Today marks International Women’s Day 2021 and its #choosetochallenge campaign that calls out gender bias and inequality.
In celebration of this, we look back to the recent Hampton-Alexander publication where they reported the progress made by the FTSE 350 Women on Boards. As of January 2021, women represented 34.3% of the FTSE 350 Board make up. Sir Philip Hampton is reported as saying: “There’s been excellent progress for women leaders in business over the last 10 years or more..” and while this is commendable, we at Beyond Governance, wonder whether we are calling out mediocracy. 34.3% is marginally above the 33% recommendation Lord Davies set out in his final report in 2016 and it is considerably lower than gender parity of a 50:50 split.
So, why do companies see this as a success? Historically, when we have discussed the diverse make up of Boards, gender diversity has been the front runner in conversations. The 33% quota originally set was to help improve the diversity of Boards. Over time this has, rightly so, become a much wider topic. Having women representation has in some ways helped Board advisory to operate differently, however, the truth is that being female does not automatically bring a different viewpoint to the table. Our opinions, attitudes and outlooks are often a result of the environment around us and what we have experienced. Therefore, if the female board members have been to the same schools, have socialised with the same people and have come from a similar background to the rest of the Board then ultimately the Board is no more cognitively diverse than what it was previously. The same could also be said for the Parker Review that recommended that each FTSE 100 should have at least one director of colour by 2021, while FTSE 100’s are performing woefully behind this target, it is not a silver bullet for improving the inclusion of directors who have different ways of thinking, different viewpoints and different skill sets (cognitive diversity).
Of course, we understand that gender, ethnicity and disability can mean that the life experienced by that individual is of itself quite different to others, but it is not a definite rule that can always be relied on. The challenge is, without these targets would companies consider changing their recruitment processes. For this reason, we understand why targets are set but believe they should be more challenging and drive cognitive diversity.
Going forwards we #choosetochallenge the FTSE350 to not celebrate achieving minimum standards but instead aim high and reach that ‘stretch’ target for true diversity.
So what action can be taken to increase board diversity?
- Build the board you want tomorrow today, after all if non-executive directors could be around for up to 9 years, business health may be in a very different position.
- Make diversity a priority and embed it into the culture of the organisation through clear genuine messaging from leadership.
- Ensure the Board regularly and objectively assesses the current skills on the board. If you’re interested in understanding how to do this take a look at our template Board skills matrix for assessing board skills.
- For unlisted boards consider setting maximum appointment terms for non-executive director positions. Most listed companies opt for a maximum of three 3-year terms and as such rotate all non-executive directors off the board by 9 years.
- Hold your headhunters/search agencies responsible for finding cognitively diverse candidates for board vacancies.
- Consider if ‘new to board’ directors may help overcome any cultural inertia and provide new perspectives.