It’s the first anniversary of the release of the Davies report on the 24 February. Lord Davies recommended that 25 per cent of FTSE 100 board members should be female (the average then was 12.5 per cent) by 2015, and that both FTSE 100 and FTSE 250 companies should increase the percentage of women appointed to the board from then on. This is now the government’s key programme to get more women at the top of British business.
I work for a FTSE 250 company and we have just been asked by the government’s business department, BIS, to complete the annual return on the proportion of women in our senior ranks so the department can keep track of Davies’ targets. The pressure is on.
So, where have we got to with regard to women on boards? The average percentage of women on the board at a FTSE 250 company is 8.9 per cent as of October 2011, up from 7.8 per cent a year earlier. Not much has changed in our own company this year – the board has been 20 per cent female (one woman out of five board members) for 10 years. Although I could say we’re doing well at our company, I know that it wouldn’t take much for one woman to leave and be replaced by a man – dropping us down to 0 per cent, even if only temporarily. Volatility is high when you’re dealing with such small numbers.
Also, FTSE 100 and FTSE 250 companies are a real mix when it comes to their employees; about a sixth of these companies are investment companies that mostly employ nobody, others are really overseas companies such as the mining companies with tiny UK head offices and the vast majority of employees overseas. Many FTSE 350 companies give us little indication of what the UK workforce is really like let alone giving us an idea of trends. After all the reason these companies have listed on the London Stock Exchange is to get access to the large capital sums they can raise.
Many of the UK’s largest private sector employers are not listed on the London Stock Exchange and so are not counted in the FTSE 350. Some private sector employers are owned by private equity companies, such as the stores owned by Arcadia Group, or the online retailer Shop Direct Group, or the water and sewage companies Anglian Water and Yorkshire Water. Other private sector employers are owned by companies listed on overseas stock exchanges such as Kraft (US), Northumbrian Water (Hong Kong) or Nissan (Japan). These companies are, therefore, excluded from the BIS data collection on senior women board members and employees. We have no idea whether women are getting to the top in the UK operations of these companies.
It is true that all FTSE 100 and FTSE 250 companies do have to have effective boards to supervise the company managers.So, perhaps it is reasonable to tackle the proportion of women on these boards even if they only give us a hint as to what is happening in the rest of UK business. Many FTSE 250 companies have quite small boards – five people, as on our board, would not be unusual – so a percentage is not always the best guideline. Bearing this in mind, Lord Davies did not set a target for the percentage of women on FTSE 250 boards but said that 33 per cent of new appointments to these boards should be female. In the event, 18 per cent of new appointments since his report was published have been female and this has helped to nudge up the average percentage from 7.8 per cent in late 2010 to 8.9 per cent in October 2011. Clearly we’ve seen some improvement but not at the rate expected. A bit of a snail’s pace really.
If we really want to see women at the top in business, we need to see them running companies, not just overseeing them as non-executive directors. That means we need to see more women becoming executive directors on boards. The numbers I quote above are for all directors – executive and non-executive. So what about the proportion of women in executive director jobs – the people who really run the companies? That was the question asked by Lord Oakeshott (LibDem) in Parliament a few months ago, and to which we got the answers recently from BIS.
Unfortunately, there is evidence that the number of women getting to executive director positions is static, or even getting worse. There were 16 female executive directors in the FTSE 100 at the end of 2011 compared with 18 at the end of 2010. So, a slight drop on an already low base. Women did make up 6.1 per cent of all executive directors in the FTSE 100 in 2011, compared with only 3 per cent in 2002, so perhaps there was just a small blip in 2011 that will soon reverse itself. However, we are clearly failing to get women into executive positions in companies even while those very same companies have been able to get more women to take on the part-time non-executive director positions.
Internationally there have been a spate of recent female appointments to CEO – Virginia Rometty at IBM, Heather Bresch at Mylan (a generic drug manufacturer) in the US, and Maria das Gracas Silva Foster at Brazilian Petrobas (oil and gas). With more female executive leaders it will become easier to find more female non-executives in the future. Ultimately we will then see more women take the role of chair, as did former banker Barbara Stymiest, just appointed at Canadian BlackBerry maker, Research In Motion. Then we will truly be able to say there are more women at the top in business. We still need to see organisations putting more effort into developing successful executive careers for their high-flying female employees – and for other minorities, for that matter – to ensure our businesses really get the best possible talent at the top.