Steve Giles is a consultant and lecturer in governance, risk and compliance

‘Almost 40% of UK FTSE 100 board roles are now held by women.’ So ran the BBC’s headline at the time of publication of the first report from the FTSE Women Leaders Review, a business-led body backed by government.

Much progress appears to have been made in the UK, which is continuing a voluntary approach to improving gender balance on FTSE 350 boards and leadership teams.

Men still dominate management roles, and organisations need to develop pipelines of talented female executives

In terms of board roles, women now form the majority of non-executive directors (51%), according to Spencer Stuart’s 2021 UK Board Index for the top 150 listed companies. But more is needed around leadership. Spencer Stuart’s analysis shows that 86% of executive directors in the FTSE 150 are men, with only 12 female CEOs and 14 female chairs.

Barriers preventing women rising to the top remain. Dismantling them means addressing behaviour and building inclusive cultures. Janhavi Dadarkar, portfolio non-executive director (NED), CEO of the Academy for Board Excellence and programme lead for governance courses at the Institute of Directors, recognises this.

‘For all the positives of gender balance, there is still a mindset change needed for real, meaningful difference; diversity and transformation bring challenges,’ she says.

Boardroom progress

The original challenge was a lack of women in the boardroom. Here, significant progress has been made following successful campaigning in the three review phases:

  • The Davies Review was set up in 2011 when female representation on FTSE 100 boards was only 12.5% (up from 9.4% in 2004). Davies set an ambitious target of doubling this to 25% by 2015; the target was exceeded (26%).
  • The 2016 Hampton-Alexander Review set a new target – for women to comprise 33% of FTSE 350 boards by 2020. The final report in February 2021 shows that the target was exceeded (34.3%), the number of women on boards was up by 50% in five years and there were no longer any all-male boards in the FTSE 350.
  • The headline finding from the FTSE Women Leaders Review that women now comprise 39.1% of FTSE 100 boards, up from 36.2% at the beginning of 2021, shows strong and continuing progress.

The speed of change contrasts with that in many other jurisdictions. In 2022, Deloitte’s Women in the boardroom: a global perspective has the tagline ‘Progress at a snail’s pace’. The worldwide average of women on boards is now 19.7%, up just 2.8 percentage points since 2018 (see also the AB article on these findings).

More to do

Although the headline data in the UK is impressive, managers and staff are often completely unaware of a ‘sea-change in UK boardrooms’ (claimed in the FTSE Women Leaders Review’s press release). They notice who leads the business as CEO and who sits on the executive committee. Having more female NEDs on the board, enabling relatively binary and simplistic targets to be hit, carries little traction. Men still dominate management roles, and organisations need to continue working on developing their pipelines of talented female executives.

Many business leaders remain under-informed about the true value of diversity

The latest review acknowledges that more is required. There are too few women in the top jobs – most notably the CEO but also in FD, chair and senior independent director (SID) roles. Only one in three leadership roles and 25% of executive committee roles are held by women. There remain many companies yet to hit the old 33% target of the 2016 Hampton-Alexander Review.

These issues are addressed by the review’s four recommendations, setting new targets and aspirational goals by the end of 2025:

  • an increased target for FTSE 350 boards and leadership teams of a minimum of 40% women
  • FTSE 350 companies having at least one woman in the chair or SID role on the board and/or one woman in the CEO or FD role
  • key stakeholders having guidance or mechanisms in place to encourage those FTSE 350 boards not achieving the prior 33% target to do so
  • extending the scope to include the largest 50 private companies in the UK by sales, thereby encouraging progress across a wider spectrum of business.

‘Diversity is moving from a binary male-female dynamic towards the full spectrum of identities, qualities and abilities’

Bigger gains

These recommendations are important and are part of a much broader diversity agenda. The FTSE Women Leaders Review points to bigger gains in the future from ‘building a truly inclusive workplace culture where everyone irrespective of gender, ethnicity or background can thrive and give their best’.

Annabel Parsons, executive coach and CEO of Parsons Talent Consulting, thinks there is a powerful business case. ‘Diversity is moving on from a binary male-female dynamic towards the full spectrum of identities, qualities and abilities that boards require to address more complex factors,’ she says.

‘Maintaining the tension between purpose and profit, global and local – these dynamics benefit from broader diversity of mindset and experience that will drive the boards of the future.’

Positive impact

According to the UK Corporate Governance Code, companies ‘should promote diversity of gender, social and ethnic backgrounds, cognitive and personal strengths’. Research suggests that doing so has a positive impact on business performance and decision-making. Every organisation looking to retain talented staff today needs to respond.

Meaningful change requires commitment, focus and planning. It is sometimes made more difficult because many business leaders remain under-informed about the true value of diversity.

Dadarkar notes both the challenges here and the opportunities: ‘Ultimately, corporates have people in them that reflect society and structures that unconsciously create an environment that is not inclusive,’ she says.

‘To change that, leadership must be deliberate and foster a culture based on an understanding of the benefits for all.’

More information

Listen on demand to ACCA’s webinar to mark International Women’s Day, on women’s involvement in the journey to net zero

Read Steve Giles article ‘Board challenges for 2022’