Women in the boardroom: measuring progress

Women in the boardroom: measuring progress
Has there been an increase in the number of women in the boardroom since the beginning of 2014? Melanie Richards, partner in debt advisory at KPMG, discusses whether there has been any progress in addressing the gender imbalance in boardrooms.

Original news

Press Release: Women on boards—Cable launches enhanced code for executive recruiters,

A new Enhanced Voluntary Code of Conduct for Executive Search Firms gives recognition to those firms which have been most successful in the recruitment of women to FSTE 350 boards. It builds on the terms of the standard voluntary code and will also recognise the outstanding efforts of search firms working to build the pipeline of FTSE board directors of the future.

What have been the key developments in 2014 concerning women on boards?

This year has seen the proportion of women on FTSE 100 boards pass the 20% barrier. According to data from Cranfield, 2014 will also go down as the year when significant progress was made tackling the gender imbalance among the non-executive director community.

These achievements have been made without resorting to quotas as the idea of ‘comply or explain’ seems to be galvanising organisations into action. Yet progress should not be mistaken for success. While Veronique Laury’s recent appointment as a CEO of a FTSE 100 company is great news, she is only the fifth female to reach this position. Attention needs to be focused on why the pipeline to executive positions is still far too small.

How were the Davies Steering Group’s results received?

Businesses across the UK—and internationally—are increasingly recognising the importance of balance in the boardroom, for example, more than 100 chairmen from major employers have signed up to the goals of the 30% club, and that’s just in the UK. There is also an added pressure on businesses to recognise this area with the Financial Reporting Council recently updating its code of governance to reflect the need for better balance.

The key for success though will not, ultimately, be measured by the number of signatories to a cause or actions taken to avoid regulatory reaction. The real need is for business leaders to be more authentic and have quality conversations around gender imbalance. Commitment has to come from the top and has to permeate an organisation.

Are we likely to see more intervention from the government on this issue?

Given the progress made since Lord Davies first reported on gender in the boardroom, I certainly hope not. More than 20% of FTSE 100 boardroom positions are held by women and with the government committing itself to avoid legislation until 2015 at the earliest, I hope that a domino effect will mean formal intervention is not necessary.

The ‘comply or explain’ culture that Lord Davies has inspired certainly seems to be having a positive effect. While it may be true that other countries have turned to the statute books, the UK is moving to a point where voluntary compliance and a desire not to be left behind is working. However, we cannot be complacent and must continue to focus on making progress in this area.

Do you feel the make-up of central government affects the boardroom?

It’s not about business mirroring government, but rather whether individual organisations are reflecting their business needs. The fact is that every employer should be looking to mirror its clients and the environment in which it operates—and this goes for the public, private and voluntary sectors alike.

This issue is also about more than gender diversity. The political environment, just like society at large, is made up of men and women from a diverse range of backgrounds and all of these should be reflected in the boardroom. In other words, diversity is already a reality. Inclusion—on the part of the boardroom—is a choice.

What is on the horizon over the next 12 months?

Innovation isn’t the answer to the diversity conundrum. Real success can only be guaranteed with cultural change and this is not something that can happen overnight. That’s exactly why the government established a timeframe for voluntary action and why they argued for ‘comply or explain’.

The truth is that what gets measured gets done—and the progress of the past few years certainly goes some way to suggest that UK plc is moving in the right direction. The key, though, is to maintain momentum, meaning that over the next 12 months the onus will be on organisations to analyse their talent pipelines and act on what they see. It will no longer be enough to recognise a problem. For business to succeed over the next year and beyond, actions will have to speak louder than words.

Interviewed by Neil Fanning.

The views expressed by our Legal Analysis interviewees are not necessarily those of the proprietor.

First published on LexisPSL Corporate on 2 October 2014. for a free one week trial.

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About the author:
Eleanor Kelly

Eleanor trained at Nabarro LLP and qualified in their Corporate team, where she worked on a wide range of corporate transactions and general company advisory matters. She also gained in-house experience on secondments to clients of the firm.

Eleanor’s specific experience includes advising on reductions of capital, striking-off and dissolution, public company takeovers (including by way of scheme of arrangement), general meetings of listed, unlisted and private companies, group reorganisations, share buybacks and private company share and asset sales and acquisitions.