Women on boards – what will 2016 bring?

2016 may be a year of great opportunity for increasing diversity, though much remains to be done.

Last year ended positively.  Lord Mervyn Davies, the outgoing chair of the government’s equality taskforce reported that:

  • his target that women make up 25% of FTSE 100 directors had been achieved
  • women now make up 26.1% of FTSE 100 directors, up from 12.5% in 2011

What is behind this?  Over 90% of the new women directors appointed at FTSE 100 companies in the last five years have in fact been non-executives.  While non-executives can  make a big impact on a business, it’s not the same as being on the executive board and having a say in strategic direction. So is this then just a token gesture, simply a politically correct manoeuvre to maintain reputation?  Equalities minister, Nicky Morgan, said, “Women don’t want to be treated differently or seen as window dressing”.  They want to make a positive and proactive contribution.

Davies concluded by recommending that FTSE 100 companies should work towards a target of 33% female directors by 2020. While targets are better than having quotas, we need to be increasing diversity in general on executive boards, as the majority still consist of white men.  There are currently just five female CEOs running FTSE 100 companies, and this remained unchanged during Davies’ time in office.

We need more evidence of the advantages of boardroom diversity and of how inclusiveness benefits all.  A 2006 Harvard Business Review study quoted male directors on the impact of women in the boardroom. Men on the board of one company said “how terrific the discussions and richness of outcomes have been” and that with women’s voices, “there is a higher level of understanding of the business.” A corporate secretary said that having 3+ women on a board makes the dynamic “much more conversational and less hierarchical and, as a result, all the directors get better information.” Fewer than three, however, and the women found it hard to be heard.

Catalyst research shows that boardroom diversity is linked to increased profitability and that 3+ women directors are pivotal to change. McKinsey research also provides evidence that companies prioritising diversity raised profits. It was found that, in the UK, for every 10% increase in gender diversity on the senior executive team, there was a 3.5% rise in pre-tax profits.

We need to ensure that stories and research like those above are shared more widely in order to encourage and inspire the next generation of female and non-white business leaders.