The government-backed Hampton-Alexander Review on improving the gender balance in FTSE leadership found that in January 2021, 1,026 women were in FTSE 350 board positions, compared to 682 in 2015. As of February 2021, there were zero all-male boards in the FTSE 100, 250 and 350.
While progress has been made, the numbers disguise a mixed picture. The report does not differentiate between non-executive directors and executives and the latter group still lags behind in terms of gender diversity. Women of colour at board level are also underrepresented.
The report hails the increased gender diversity on boards as a “significant improvement” and highlights the fact that diversity improves board efficiency – something backed up by recent comments from Edouard Fernandez-Bollo, member of the Supervisory Board of the European Central Bank, who said “data suggest that a lack of gender diversity leads to inefficiencies.”
However, the review also warns that there is still a long way to go before boardrooms can be considered as truly equal. In a letter accompanying the review, organisation Chair Sir Philip Hampton flags that a large number of individual boards have had ‘compliance challenges’ with meeting the review’s 33% target of women in FTSE 350 leadership teams, and almost one-third of the FTSE 100 haven’t met this objective.
The number of board positions held by women of colour also remains low, with only 4% of FTSE 100, 2.2% of FTSE 250 and 2.9% of FTSE 350 board roles being held by this group.
The appointment of more employee directors would be one method for expanding diversity at board level. Current statistics show that the most notable increase in female representation is among non-executive director (NED) roles. In 2020 in the FTSE 100, the percentage of female NEDs was at an all-time high of 40.8% (38.9% in 2019), while the percentage of female executives had risen only slightly to 13.2% (10.9% in 2019).
ICAEW has highlighted a number of advantages to hiring employee directors including supporting long-term thinking and enhancing board credibility. Additionally, the Corporate Governance Code allows companies flexibility in the way that they engage with their workforce, and a director appointed from the workforce is one of the options.
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