Marcus Evans Group | Worldwide Headquarters | American Offices | Latin America | European Offices | African / Asian Offices

Threat of quotas helps to put more women in the boardroom

Lord Davies’s review of boardroom equality has been a catalyst for change – but more executive appointments are called for

Lord Davies, who earlier this year reviewed boardroom equality for the government, was criticised for failing to recommend a compulsory quota system to improve representation of women at the highest level. But it seems that Davies’s mere threats of further action if companies did not get their act together have paid off anyway.

According to analysis conducted by the Observer, Britain’s biggest companies have doubled the number of women they are recruiting to their boards in the past six months.

FTSE 100 firms have appointed 18 women to their boards since 24 February, when Davies told businesses that within four years a quarter of senior bosses should be female. The female board appointments represent 31% of the total made over the period, well over twice the proportion seen in any previous year. Just 18 women were hired to top-level FTSE 100 management positions in the whole of 2010 – 13.3% of total board appointments.

The appointments include Lucinda Bell, who became British Land’s finance director in March, and Lesley Knox and Helen Weir, who both joined brewing giant SABMiller in May as non-executive directors. GlaxoSmithKline, Royal Bank of Scotland and Whitbread have also each appointed two women to their boards in the past six months.

Davies fired a shot across the bows of Britain’s blue-chip industry in February when he gave FTSE 100 companies six months to sign up to a voluntary target of 25% female board representation and to explain the steps they intended to take to achieve that target.

Technically, the six-month due-date falls on Wednesday 25 August, although Davies has given them till the end of the month to make their intentions known. He had not specifically threatened to introduce quotas if he was unhappy with responses, but many seem to have taken it as read he would eventually do so.

As the figures show, there has been a huge jump in female board recruitment and the general consensus is that this is almost entirely down to the Davies report. “Things are progressing and it’s great that this is happening,” says Dr Ruth Sealy, deputy director of the international centre for women leaders at Cranfield School of Management, who is collating and analysing the companies’ responses to Davies’s call-to-arms and will publish her findings in October.

“People have certainly taken notice … and the headhunters have suddenly perked up,” agrees Dr Sarah Rutherford, a diversity consultant whose book Women’s Work, Men’s Cultures is to be published next month.

Carmen Watson, managing director of Pertemps Recruitment says “there is every reason to believe that the Davies report will up the ante”.

“The issue is now a serious talking point in senior business circles. It has a lot of visibility,” says Denise Wilson, of the Davies steering group, which was established to oversee the process. But beyond the broad agreement that things are going in the right direction, views vary about how much has really changed.

Until the submissions of Britain’s biggest firms have been analysed it will be difficult to assess the initial impact of the Davies report. Wilson believes that just under half of the FTSE 100 have so far made their intentions clear, although it is hard to be sure since they have been issued in fits and starts over a period of months and they are not required to lodge them in any particular place.

However she believes there are a lot more submissions in the pipeline which should result in a last-minute flurry, meaning “pretty much all of them will meet the deadline”.

Meanwhile, the Financial Reporting Council (FRC) has invited submissions into whether the corporate governance regulator should inject a clause to promote greater gender diversity into its code and, if so, what it should say.

Some 55 of the 70 total submissions said the FRC should introduce such a code, while among those respondents who were investors, the figure was 90%, according to Helena Morrissey, who has analysed the responses.

Morrissey is chief executive of the money management group Newton and founder of the 30% Club, a group aimed at increasing the number of boardroom positions occupied by women in the FTSE 100.

While joining other commentators in declaring progress “encouraging overall”, Morrissey says that it’s been “slow progress, with many companies still a bit ostrich-like”. But she is encouraged by investors’ response to the FRC call for submissions. She is not alone in believing more could be done, although how much depends on who you talk to. For Rutherford, it’s a lot.

“To be honest, it’s only because of the threat of quotas. And I’m not sure how many executives – as opposed to non-executives – have been appointed. I would be much happier if they were executive appointments,” says Rutherford, adding that the long-term sustainability of recent advances are coming under pressure as virtually every company she has encountered has cut its diversity department to save money in the downturn.

By its very nature a full-time executive position will carry much more influence than a part-time non-executive role. British Land’s appointment of Bell is the sole female executive board appointment since 24 February. Some 58 board appointments have been announced since 24 February, compared with about 80 in a typical six-month period.

Even with the surge in female appointments, only about 14% of FTSE 100 board positions are held by women. That’s an improvement on 12.5% in December but short of Davies’s 25% target. © Guardian News & Media Limited 2011 | Use of this content is subject to our Terms & Conditions | More Feeds