Businesses have the power to fix their own board diversity problems without quotas
The business case for creating diverse leadership teams based on people’s experience, hard-work and achievements, rather than their background or gender, is obvious. You would find it hard to track down any credible academic, researcher or business expert across the world who disputes this.
Put simply, businesses are more innovative, prosperous and profitable, when they embrace the talents of the whole population – including women, who we know have been underrepresented across the upper rungs of business for years.
Internationally, we have seen differing approaches to advancing female representation at the highest levels of business. While some countries, such as Belgium and Germany, have applied mandatory quotas for women on corporate boards, others, including the UK, have opted to put the decision in the hands of businesses, by favouring a voluntary approach towards setting targets.
This week, I was delighted to see the UK’s approach paying dividends, as our new FTSE Women Leaders Review – which monitors female representation at the highest levels of British business – saw the UK catapulted up to second in the international rankings for women’s representation on boards at FTSE 100 level.
It shows how the UK has leapfrogged countries such as Norway, which enforces a quota system on businesses, with nearly 40 per cent of UK FTSE 100 board positions now held by women, compared with 12 per cent just ten years ago.
Meanwhile, the number of women in Chair roles across the FTSE 350 rose to 48, up from 39 in 2020 and there has been a significant decrease in the number of “One & Done” boards – with just one woman – to just 6 this year.
This has been achieved not through top-down, government mandates or arbitrary quotas, but instead by companies seizing the initiative for themselves, and understanding the business case for diversifying their teams.
British companies are making changes not because they have to, but because they want to. With over 700 more women in Leadership roles across UK FTSE 350 companies in 2021, it’s clear that a focus by business on pandemic recovery will not detract from efforts to increase the gender balance in their boardrooms and top teams.
In the UK, we want to build on the success of this business-led approach, which is why, as part of this week’s new FTSE Women Leaders Review, we’re raising ambitions and calling on firms to fill 40 per cent of board positions with women, 40 per cent with men, and the remaining 20 per cent with any gender.
We also want to ensure businesses are thinking about roles that women are taking on. Increasing representation at non-executive level is welcome, but we need more women in Chair, CEO and CFO roles where they have a direct say in a company’s day to day operations.
Currently, only one in three FTSE 100 leadership team roles are held by women and only around 25 per cent of Executive Committee members are women.
Clearly there’s more work to do – and our focus now is on ensuring those FTSE companies that are still lagging behind, catch up. But with more women at the top table of Britain’s biggest companies than ever before, I hope the success of our voluntary approach – led by business, for business – can act as a blueprint for other countries across the world looking to act and show similar leadership.
Because those nations that support and put trust in their business communities to foster more diverse, innovative boardrooms and leadership teams will secure a competitive advantage and bounce back quicker from Covid-19.
Just as we’re doing here in the UK.