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FTSE boards failing to promote women into executive roles

Author: ICAEW Insights

Published: 30 Nov 2022

Despite progress in hiring women as non-executive directors, boards continue to miss opportunities to create robust female talent pipelines to the top executive jobs.

Chairs of the UK’s top public companies need to work harder to ensure more women reach executive positions according to new research, which describes the progress on female board representation as “frankly appalling”.

Most FTSE 350 companies have achieved the government-imposed goal of recruiting 33% women to boards, but few are promoting women into executive positions, which hold the real power.

“Behind the achievements, gender inequality persists,” Alison Kay, Managing Partner for Client Service EY UK & Ireland, said in The Female FTSE Board Report 2022 by Cranfield University.

Cranfield’s research says that executive succession planning is the key to change. It suggests the leadership provided by the chair and the CEO is critical to developing a diverse executive pipeline.

Overall, just 18 FTSE 100 companies have women as chairs, but Helen Ashton’s role at JD Sports Fashion Plc is interim and Deanna Oppenheimer’s at Intercontinental Hotels Group Plc is designate. There are just two female chairs at FTSE 100 companies – Anita Frew at Rolls-Royce and Deanna Oppenheimer at IHG Hotels and Resorts. 

Executive Doctoral Researcher at Cranfield School of Management, Michelle Tessaro, who conducted the analysis, said it was surprising that, in such competitive labour markets, many companies continue to ignore 50% of the talent pool. 

“Succession planning is often left to the CEO, but there must be more chair, and indeed board, accountability for delivering on diversity objectives. The board must ensure the talent pipeline is developed so women are not ‘pushed out’ or ‘opt out’ of important career development opportunities,” Tessaro said.

The report, the 23rd annual update, found that there has been no change in the number of women executive directors for the past three years. Among the FTSE 100 just 16.8% of executive directors are women, holding 36 executive directorships. While at the FTSE 250 level, women make up just 12.1% of executive director positions.

The findings prompted Professor Karen Holford, CBE, Chief Executive and Vice-Chancellor Cranfield University, to suggest that there still seemed to be “a reluctance to appoint women into the most senior roles”. 

Alison Kay said the findings show that it is time to move beyond board-level targets. “So far, we have managed to increase the number of women at the very top of FTSE companies but have fallen woefully short of their intended outcome – distributing the power and influence necessary to achieve true gender parity. They risk becoming the goal – a box to be ticked rather than part of a wider transformation within an organisation.” 

“While over 50% of the UK population is female, there is a significant absence of women from our top board roles at a time when diverse leadership is needed more than ever, to help navigate businesses through deep geopolitical and market uncertainty,” Kay added. “This marks an opportunity for FTSE companies to take action beyond compliance and make meaningful changes that will help to transform their business for the better, now and in the future.”

Diageo continues to set the bar high among FTSE 100 companies with its board made up of 64% women. Several years ago, the company implemented a concrete succession plan to ensure women reached the highest echelons within the business.

Recommendations to achieve true gender parity at the top of businesses include greater guidance for nominations committees, making their role in improving gender diversity more explicit; and for CEOs to recognise they have ultimate control and capability to disrupt the current status quo. 

With the most recent changes among executive FTSE boards, the current 36 women in executive roles will soon be reduced to 34. Louise Beardmore, CEO Designate at United Utilities, has been confirmed in post, but Kath Smith, Interim CEO at JD Sports Fashion plc was replaced by Régis Schultz in late July 2022. Meanwhile, Alison Brittain stands down as CEO of Whitbread plc at the end of the year and will be replaced by Dominic Paul. 

In total, there are nine women in CEO roles and two further women in CEO designate/interim roles, 19 in Chief Financial Officer/Group Financial Director roles (an increase of four since last year) and the remaining in Chief Operating Officer/Human Resources/Talent/Communications roles. 

The appointment of Beardmore as CEO of United Utilities means that five of the top six jobs at FTSE water companies are now held by women (either chair or CEO). Pennon and Severn Trent are the other two water companies. 

Sharron Gunn, ICAEW COO, said: “This report clearly highlights that while on the surface progress is being made, there is still work to do. Progress could be supported by clearer targets around female representation in executive roles on boards.

“Women are still much more likely to be the primary caregiver for children or dependents, which can sometimes inhibit their capacity to take on executive roles that demand lots of time, and encouraging shared directorships is one way to tackle this barrier. Flexible working practices can also help with the progression of women into senior roles.

“The accountancy profession is being very proactive in attempts to improve gender equality, with many of our member firms making changes to their policies and offering support to women to help them progress in their career. We are hopeful that we will see further improvements within the next few years.”

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