This month, Lord Davies of Abersoch, former Labour trade minister and chairman of Standard Chartered Bank, and now a private equity entrepreneur, will present his report on how to increase the representation of women on British boards.
This is a question that rears its head periodically and upon which many have opined. Every so often a government report is commissioned and recommendations made and nothing much changes. I was asked in 2001 to conduct an inquiry that touched on this and other issues around women's pay and employment. The late Sir Derek Higgs also reported on the subject in 2003 in his report into the role of non- executives, and there have been several other independent reports since.
It would be unrealistic to think that Lord Davies will come up with the definitive answer this time but there are grounds for optimism, not least because the EU is putting some weight behind the issue. Though nothing is formalised, EU Fundamental Rights Commissioner Viviane Reding has stated that unless companies change their numbers voluntarily, the commission will create legislation mandating that 20% of board members should be women. This may not sound like much but still it represents a significant improvement on the status quo.
It is probably worth reminding ourselves just how dire the situation is for women aspiring to senior roles on British corporate boards. The indefatigable Professor Susan Vinnicombe, and her team from the Cranfield International Centre for Women Leaders, have for the past 10 years produced the Female FTSE Board Report. Their findings demonstrate that there has been an increase in the pace of improvement in the number of board positions held by women almost everywhere in the world, except for the UK and the US. Here, it has plateaued at around 12% for the third year running, while in America it has been stuck at 15% for the past five years.
Of 1,076 FTSE100 board roles, only 135 are held by women and last year only 13.3% of new appointees were women. There are still 20 FTSE100 companies that do not have any women on the board. Of these, eight have persistently denied board places to women for at least five years. It is the absence of improvement over the years in sophisticated corporate markets like the UK and US that is particularly concerning.
When faced with figures like this, and the waste of talent they represent, it is tempting to turn to the solution adopted in Norway. There, it is mandatory for boards to have at least a 40% representation of women. However, this has not been entirely successful, as the same women tend to be appointed to multiple boards - a cadre of 'safe' appointees seems to have developed.
There have been changes to the structure of British boards in recent years that may even have made it harder for women. Boards have tended to become smaller with fewer executive directors, so that often only the CEO and the CFO are on the board. Many companies feel the pressure from their City shareholders to appoint NEDs who have current executive board experience. This has the effect of reducing the pool of qualifying women, since many fewer women than men presently hold such roles. However, while serving CEOs or CFOs can be a valuable addition to any board if they are of the right temperament and calibre, there is also value in diversity of experience and approach. Much was made of the unfortunate effect on governance of 'group-think' by the boards of the collapsing banks during the financial crisis, on which there were few or no women.
Sheryl Sandberg, COO of Facebook, recently made an influential speech about the barriers to women's progression to leadership roles. She gave one particularly powerful explanation for the suppression of women's appetite for success and the reluctance of people to appoint women in top roles. Research in US universities has shown that success and likeability are positively correlated for men and negatively correlated for women. One case study at Columbia University used the story of Heidi Roizen, a highly successful Silicon Valley entrepreneur. The students were admiring of her achievements but decided she was too pushy and aggressive. When the name was changed to Howard Roizen the students both liked and admired him. It may well be that the chairmen and nomination committees of some corporates have a similar unconscious bias, preferring male contenders over equally able but apparently less likeable women candidates.
This psychological barrier is difficult to address. It may be that mentoring and training for chairmen and others charged with appointing board members would help. Head-hunters too could benefit from such guidance. Certainly, it must be in the public interest that those entrusted with the vital role of ensuring the effectiveness and diversity of our corporate boards are well trained for the task. This kind of engagement with the issue would also play well with corporate governance experts who favour a 'comply or explain' approach, by demonstrating a real willingness to change.
Lord Davies has indicated that he is not in favour of quotas, but it may be that EU law will make these inevitable. Unless, that is, companies find a more acceptable method of tapping into the pool of female director talent that undoubtedly exists but which has been overlooked, often unconsciously, for some years now.
- Baroness Kingsmill CBE has been a non-executive director of various private and public boards. She is a non-executive director of International Airline Group and Korn/Ferry International