Women on boards – has the Davies review had an impact?

Diversity / 26 August 2011

Six months after Lord Davies published his report into the absence of women on boards, have the tables turned? Laura Johnson investigates

While the Davies review shied away from imposing quotas on organisations for the number of women on their boards, the report’s central recommendation was still ambitious – by 2015, at least a quarter of FTSE 100 board members should be female. But in boardrooms across the country there is still an unmistakeable lack of female leadership as we reach the first of the report’s major milestones.

The first task set by Lord Davies for companies was to outline clear steps they will take to open up their boardroom to women. The deadline to report back on this measure has now arrived, but without the heavy hand of law-enforced quotas behind the report’s recommendations, will UK businesses offer their support to Lord Davies’ crusade?

There are some positive examples of business engagement. For example, supermarket giant Morrisons has not only committed to increasing female representation in its senior management group to 30% but is also encouraging its suppliers to join them in setting similar targets. Unfortunately, the impact of promising initiatives like this is yet to filter through convincingly.

In the public sector, you’ve got really good women who have been appointed chair, having gone through the same procedure. You’ve got senior women non-executives for government departments. You’ve got senior women running government departments. They could do the crossover between the public sector and the private sector.

Baroness Mary Goudie, founding member, 30% Club

In August 2011, there were still 14 FTSE 100 companies with all-male boards. And research by Cranfield School of Management reveals FTSE 100 companies recruited 23 women to their boards this year, bringing female representation up to just 13.9%. The statistics alone suggest UK plc is running behind against a challenging schedule. If the pace doesn’t pick up, a quota approach, such as the 40% law in Norway, will be an inevitable last resort.

Token trouble

Fearing tokenism, the overriding opinion in Britain is that to be credible in the boardroom, women need to be seen to have earned their positions. Luckily, beyond the numbers above, there is a more positive tale emerging. While the rate at which women are entering the boardroom may be underwhelming, the media exposure the Davies report has given to board diversity is having a powerful effect on three key groups.

Chairmen
Initiatives such as the newly formed 30% Club (so-called for its members’ aim to surpass Lord Davies’ 25% target) are gathering momentum among influential business figures.

“The 30% Club has had a very successful meeting in London with almost 30 chairman of FTSE companies,” says Baroness Mary Goudie, a founding member of the group. “25 have signed to commit to increase their boards to have 30% women.” The support of chairmen such as Sir Win Bischoff of Lloyds Banking Group and Sir Roger Carr of Centrica is a powerful endorsement for women on boards. 

Investors
Wielding a commanding share of many corporates, investors have a big role to play in the make up of boards. “A number of investors have come out to say they are in favour of women on boards,” Baroness Goudie adds. “For example, Martin Gilbert of Aberdeen Asset Management argues that if companies won’t put women on boards the investors should pull.” A sign this important group is prepared to take some responsibility for achieving the targets set in the Davies report.

The headhunters
“There are really suitable, credible women out there who’ve got the right qualifications,” says Baroness Goudie. “It’s time for them not least to step forward but for the headhunters to approach them.”

Corporates turn to headhunters when they need to fill a gap on a board. The new voluntary code of conduct issued by a group of leading recruitment firms in July supports increasing board diversity. It’s an indication these firms’ little black books of executive and non-executive directors will, in time, become better stocked with women. 

Broadening horizons

But boosting the credibility of these lesser-known female board candidates will require a sharp realignment of old perceptions. After all, when filling board positions the safest route is to plump for someone who has done it before, hence the consistent cycle of grey-haired men making it to the top table of companies. Letting women in to this circle means having a more open mind.

“In the public sector, you’ve got really good women who have been appointed chair, having gone through the same procedure,” Baroness Goudie points out. “You’ve got senior women non-executives for government departments. You’ve got senior women running government departments. They could do the crossover between the public sector and the private sector.” That is, if headhunters and established board members will give them a chance.

Giving women the mentoring, training and support they need to break the glass ceiling is crucial to breathing life into the aspirations of the Davies report. But it is possible. “I think it’s achievable,” says Baroness Goudie. “If you look at the number of women in senior management or just above, there are the women out there to do this.”