The IoD is often asked about the number of women on company boards. Companies House does not systematically record director gender, meaning there is no ‘push button’ method for summoning accurate data on the number of female board members across UK PLC. However, the status of women on boards has been the subject of committed and competent research.
The Government-backed Davies Review started in 2011 with a detailed investigation of women on the boards of FTSE350 companies. The Davies Review ran for five years before being followed by the Hampton-Alexander Review in late 2016. Together, these two projects provide clear, objective evidence on gender balance in the boardroom. Cranfield School of Management has been involved in both the Davies and Hampton-Alexander Reviews, and continues at the forefront of research into women on boards.
Although this factsheet makes extensive reference to Davies and Hampton-Alexander, you are encouraged to read both reviews in full – they are models of clear and concise reporting. We also recommend Cranfield School of Management’s Female FTSE Board Report.
The Davies Review 2011
The Hampton-Alexander Review 2017
The Female FTSE Board Report 2017 (Cranfield School of Management)
The gender balance of UK FTSE350 boards since 2011
The headline news is that between 2011 and 2017, the proportion of women serving on FTSE350 boards has increased. Hampton-Alexander 2017 also notes that UK companies have displayed greater transparency on the issue in recent years – the report received submissions from all companies in the FTSE100, and 240 members of FTSE250.
In 2011, Davies reported that female representation on the boards of FTSE350 companies stood at 9.5 per cent. By October 2017, this figure had improved to 24.5 per cent, according to Hampton-Alexander.
The number of all-male boards has also declined sharply from 152 FTSE350 boards in 2011 to eight in 2017. No FTSE100 boards are currently exclusively male.
Progress indeed, but both Davies and Hampton-Alexander uphold a minimum target of 33 per cent female representation on FTSE 350 boards by 2020.
A disconcerting fact exposed by Davies and Hampton-Alexander is that the increase in female directors is overwhelmingly due to the appointment of women as non-executive directors. In 2011 there were 244 female non-executive directors in the FTSE350. By 2017 this number had risen to 684, including a 33.3 per cent share of FTSE100 non-executive roles. As a result, UK companies have shown that they can meet, and even exceed, the 33 percent target set by Davies and Hampton-Alexander.
The contrast with executive director roles is stark. In 2011 the FTSE350 could only muster 45 female executive directors. Since that time, only 18 more women have been appointed to executive director roles, with 63 female executive directors recorded in October 2017.
Investors have become increasingly concerned by the slow advance of women into executive director roles. In 2013, Legal & General put companies on notice that, as a prominent institutional investor, it would vote against the Chairs of companies where female board representation was below 25 per cent. In April 2018, the Investors Association warned companies that shareholders would no longer accept all-male boards (especially all-male executive teams). The Investor Association explained: “The body of research is clear: firms with a diverse management team and pipeline make better decisions and drive innovation. The target of 33% for women in senior leadership positions by 2020 absolutely aligns with investors' desire to see the companies they invest in recognising diversity as a critical business issue.”
Hampton-Alexander 2017 concluded with a call for “step change” to accelerate the promotion of women to both executive and non-executive board roles.
To mark International Women’s Day in March 2018, the UK Government highlighted research by BoardEx which reported 309 women on the boards of FTSE100 companies. This means that nearly 29 per cent of FTSE100 board places are filled by women – encouraging progress towards the 33 per cent in 2020 target set by Hampton-Alexander. The BoardEx research also showed that the number of women chairs at FTSE350 companies has risen from 17 to 20 while the number of women on boards has increased to 25.2 percent
However, in May 2018 an interim report listed some of the comments made by FTSE350 chairs and chief executives during the interviews which inform the Hampton-Alexander Review. By common consent, the list makes unwelcome reading – some male business leaders still regard women as fundamentally unsuited to life in a UK boardroom, whilst others think it sufficient to have appointed a single female director. The comments also included complaints about the small pool of talented female directors – with suggestions that “all the good women have been snapped up”. On a more practical note, some business leaders admitted that their senior management development pipeline did not include enough women. The UK Government described the list of excuses as “appalling’. Hampton-Alexander leader Sir Philip Hampton commented:
"We used to hear these excuses regularly a few years ago, thankfully much less so now. However, leaders expressing warm words of support but actually doing very little to appoint women into top jobs - or quietly blocking progress - are really not much better."
So the situation as of 2018 is progress made, but much work to be done.
The pipeline issue
The IoD believes that promotion to the board should be entirely based on merit.
But to be considered for a board role, an employee has first to make their way through the company pipeline that develops senior management talent. The IoD Policy Unit suggests several factors which obstruct the progress of women, including:
- Women are disproportionately present in low wage sectors.
- Generational Lag - Although women are now more likely than men to attend university, women of an age associated with reaching board level belong to a generation in which fewer women than men studied at university. The average age of a UK executive director is 53, for non-executive directors the average age is 60.
- The Motherhood Penalty - A career break to have children, or continuing childcare responsibilities can mean stalled personal development and missed opportunities. In the UK setting, talented women are still confronted by a choice between motherhood and the intermediate management role which prepares them for the board room. Current law and practice in the UK places the greater share of childcare duties on the mother.
- Company decisions on recruitment, staff development, and promotion are still subject to personal and structural bias which is often difficult to detect and correct.
The IoD’s work towards gender-balanced boards
The IoD is a leading advocate of increased female representation on the boards of British companies.
The IoD website is home to the Enterprising Women Hub where you can learn about the annual IoD Enterprising Women Summit. Enterprising Women seeks to develop the presence of women on the boards of all types of UK companies, from startups to FTSE100 companies. The Hub also hosts a series of profiles of female executive directors, all exceptional talents. IoD members should also watch out for Women As Leaders activity by their local IoD branch or region.
Improving your knowledge and skills will make you more confident on your journey as a company director – IoD Professional Development provides a range of training courses.
Whatever your gender or ethnic background, there is a single statutory framework controlling the actions of company directors. The IoD is also the foremost supporter of the UK Corporate Governance Code which sets the standards for board activity. You can learn more about both by reading the IoD Business Information Service Factsheet Collection. The Business Information Service can also respond to enquiries you have in support of your business. For career development conversations, or advice from lawyers, accountants and similar professionals, contact the IoD Directors Advisory Service.
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