When there are more men named John than women leading FTSE 100 companies, it’s clearly time to up the ante on gender balance in the boardroom.
It’s a fact that women make a difference on boards, yet the reluctance on the part of many CEOs to include them on their team is narrow-minded and regressive.
A recent study showed that women make a significant difference in the boardroom. The report, carried out by academics in America, said that women bring a collaborative leadership style that benefits boardroom dynamics by increasing the amount of listening, social support, and win-win problem solving. Although women are often collaborative leaders, they do not shy away from controversial issues. Those questioned as part of the study said they believe that women are more likely than men to ask tough questions and demand direct and detailed answers.
The report stated: “Women also bring new issues and perspectives to the table, broadening the content of boardroom discussions to include the perspectives of multiple stakeholders. Women of color add perspectives that broaden boardroom discussions even further.”
My own experiences in a senior management team in an oil & gas service company very much reflect that. I was one of only three women in a senior management team of 25 and the lack of diversity and gender balance was apparent not just in the faces round the table but in the way decisions were often made.
This research concluded that you need a critical mass of women at board level to guarantee that their voices are heard and that they have an impact on the governance of the board. That critical mass was three or more.
Yet looking across our FTSE boardrooms the numbers bely that fact; The Female FTSE Report shows an increase in the overall percentage of women on FTSE boards from 2016-2016. But despite the increase by 26% on FTSE 100 boards and 20.4% on FTSE 250 boards, the actual rate of progress has slowed since the Davies report in October 2015. This means that the number of new appointments to women was a mere 24.7%, which is the lowest number since September 2011.
Looking forward it’s unlikely that the 33% board target – as set out in the Davies report – will be met.
The same Cranfield School of Management report shows slow progress among executive ranks and in the executive pipeline, with female executive directorships only 9.7% in the FTSE 100 and 5.6% in the FTSE 250. Women overall hold 19.4% of FTSE 100 Executive Committee roles, and only 10% of operational and C-suite ones.
So is now the time to introduce quotas for women directors in order to fill that pipeline of female talent and drive it to the boardroom? It has worked elsewhere in Europe.
Norway was the first to adopt a quota for female board members (40%) in 2004. Other nations followed suit – adopting either mandatory quotas (Germany, France, Belgium, Iceland, Italy) or voluntary goals (Austria, Finland, the Netherlands, Spain, Sweden, the UK), with goals for female representation ranging from 25% to 40%.
France passed a law in 2011 that requires the CAC 40 boards to have at least 40% of women by this year. The boards are collectively at about 35 per cent at present, up from 8% in 2006.
In Italy mandatory quotas for boards of directors of companies listed on the stock market were introduced in 2011. These temporary, mandatory quotas will last for just nine years with an initial target of 20%.
Paola Profeta, Associate Professor of Public Economics at Bocconi University, carried out an analysis of the results of the change. She said that women had been “highly under-represented in top business and political positions”, with only 6% representation on boards.
Profeta discovered that not only did these temporary quotas actually created a better selection process and a better quality of candidates but the quality of the men in the positions “increased” too. She believes that the “the lower quality men” were losing out.
But while it’s important to ensure gender parity at the top, it’s just as important to make sure that the quotas are supported by other initiatives, such as mentoring and flexible working, to create more family friendly organisations and to build that female talent pipeline I mentioned earlier.
We know it makes sense to have diverse boards, yet none of the voluntary initiatives to boost the number of women in the boardroom has worked, gender inclusivity is not top of the agenda for most businessmen and it’s unlikely to be unless it’s mandated..
Perhaps that time is now.
And finally, while we’re discussing gender balance on boards, we are still battling the gender pay gap.
Yesterday (Tuesday) was Women’s Pay Day, so called for being the day in the year from which the average woman starts being paid, compared to the average man. The current gender pay gap is 18% so this year Women’s Pay Day is celebrated 66 days into the year – yes, that does mean that women have worked for nothing for 66 days.
Sadly, the World Economic Forum doesn’t anticipate that gap closing until 2186.
So we have work to do. A lot of work to do. On International Women’s Day, where the theme is all about taking groundbreaking action that truly drives the greatest change for women, we need to embrace the ##BeBoldForChange hashtag and work together to ensure gender parity in our biggest – and smallest – businesses.