The issue of gender diversity in companies’ boards and senior management teams has been one of 2012’s hot topics. And while progress is certainly being made in terms of the number of women directors on boards, there is still much to be done.
A recent event in London to mark the two-year anniversary of the 30% Club – a high-powered group set up to instigate progress in this area – co-incided with the latest update from the UK government supported-Davies Committee (which issued its landmark report on the subject in March 2011). That committee reported that, encouragingly, 44% of new director appointments in March-Sept 2012 in the UK’s top FTSE100 companies were women – doubled from a year ago. In the FTSE 250 it was 36%.
Of the early adopters of the diversity amendment to the UK’s Corporate Governance code, 60% now had a stated policy on boardroom diversity, while 42% had or intended to set measurable objectives to increase women on boards. And 25% of external board evaluation exercises, required under the Code, now included the diversity issue, which Davies thought was satisfactory as it had only recently been brought in.
So is everything in the diversity garden rosy? Not quite. Almost all of these increases in female directorships related to Non-Executive (NED) positions – the position for executive roles had stayed static, with just 7% women. In the year to Sept 2012, there were 22 NED appointments – all male.
There was much talk at the event of ‘improving the pipeline’ of talent coming through the ranks of companies. The need for improvements in mentoring and supportive networks were also discussed. Vince Cable, the UK business secretary said he would write to the 8 companies on the FSTE250 who still have all-male boards, although he admitted that most of them were mining companies based elsewhere in the world, where his exhortation may not have a huge effect. He also urged all businesses to use only those executive search firms which had agreed to report back to government how many women they place. But none of this seems likely to see dramatic change any time soon.
The 30% Club said that international interest was rising in the subject, notably in Hong Kong. ACCA can also vouch that other regions in Asia are showing interest – there is an important World Bank-sponsored event in Pakistan in January on women on boards.
Ultimately though it will be up to businesses to see the benefits of increasing diversity. Intuitively it has to make sense to increase the talent pool as wide as possible, and there are several studies which show that companies with greater diversity tend to enjoy better performance – although it is nigh-on impossible to prove a causal link.
ACCA, together with the UK Economic and Social Research Council, has just issued some interesting research on the subject. We commissioned the Cranfield School of Management report Women in finance; a springboard to corporate board positions?, which shows that a financial qualification is key for women who want to get onto company boards. The figures are quite stark – while 45% of female executive directors are financially qualified and 65% in total have a financial background, by contrast just 26% per cent of their male colleagues are financially qualified and 44% have a financial background.
The report suggests that finance, compared to many other sectors, offers a clear career path for women, especially within professional services firms. Advantages identified were:
- objective definitions of success mean less internal politics is required.
- there is relatively less damage from career breaks.
- roles are often HQ-based, so there is less extensive travel
Although it should be pointed out that at the 30% Club event some criticised the professional services sector for its relatively small number of women partners, given that 50% of the firms’ graduate intake is female.
Cranfield International Centre for Women Leaders deputy and co-author of the reportdirector Ruth Sealy, said a certain level of financial acumen is "necessary for all board directors. But for women, having a finance qualification or functional background helps to break down some persistent stereotypes about women’s competence, giving them credibility, legitimacy and a common language that allows them to join the conversation of the boards".
This may well be true. And the accountancy profession can take some pride in that finding. But, on the other hand, if women have to gain a financial qualification in order to give them the ‘credibility and legitimacy’ that men are assumed to possess innately, then we really do still have a long way to go before boardroom equality is reached.