Get on Board(s)!

Well, what is all the fuss about? Lord Davies’ third report to the Department of Trade and Industry,
on the number of women on UK corporate boards was published this week and shows that since his
first report in 2011, the number of women non-executive directors (NEDs) on FTSE 100 companies
(ie, the 100 most valuable/profitable) have increased from 15% to 17.3% over the past two years.
So what are NEDs? Why should we want more women to sit on boards? NEDS are individuals who
are not employed by the company, but usually receive a payment for their contribution of time and
expertise and they advise and take responsibility for the strategy, performance, risks, and standards
of behaviour in the company, including appointments and processes. And yes, there is some
evidence that having women on boards is a good thing. The latest report from Mckinsey (Women
Matter 2012) provides evidence that companies with increased representation of women on the
Board, perform better.
50% of the population are women, so why are so few holding such positions? The latest Sex and
Power report shows that non-executive directorship is only one of many areas where women are
not proportionally represented in areas of influence in the UK.
Lord Davies reflects on this encouraging though slow increase, and sees it as probably due to several
factors. Firstly, there is no obligation for company Board positions to be openly advertised. The
Board decides on what skills and experiences might be useful to it and seeks out suitable candidates
through informal contacts and recruitment consultants. Such systems lead to the appointment of
those who fit a model prescribed by those already in position (mainly male), and this has been well
described in recent research. Secondly, the skill set and experience often involves having had an
executive position in such a company and Lord Davies’ report also points out that the number of
Executive Directors (CEOs, CFOs, COOs etc) and the number of women actually running companies is
very low (only 6.1% of FTSE 100 and 5.4% of FTSE 250 companies executives are women). As long as
these are the skills required (rather than considering broader experiences as important) the number
of women NEDs will stay low because the development stream remains small.
An important initiative by the Davies Committee has been to establish a Voluntary Code of Conduct
for Executive Search Teams. The aims signed up to by some ‘Headhunters’ include that ‘diversity
goals’ should be explored with company Chairmen (perhaps the recruitment agencies are seen as
champions?), providing long lists of 30% women (or explaining why they haven’t been able to),
publicising their commitment and investing time in developing relationships with the pipeline of
female candidates. The code is at least a start. The list of those who have agreed to sign up is not
exhaustive. It does include many, but not all, of those recruitment companies who help in senior
appointments in healthcare and universities. As efforts are made to support women to reach
leadership positions in healthcare and clinical academia, NHS Trusts and universities should pay
heed to which companies they engage to help them fill their senior roles and select those who
subscribe to the Code.


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