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33% Women on Boards - is the target working?

4th December 2019
 
On the 12th Nov, the latest Hampton-Alexander rankings were published. The Hampton-Alexander review is committed to getting 33% women on boards and leadership teams of FTSE 350 companies by 2020. In other words, the Top 350 companies (PLCs) in the UK are targeted to have 33% female representation on their Board by 2020 as well as 33% of female representation on their Leadership teams.
 
We asked a significant number of our female contributors whether quotas were a good thing and the general consensus was no. Targets are necessary, quotas are negative.
The risk of tokenism, “she is only in that role because she is a woman”, significantly devalues those who deserve a seat at the table. Interestingly we very rarely look at our male executive leads and instinctively devalue their qualifications for the role based on their gender even though we know homophily impacts the working world as well as our social networks.
 
Whilst the Hampton-Alexander rankings are targets, not quotas, the 33% is aspirational rather than a necessity has this process promoted the wrong behaviours to reach the target? Since its launch in 2016, there has been some progress but is this progress real committed change in respect of diversity or just short-sighted, reactive decisions that promote tokenism ahead of the best candidate?
 
Is it possible to hit the target without investing in change? Yes and no. Perversely, it is actually easier to influence at a Board level than it is the Leadership team. A Board is made up of Executive Directors and Non-Executive Directors (NEDs).
 
The Executive Directors are full time and ultimately manage the strategic direction and operational management of the organisation. The CEO, Chief Financial Officer and Group HR Director would be examples of Executive Directors.
 
Non-Executive Director roles cannot be filled by internal candidates, these positions require no specific industry knowledge. They are not full time, they are important roles which hold the organisation to account and ensure all decisions are made with sound reasoning with the aim of increasing shareholder value. Sometimes they are referred to as Independent Non-Executive Directors as their job is to hold the Executive Directors to account.
 

Let’s be a bit controversial now…..

Are most of the big improvements for organisations in the report is due to recruiting more women in Non-exec roles? One company hit the 33% target because the last three appointments to their Board have been female non-executives. On the other hand, it must be said that true commitment to Diversity and Inclusion takes much longer, cultural changes take a number of years to achieve.
 
A NED has a set term so it isn’t a case of firing someone or restructuring in order to easily get a woman into that role, and let me be clear, I do not aim to devalue female NEDs, far from it, what I am pointing out is a behaviour or tactic that is probably being used to increase an organisations movement up the Hampton-Alexander rankings without actually investing financially, emotionally or strategically in gender diversity.
 
In the 2019 rankings, of the 350 companies, 46% have achieved the target for Board members and only 21% have achieved the target for their Leadership teams. This illustrates the inherent barrier, a glass ceiling as it is otherwise known, and challenge it is for women to get a seat at Board level, equally it could also suggest that many organisations haven’t sufficiently influenced their internal processes and systems to move women through their senior channels.
 
Another risk to the wider business world is losing the female operational talent we have to Non-Executive portfolios. Many future CEOs are transitioning to have a Non-Executive portfolio because it is an attractive proposition with a far better work-life balance. This leads to a lack of role models and a lack of day to day influence, so are we actually going backwards when it comes to getting women in senior operational and strategic roles?
 
It's very difficult, as I’ve stated, targets are really important if we don't know where we are going then how are we going to get there, but the problems happen when hitting those targets lead to the wrong behaviours. It is worth noting that in 2011 11% of FTSE 100 boards were women, this is now 32%.
 

Does it really matter if the amount of women is increasing on both Boards and Executive Management teams?

Women generally don't want a role to help hit a target, we want a role because we are good enough and we have a lot to offer. The issue we generally have is lack of opportunity to seek these roles and be successful in the recruitment process. If we are only in that role because we needed more women our ability is automatically questioned and devalued, even if we are more than capable of doing the job. If our ability and seniority are questioned then it is much harder for us to succeed as we will not be able to influence and manage as effectively.
 
What are the other options? Set a target of 2025 instead? Would that mean CEOs and Boards wouldn’t take it seriously enough; "We'll think about that next year" so nothing would change? What are the ramifications if a company doesn’t hit the target? We know that whether an organisation is diverse is now a consideration for prospective employees but at the minute, there are no hard and fast consequences so in reality, it is down to the motivation of the Executive team to want to be more diverse and inclusive. Let's be honest, as much as Diversity increases profit, productivity, motivation and employee retention, this doesn't happen overnight and there is both a financial cost and time commitment cost associated to achieving Diversity.
 
For me, the Hampton-Alexander Review is a positive start, but it should be viewed as that and once 2020 comes and goes we shouldn't down tools and not think about representation at a Senior level anymore.
 
It is now down Business Leaders, current and prospective employees to start discussions on driving change. We know the importance of male advocacy so it needs to be an overarching conversation including as many different points of view as possible.
 
Ultimately Diversity and Inclusion is a journey. The subject matter isn’t going away and organisations will be better off in the long run if they fully immerse themselves and commit to it, and not for the sake of a target.
 
Just increasing up our female non-execs might move us higher up in the Hampton-Alexander rankings but it won’t give us the benefits that a Diverse organisation brings, and that should be the ultimate goal.
 
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