Why are there so few women board directors at our top companies?
8 FTSE 100 companies still have no female board members, a Lords Inquiry heard last week.
Figures released earlier this year indicate that nearly 16% of FTSE 100 Board members are now women. This might sound very low but it is actually a tiny increase from 12.5% last year. The target for FTSE 100 companies is to aim for a minimum of 25% of female board representation by 2015 with one-third of new appointments being women. Even this target has come in for substantial criticism for its lack of ambition. After all, women compose 51% of the UK population, yet only half of that is the gender diversity target.
Women have long been highly qualified leaders in many fields. We make up almost half of the UK workforce operating in a range of technical, professional, commercial and administrative roles. So why don’t we make it to the Boardroom?
If the goal is real gender equality in the workplace and in wider society then we need to see women taking up the most senior positions. This may require a change in mindset and behaviour by existing Board members but once a critical mass of women unlock the door to the Boardroom, as with any social change, there will be no going back.
Quotas have been suggested as a way of promoting change initially, which would later be sustained naturally. The idea of quotas has always been controversial in the meritocratic world we like to think we live in. But Lords Davies’ Report: Women on Boards found that, at the current rate of change, it would take 70 years to achieve gender-balanced boards in the UK. So maybe we need something to kick-start the process?
Whatever about Government recommendations, companies will have no choice but to listen to their investors. The recent "shareholder spring" has shown that investors are prepared to flex their muscles in relation to executive pay and corporate governance. And they care about boardroom diversity too.
Legal and General Investment Management, the most powerful investor on the UK stock market, has been urging companies to broaden the range of experience of directors by appointing more women, older staff and those with an international background. Sacha Sadan, LGIM’s Director of Corporate Governance has been quoted as saying: "For a business to make the best decisions possible, the best quality information is required alongside rigorous debate. This rigour is only achieved through a diverse board whose members offer truly fresh insights from a variety of perspectives."
In these challenging times, if more diverse Boards improve company performance and share prices, then change is not simply a moral imperative but an economic one.
By Claire Dawson, Employment Law Expert
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