The UK has been hugely successful in its mission to increase female representation at board level.
Just over 27% of FTSE350 and 31% of FTSE100 non-executive directors are women. Britain stands in sixth place in the international ranking. And we’ve done all this without introducing legislative quota regimes.
However, to get this far, British firms have drawn heavily from a pool of female talent beyond its borders – particularly the US and Europe – with 38% coming from outside the UK.
So what makes FTSE roles so appealing for non-British businesswomen – and what impact will Brexit have on the gender balance on British boards?
The pull of Britain
One of the biggest draws of UK boards for non-British women is the standard of UK governance, with the perception that boards are professional, respectful and well run – the unitary board system is also seen as more appealing than the European supervisory system. On top of this, the absence of a language barrier is viewed very positively.
Several NEDs say that the lack of a formal quota has meant they feel valued for what they bring to the board, rather than just ticking a box. This is a hallmark of the anti-quota argument. To date, the ‘comply or explain’ approach has worked well. There’s also a consensus that the US is still not taking board diversity seriously.
The truly international nature of London is another key factor, attracting senior executives to live and work here and creating a pool of candidates readily available to join FTSE boards.?
A bumpy ‘Brexity’ road ahead
While UK companies should be rightly proud of what's been achieved to date, there could be trouble ahead.
The dual impact of Brexit, and the introduction of mandatory quotas in more countries, should not be underestimated. Together, they have the potential to derail the UK’s progress as the war for top female talent hots up across Europe, and internationally. In parallel, UK businesses are likely to want to increase their international representation to demonstrate their commitment to remaining global players.
A real concern is that UK boards become less appealing to discerning candidates. The result of Brexit remains uncertain, but even seemingly small matters, such as ease of travel, will have an impact on UK boards' desirability.
The compensation for US boards is also considerably higher than the UK, further exacerbated if the pound remains low against the dollar. Likewise, EU boards are seriously looking at raising the compensation they offer.
The war for talent
Mandatory female board quotas have already been implemented in Germany with great success, with the quota of women on blue-chip boards jumping up from 34% in 2014 to 39% in 2015. French law requires 40% female representation on boards effective from next year, so the pressure on European corporations to find the best female talent is intensifying.
Furthermore, 46% of the supervisory board appointments to the DAX 30 (German stock index) were female in the last year, but German boards continue to have low international representation, perhaps influenced by the preponderance to speak German in board meetings.
In France, competition for female non-executive board members is growing as the deadline for mandatory quotas approaches. Companies are increasingly looking farther afield and appointing non-French NEDs to fulfill the criteria – more than half of this year’s female appointees are foreign.
The pool of talent is only so big, however, and the push effect of the Brexit vote in the UK, combined with the pull effect of German and French corporations offering increasingly attractive packages, could potentially tip the balance.
The UK's loss could be Europe's gain.
Sarah Galloway is a member of the board practice at Russell Reynolds Associates