The government wants 33% of senior FTSE managers to be women by 2020

It's stepping up the pressure to improve diversity at the top.

by Jack Torrance
Last Updated: 22 Nov 2016

There’s been a massive surge in the proportion of women sitting on Britain’s boards over the last five years. Once they were an uncommon sight but now women make up more than a quarter of FTSE 100 board directors. In 2011 there were 152 all-male boards in the FTSE 350, now there are just 11.

Of course that’s still not remotely good enough, but it’s a significant improvement nonetheless, and one that’s been achieved not by introducing compulsory quotas but by the government and other institutional investors leaning on companies to make their boards less ‘male, pale and stale.’

But board positions are only one piece of the diversity pie. Non-executives have a fair amount of power but the real day-to-day decision making happens at the executive level. On this measure firms are still lagging behind – research back in December found that less than 10% of FTSE 100 and a little over 5% of FTSE 250 executive directors were women. When Emma Walmsley (pictured) takes over at GSK next year she will be one of just seven women bosses in the FTSE 100.

Now the government hopes to use the same techniques as before to nudge businesses into improving the representation of women on their executive committees. Tomorrow a report by Sir Phillip Hampton and Dame Helen Alexander will recommend a new target for FTSE 100 companies: that 33% of their ‘executive pipeline’ - executive directors and those that report directly to them – be women by 2020.

It’s an important change of tack. With its prior focus specifically on the boardroom, the government risked shunting women out of career path that would lead to becoming CEO. ‘We're creating a dual career route for women, which means that a lot of female talent is lost to the executive stream,’ TalkTalk boss Dido Harding told MT back in August. 'It's almost impossible to cross back again because you're not operational anymore.'

But it will also be a challenge to emulate the prior initiative’s success. Companies feeling the pressure to make their boards less dominated by men can simply create new seats and then go hunting in sea of talented women. Non-executives don’t need to have prior experience in that sector and are not given direct responsibility for a particular function. But you can’t just pluck executive directors with the necessary qualifications out of thin air. That’s why this new move is rightly focused on the ‘pipeline’ and not just those in the top jobs.

‘We don’t under-estimate the challenge the new voluntary target presents for many FTSE companies,’ Hampton and Alexander said in a statement. ‘However, we are encouraged by the breadth of experienced women ready and willing to step up, the significant efforts underway in many companies on this agenda and the ability of British business to work together to bring about change when it is needed.’

Tags:

Find this article useful?

Get more great articles like this in your inbox every lunchtime