Women made up more than half of new FTSE 350 boardroom directors in 2020
When it comes to corporate diversity and inclusion (D&I), we should never stop striving for true equality – but it’s also crucial to recognise the positive milestones along the way.
Case in point, 2020 saw women make up more than half of all new boardroom director appointments in FTSE 350 companies for the second year in a row. Considering the gender disparity senior levels of leadership have long been known for, it can’t be overstated how huge – and hopeful – an accomplishment like this one is.
Of course, there’s still work to be done – both to ensure equity for women in all levels of organisation and to think of diversity more holistically. For example, the latest research published suggests that female leaders within the FTSE 100 are earning 73% less than their male counterparts.
Moreover, research from Heidrick & Struggles found that four-fifths of director appointments have been filled by white individuals, with most of the rest going to individuals from Asian backgrounds. Just 3% of those seats went to black people, highlighting the much slower pace of progress in racial equality at this level.
And when the focus of D&I efforts seems to be directed just towards women, regardless of background, it’s hard for individuals from diverse groups to think they’re a business priority – as it’s important to remember the pandemic also disproportionally impacted people of an ethnic minority background on practically every scale there is.
As we proceed into the future of work, I don’t expect organisational D&I efforts to slow down – quite the opposite. Now is the time to kickstart a truly effective, long-lasting culture shift.
The business imperative of diversity
For the longest time, conversations around equality have been framed as matters of fairness or justice. That’s because gender and racial inequality in the workplace stem from our sexist and racist history, and one tangible way for businesses to denounce that ignorant past and begin righting those wrongs is to be more inclusive to those from marginalised groups.
However, even if the motivations behind diversity and inclusion were altruistic at one point, that has long stopped being the most pressing reason why businesses need more diverse teams.
As the World Economic Forum put it: “the business case for diversity in the workplace is now overwhelming.”
In a world as complex, varied and interconnected as ours, the only way to begin to understand and relate to your business environment is to have that diversity represented in your own workforce. So it’s no surprise that teams with diverse management teams have 19% high revenues due to greater innovation.
That is a significant competitive advantage that no CEO worth their salt could afford to ignore, especially as it can be gained at practically no financial cost to the business. All that’s required is a willingness to change the traditional ways of doing things – so more of a cultural cost than capital.
It would be considered short-sighted in the least if a business wasn’t creating a long-term, concrete strategy for improving in a critical area of performance, like profitability or innovation. But to not evolve your internal culture is downright self-destructive when your competitors are out-performing you because they made those exact kinds of changes.
Diversity has no alternatives
Long-held ways of working can be hard to disrupt, especially in established businesses that have cultures that span decades, or even centuries in some cases. But while monolithic thinking may have worked in the past, business continuity today is determined by a much more varied array of stakeholders – and so requires a much more dynamic approach.
Trying to simply guess what diverse groups want or need without any internal representation simply doesn’t work, as numerous failed ad campaigns and initiatives have shown. The only solution is representation – having as many different ethnicities, cultures, sexualities, religions, and economic backgrounds as possible represented in an organisation’s workforce, particularly in positions of power, improves the chances of better addressing the needs and desires of all groups.
But to attract and retain a diverse and representative workforce, organisations need to commit to rallying against unacceptable pay gaps and promoting equal growth opportunities.
HR leaders can start by having more open conversations with the stakeholders, employees, partners and even customers about their own perspective on diversity and inclusion. Having evidence about the business implications of a truly diverse team will help HR to motivate the wider business in the long term and commit to the difficult changes required.
It will be the businesses that foster and truly embody a culture of inclusivity that will succeed in the long run. Ones where all employees are supported throughout their career and offered opportunities to grow.
Whilst it’s fantastic that we’re seeing more women in the FTSE C-suite, nevertheless, we have a very long way left to go.
Kelly Metcalf, Head of Diversity, Inclusion and Wellbeing for Fujitsu Northern and Western Europe
FTSE 350 urged to step up to meet 2020 women on boards targets
27th Jun 2018: Figures released by the Hampton-Alexander Review showed in 2018, 29% of FTSE 100 board positions were held by women. More women than ever before are on the boards of the UK’s largest companies but they still have some way to go to meet the target of 33% women by 2020, according to new data revealed today to mark the halfway point of a government-backed review.
While some FTSE 350 companies are on track to meet the government-backed targets for women on boards, others are lagging behind. These have today been urged to emulate success stories of the 80-plus companies already at or beyond the 33% such as hospitality company Whitbread, alcoholic drinks company Diageo, and fashion retailer Next.
Heather Melville OBE, Chair of CMI Women:
“Why is it that in 2018 achieving gender diversity in our leadership teams is not being made a business priority? For FTSE 350 to fall short of this target is just not good enough. Those employers lagging behind risk being outperformed by 21% compared to their competitors with diverse leadership teams.
"That said, congratulations to the FTSE 100 firms who are on track to hit the 33% target for women on boards. These women at the top of the ‘glass pyramid’ are the role models that the 66% of women in junior management roles need to inspire them and ensure companies are developing a pipeline of future female leaders.
"FTSE 350 companies should treat this as they would any other business initiative - set transparent targets for getting more women into senior roles, embrace necessary cultural changes and importantly, track the results. As we’ve seen with the gender pay gap reporting regulations, transparency provides the ability to benchmark progress. After all, what gets measured gets managed.”
