be women in influential roles such as Executive Directors.

“The added dimension of Covid-19 means organisations must be pro-active to address the long-term impact of the pandemic on women’s careers. With more focus on flexible working and wellbeing, it is an opportunity to progress the diversity agenda.”

Speaking at the launch of the report, Professor Vinnicombe said that just having more NED women on boards is not enough to really have an impact on the female pipeline. She added that research showed that there needed to be at least two women on shortlists for women to be taken seriously. She also said that it was difficult to predict which sectors would have fewer women on boards. Supermarkets, for instance, performed quite badly, although they had many women in their workforce. What mattered, she said, was that companies were seriously committed to diversity and inclusion.

Elena Doldor, Reader in Organisational Behaviour at Queen Mary University of London, and report co-author, says voluntary targets, when implemented thoroughly and ambitiously, can bring culture change. She said: “Targets don’t threaten meritocracy, they enable it. Our research indicates that when used ambitiously and systemically, targets can unroot bias across key talent management processes and contribute to genuine culture change. For targets to become more robust, it is critical that organisations put in place accountability mechanisms for meeting their targets and address the long-term impact of the pandemic on women’s careers.”

She added that even if ambitious targets were not met they could motivate action. She said accountability was also important in all areas. Some employers linked senior management appraisals to progress on diversity, but this was not accepted practice yet. Targets and their data-driven approach had led to more scrutiny of processes with regard to their diversity impact and had forced employers to ask the right questions about their talent pipeline.

The report, which focused on the 12 months up to the 1^st June 2020, found:

• FTSE 100: the percentage of women on boards has increased from 32% to 34.5%, with 324 women holding 355 directorships.
• FTSE 250: The percentage of female directors has risen from 27.3% to 31.9%, The percentage of female NEDs is 37.6%, but the percentage of female executive directors is only 11.3%.
• There continue to be few women appointed to senior roles; there are still only five women CEOs, eight women Chairs and 21 women Senior Independent Directors in the FTSE 100.
• The number of FTSE 100 committees has risen from 295 in 2019 to 393, but the percentage of women chairing these has dropped from 31% to 29%.

The report found most organisations adopted voluntary targets because previous diversity initiatives had failed and that the targets had become relatively normalised. It says that, despite a general emphasis on realistic targets, more ambitious targets were sometimes seen as a way of mobilising organisations into action, even when they are not fully met. The trend was a target of 30%-40% women in senior leadership roles.

It also highlighted the need for organisations to address more proactively the long-term effects of the coronavirus pandemic on the pipeline of female talent by taking tangible actions to buffer the disproportionate impact the lockdown has had on women’s careers.

In the discussion after the launch of the report, issues that were raised included the need for those in positions of influence to take proactive action, to share data across sectors and internally between different business units, the importance of data, data analysis, reporting and creating long-term maps for improvement to back up target setting, the need for HR systems to have self identification metrics, from gender and ethnicity to age and sexuality, supported by a transparent, inclusive culture which foregrounds trust and a concern about the diversity of the pool of women who are NEDs.

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