Wednesday, 10 April 2013

Lord Davies two years on: losing momentum

Lord Davies of Abersoch
On the two year anniversary of Lord Davies' review into boardroom diversity in the UK's largest public companies, progress appears to be slowing, says a report by the Cranfield School of Management published today.

While in the six months from March - September 2012,44 per cent of all FTSE 100 board appointments went to women, in the last six months that has dropped to 26 per cent. The FTSE 250 has also seen a deceleration from 36 per cent in March-September down to 29 per cent from September to end-March 2013.

Dr Ruth Sealy, co-author of the report, said "Only a quarter of FTSE 100 companies have already achieved the target and the drop in the last six months is worrying. It is disappointing to see that women from outside the corporate mainstream, including entrepreneurs, academics and civil servants are still not being considered for FTSE board positions." 

Women now occupy 17.3 per cent of board seats in FTSE 100 companies - up from 15 per cent a year ago., while seven companies continue to have all-male boards.

In a statement today Lord Davies reiterated the threat of enforced quotas if business does not meet the voluntary targets. "Quotas," he said, "are still a real possibility if we do not meet the 25 per cent target of women on boards of FTSE 100 companies by 2015."

Brande Stellings, Vice President, Corporate Board Services for Catalyst, the US-based pro-diversity not-for-profit, said, "We applaud the progress that has been made. It's a great indication that voluntary goals work. We really think at Catalyst a focus on action is key. When you compare progress in the UK with what has happened in the US, then it makes you look at the voluntary targets, the reporting, the coalition-building as factors that figure into success."

"Catalyst recently looked at new board appointments to Fortune 500 seats," she continued, "and found first, there weren't that many of them and second, the proportion of appointments that went to women was not much higher (about 18 per cent)  than the current proportion [16.6 per cent] of women directors overall. This is just maintaining the status quo. One challenge is the low turnover of board seats in the US compared to the UK.""

The UK experience has shown progress is almost entirely limited to non-executive appointments in the largest companies: the needle has hardly moved in executive ranks. 

Commenting on this Stellings points out, "Culture change is hard and takes time. Catalyst did a study, Advancing Women Leaders, that looked at predictive power to see whether having more women board directors led to more women executives. In the study it showed a five year time difference - or delayed response."

Whatever the underlying reasons for a slowdown in the progress toward greater board diversity, Stellings is with Dr Ruth Sealy that it is not a lack of available talent.
"There's a big supply: there are plenty of women ready to be board directors. But there is still a challenge on the demand side," she said.

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