Figures released today by the Hampton-Alexander Review, which aims to ensure that talented women at the top of business are recognised, promoted and rewarded show 305 positions - 29% of FTSE 100 board positions - are held by women, up from 12.5% in 2011.
Launched in 2016, the government-backed Hampton-Alexander Review set FTSE 350 businesses a target of having 33% of all board and senior leadership positions held by women by the end of 2020. Today’s statistics show that if progress matches the same gains made over the last three years, then FTSE 100 companies are on track to meet the 2020 target.
However, today’s announcement also revealed that while the number of women on boards has increased to 25.5% in FTSE 350 companies, around 40% of all appointments need to go to women in the next 2 years for the FTSE 350 to achieve the 33% target.
Sir Philip Hampton, Chair of the Hampton-Alexander Review said:
"It is good to see progress of women on boards continuing with the FTSE 100 likely to hit the 33% target in 2020. However, nearly half of all available board appointments in the run up to 2020 now need to go to women if the FTSE 350 are to meet the target.
"Far too many companies still have no women - or only one woman - on their board.
"Meanwhile, progress in executive and leadership positions is eagerly awaited as the portal for companies to submit their gender data opens today.
"We’ll be analysing the data on women in executive leadership roles and hope to see increasing numbers of women joining Executive Committees, or reporting to ExCo members, in the FTSE 350."
Business Minister Andrew Griffiths today called on businesses to prioritise their commitment to tackling gender inequality, saying:
"While it is great to see there are more women at the top of Britain’s largest businesses than ever before and I applaud those businesses who have made great strides, it is clear there is still a long way to go and I urge businesses to keep stepping up and championing diversity.
"The Hampton-Alexander Review is highlighting the benefits of everyone having an equal opportunity to reach the top, and I commend their effort in driving this important initiative."
Minister for Women Victoria Atkins said:
"This government is absolutely committed to increasing diversity in business, and we are leading the way in supporting the work of the Hampton Alexander Review to make sure FTSE companies support and develop their female talent pipeline.
"Women are good for business: they bring valuable perspectives and experiences to the decision-making process. FTSE 350 companies need to do their bit and accelerate progress. There is no excuse for having an all-male board."
The online portal for FTSE 350 companies to submit their 2018 gender leadership data also opens today. Progress made on women in executive and leadership roles will be revealed in November.
Melanie Richards Deputy Chair at KPMG, sponsor of the Review said:
"These figures are a significant step in the right direction and reflect the efforts and change in emphasis businesses have placed on tackling the gender gap. But it is undeniable that there is more to do to achieve equality in the Boardroom.
"In order to achieve these ambitious targets significant change is required, which will not happen overnight. It will take systematic focus on all aspects of recruitment and retention.
The progression of women remains key, coupled with an emphasis on creating environments in which talent can thrive, leadership stereotypes are challenged and individuals are valued for their skills and capabilities."
The Investment Association (IA) is working with investors to achieve better gender representation in the boardroom. In April 2018, the IA and the Hampton-Alexander Review wrote to 35 FTSE 350 companies who were falling short on their gender diversity targets.
Chief Executive of the Investment Association Chris Cummings said:
"The dial has shifted: gender diversity is now front and centre of investors’ minds. Firms with a diverse management team and pipeline make better decisions, so this is a business-critical issue.
"Companies must demonstrate that they have diverse management teams or have concrete plans to increase diversity, or face possible shareholder revolt."
Last month, the team behind the Hampton-Alexander Review revealed shocking explanations from sexist FTSE bosses for not appointing women to their boards, which showed that some companies are still refusing to move with the times.
Tackling the gender pay gap is part of the Industrial Strategy, government’s long-term plan to build a Britain fit for the future, with the ambition to help businesses create better, higher-paying jobs and ensure everyone can be successful in the workplace.
Bridging the gender pay gap could add £150 billion to the UK economy by 2025. Many companies reporting their gender pay gap earlier this year explained that the pay gap was due to insufficient women in senior roles, and/or a predominance of women in lower paid work. Ensuring women are selected in more equal numbers for senior roles, significantly helps to reduce the pay gap.
Under new laws, all companies with 250 or more employees were required to report their gender pay gaps. Over 10,000 public, private and voluntary sector businesses have now reported.
Figures for women on boards of FTSE companies published on 1 June 2018 by BoardEx, a business intelligence provider, show:
- FTSE 100 is at 29% up from 27.7% in October
- FTSE 250 is at 23.6% up from 22.8% in October
- FTSE 350 is at 25.5% up from 24.5% in October
- 10 FTSE 350 all-male boards
The 10 FTSE 350 companies with all-male boards in 2018 were:
- Baillie Gifford Japan Trust Plc
- Daejan Holdings Plc
- Herald Investment Trust Plc
- Integrafin Holdings Plc
- JP Morgan Japanese Investment Trust Plc
- On The Beach Group Plc
- Sports Direct International Plc
- Stobart Group Ltd
- TBC Bank Group Plc
- Ti Fluid Systems Plc
The 2018 Hampton-Alexander Report was published on the 13 November 2018, a year after the previous report.