Women still face a steep climb to the top table in business
Research commissioned by the Observer has revealed that UK boardrooms are still overwhelmingly male-dominated, despite the fact that more than nine out of 10 companies claim to have an equal opportunities policy in place.
Women occupy only 242 out of 2,742 seats on the boards of FTSE 350 companies, according to a study by The Co-operative Asset Management as part of our Good Companies Guide series of reports into ethical and socially responsible practice in corporate Britain.
More than 130 companies out of those surveyed had an all-male board and the vast majority of female directorships are non-executive. Women hold only 34 executive board seats out of a possible 970.
As a result of this work, Co-operative intends in future to consider gender and ersity when it is assessing companies from an ethical, social and governance perspective.
John Reizenstein, managing director of Co-operative Asset Management, said: “It’s a commonplace that women and minorities ought to be better represented in boards and other top positions. But does it make good business sense? Our report shows that leading UK plcs believe an inclusive, progressive approach brings real benefits, but also shows that too many companies still appear to pay the issue lip service. We think organisations which foster ersity at the top have an advantage over those which don’t.”
The gender imbalance persists despite the belief of many senior business leaders that women have a beneficial effect on the character and culture of the boardroom. Seventeen male FTSE 100 chairmen and chief executives raised the issue last year in an open letter to the national press, saying: “Business leaders have spoken out on the need for action on climate change and poverty; it is time to do the same on gender.”
The question of whether having women – or other under-represented groups – on the board would be a good thing is vexed. Previous research is contradictory: a paper in the Journal of Financial Economics, “Women in the Boardroom and their Impact on Governance and Performance”, contended that where management is already good, it is better to leave well alone rather than tamper with gender balance, though in cases of weak governance female directors brought improvement because they tended to exercise stronger oversight.
But a study last year by Calpers, America’s largest public pension fund, argued that companies with more erse boards had higher performance on key financial measures such as returns on equity, sales and invested capital.
The Co-operative’s work has not attempted to address the issue of what difference, if any, the presence of women makes to financial performance or stock market valuations. There are so few women in positions of power, and so many other variables in companies and markets, it is hard to draw conclusions about whether any effects on performance can be directly attributed to them.
However, even discounting considerations of social justice, there are strong arguments that boardroom uniformity is not in the best financial interests of companies and shareholders. Women and ethnic minorities comprise more than half the UK workforce and women comprise more than half, and rising, of graduate numbers in the EU, so it is inconceivable that their lack of representation does not involve a large-scale loss of talent. They also account for the vast majority of consumption decisions, so it makes sense for businesses to tailor product design and marketing with them in mind. On a higher level, gender equality correlates with the efficiency of economies as a whole: the World Economic Forum’s Global Gender Gap report found a strong link between equality of the sexes and economic growth.
So what is holding women back? The Co-operative’s analysis suggests that in most companies there is relative equality at junior levels, until they reach a point where women’s representation drops off markedly. That point is often where flexible working practices diminish. Some companies in our report, including support services group Mitie and British American Tobacco, analyse gender pay levels and the proportion of women at each management grade. More such analysis would help identify the barriers to female advancement.
Other hurdles for women and under-represented groups include a tendency for male bosses to recruit in their own image. Women may choose to opt out of corporate life in favour of starting a business or other options that allow them more control, or experience difficulty re-entering the workplace after having children. Career paths may accidentally disadvantage women, for instance by emphasising advancement during employees’ 20s and 30s when many are starting a family. There is also a problem with the lack of role models of successful women and negative cultural images of female bosses; films such as The Devil Wears Prada send the message that if you get to the top, your husband will resent and orce you, and you will be hated by your underlings.
The single most limiting factor for women seeking non-executive positions, according to headhunters, is the requirement for previous boardroom experience, so they are caught in a classic Catch 22 – they can’t get a seat on a board as a non-executive until they have sat on a board in an executive role. Our research showed that some companies need to think more laterally to achieve a more mixed board in terms of women and ethnicity.
One possible way of achieving this is succession planning. International tobacco giant BAT, for example, has strong policies aiming to overcome bias towards putting expats in senior overseas roles rather than locals; it has a target of achieving a 70/30 split between local and expat management, and to have one local successor ready for each post in the short term and at least two potential successors identified for longer-term development. This model could be adopted to help more women make it through the narrow neck of the management funnel.
Another problem may stem from differences in how men and women communicate. Anecdotal evidence suggests that women may phrase their contributions in a less confrontational way than men, which can be misinterpreted as weakness or lack of confidence. In some cases there has been a communication breakdown that has left the impression the male-dominated status quo was the best model after all. A chairman who takes ersity issues seriously and accommodates different styles of communication makes it easier to overcome barriers to women or those with varied backgrounds entering the boardroom; even very senior iniduals may need skills and awareness training.
The right recruits?
Recruitment companies play a major role in helping companies find the most talented workers, so have a vested interest in trawling the full range of talent, yet compared with the rest of the support services sector, their own approach to ersity leaves room for improvement.
Recruiters use sophisticated vetting and assessment procedures aimed at identifying the best possible employees, and broaden …