By Nicky Cranfield, associate at Fox Williams LLP
How many female CEO’s of FTSE companies can you name Currently there are just three in the FTSE 100: Alison Cooper of Imperial Tobacco; Carolyn McCall of easyJet and Angela Ahrendts of Burberry.
The Coalition has favoured the voluntary action of business to increase the number of women at board level. But as latest figures reveal female appointments to boards have slowed significantly, it seems that the glass ceiling remains.
What action has the Government taken and why is it important to engage women in business?
What action has been taken to date?
In 2010, the Coalition commissioned a report by Lord Davies to investigate the barriers women face in the workplace and set a target of 25% of FTSE 100 board members being female by 2015.
This initially prompted a flurry of female appointments. However, the issue seems to have slipped down the business agenda and, in January 2013, there were still seven FTSE 100 companies, which had all male boards.
New regulations will come into force in October, which will require UK quoted companies to report on the number of male and female directors in their organisations and the Women’s Business Council has been set up to look at ways of maximising women's contribution to economic growth and to assess the barriers that women face in the workplace.
Despite these steps, however, the Cranfield School of Management reports that in the first half of the last financial year, 44% of board level appointments at FTSE 100 firms went to women, but that slowed to 26% in the second half.
Is this a momentary blip or does more need to be done?
Why should businesses put more women on boards?
While the case for equality in its own right remains, it is the economic business case that is pushing a lot of businesses forwards, being:
• higher financial returns - the Women’s Business Council reports that tapping into female economic potential, could lead to £160bn being added to the economy by 2030;
• improved corporate governance, leadership and decision-making – recent research showed that those businesses with three or more female senior managers significantly outscored their more male dominated counterparts in these areas;
• a wider talent pool – women represent over half of the graduates entering the workforce, so any business that is not considering women for senior positions is substantially narrowing its available talent; and
• connection with key consumers – as stated by Moira Benigson, a top headhunter: “The case is very easy to make [for getting more women on boards]. When it comes to consumer businesses, 90% of the customers are women. You need their voice.”
These benefits speak for themselves, so will they alone drive change?
A change in culture and practice for both men and women?
Many commentators believe the aggressive male dominated culture in financial institutions were partly to blame for the various scandals and crises and a recent report has suggested that male-dominated corporate culture is the biggest barrier for women reaching board level. Clearly, then, some change is necessary, in order to promote a business environment in which women want to work.
On the flip side, however, there is an awareness that the lack of female representation needs to be directly challenged by women themselves. The Two Percent Club, an organisation of British businesswomen, said that female City staff should advocate more strongly for an increase in board level women and, as Facebook’s Sheryl Sandberg once famously stated, “women need to lean in, stop languishing in the gender roles society serves up for women, and ’fess up to being ambitious and eager to earn a top wage”.
So should women be doing more or can they rely on further government intervention?
Is positive action required?
The slowing number of appointments of women at board level has been blamed on complacency in company culture and mandatory quotas may be required to drive change.
Many British businesses are against this and fear a backlash if they were imposed. Nevertheless, there is a consensus that the proposed EU legislation has focused the minds of policy makers and companies about the need to increase gender diversity at board level.
So should the UK be taking its lead from Europe?
What is Europe doing?
The lack of women on boards is not just a UK issue. The EU has tried to address this by publishing a draft directive under which 40% of non-executive director positions at listed companies would need to be female by 2020. It would also require companies to publish targets for female representation among executive directors and in a situation where there is a male and a female of equal merit, then the candidate of the underrepresented sex would need to be appointed.
In Norway, mandatory quotas have already been introduced and it is interesting to see the reaction to that approach. The quota laws have resulted in over 40% female board participation, but have received mixed reviews. Although there are many more women carrying out non-executive roles, there is still a real lack of women at executive level and, despite the quotas being in place since 2003, Norway does not currently have any female chief executives running a top company.
What conclusions can we draw?
Will progress for women be achieved by voluntary, business led schemes or will the UK have to eventually rely on legislative changes? It seems that there are challenges with either approach. However, what is clear, is that a change in business culture is necessary and it is unlikely that change will happen unless women themselves push for it.
As Heather Jackson, founder of The Two Percent Club said “Too often the search for a solution to this issue is put at the feet of CEOs, chairmen, head-hunters and politicians, ...it is time that women also stand up to be counted and become a more visible and active part of this business issue.”
Nicky Cranfield is an associate at Fox Williams LLP. Nicky can be contacted at NCranfield@foxwilliams.com.