Boardroom diversity – behind the numbers.

 

 

Lord Davies’ most recent review on gender diversity in the boardroom, published in late October, has highlighted some positive changes that have taken place in FTSE boardrooms in the UK in the last 5 years. The voluntary, business-led, approach that has been implemented has led to an increase in the number of women on boards, creating a feeling of optimism for the future. Looking at the numbers, the percentage of women in FTSE-100 boards, which was 12.5% in 2011, has now more than doubled to 26.1%. FTSE-250 companies follow suit with the number increasing from 7.8% to 19.6% in these 5 years.

Despite the fact that the numbers are moving to the right direction, we are still far from having gender balanced boardrooms. FTSE-250 companies failed to hit the target of 25% that was set for 2015 and there are still 15 FTSE-250 companies that have all-male boards. In addition, only 2 FTSE-100 companies have reached an even split between genders, while the number of women chairmen has increased by 1 – there are now 3 -  and the number of women CEOs remains 5. It has also been pointed out that although the number of both women NEDs and EDs has increased in the FTSE-100, the number of women at Executive roles remains low.

 

Some argue that the voluntary, rather than governmental, approach that has been implemented, is why the numbers are not as high as they could and should be. Other European countries where legislative quotas have been introduced seem to be closer to an even split, with Norway reaching 35.1% of women on boards, France 32.5% and Belgium 28.5%. Even though the UK is not far off, standing at 6th place in the world, if there’s not a further progression, we will fall behind European and international standards in the future.

 

Certainly, as long as diversity in the boardroom is concerned, gender is not the only issue. Concerns have been raised about the lack of similar interventions taking place regarding the representation of ethnic minorities and different backgrounds on boards. There are only four non-white CEOs of FTSE-100 companies compared to 14% of the population in the UK.

 

The value of diverse perspectives is widely recognised. Chairmen agree that a balance in gender has a positive impact by generating more challenging debates and improved decision making. Diversity also adds value to businesses by creating global credibility and longer-term stability, putting UK businesses at a competitive position on the global stage. It is therefore crucial that we keep striving for more diverse boardrooms and to find out what the best way to do so is.

 

 

Do you think legislative quotas should be implemented in order to achieve a more even split between genders on boards?

 

 

What measures do you think would help increase the representation of ethnic minorities?

12 November 2015

 

 

written by Mariza Dimaki
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