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Building the pipeline

01 May 2014

There is still some way to go to achieve gender balance in the boardroom and female company secretaries are being overlooked

This month Lord Davies’ third annual report on Women on Boards and the Female FTSE Board Report by Cranfield University were released, which look at the progress made over the past year on gender diversity.

According to Lord Davies, encouraging progress has been made with more women than ever before in the boardroom of the UK’s top companies. The report shows that women now account for 20.7% of board directorships in the FTSE 100.

Accompanying this figure is the breakdown of all female directorships within the FTSE 100 into executive and non-executive positions – although women hold an encouraging 25.5% of non-executive directorships, only 6.9% of executive positions are held by women.

Looking at the FTSE 250, figures are more disappointing, with women only accounting for 15.6% of overall board directorships. Furthermore, of all FTSE 250 executive board directorships, women accounted for just 5.3%, yet they accounted for 19.6% of all non-executive directorships.

ICSA Policy Director Peter Swabey noted these mixed findings: ‘Although the pace of women being appointed to boards is increasing, the significant difference between female executive and non-executive directorships is the real issue as the pipeline of board-ready women needs to be strengthened.’

He suggested that there is still some way to go to achieve boardroom balance and this problem ‘is not readily susceptible to a number of solutions that have been proposed, such as increasing the number of seats on boards’.

Nurturing the talent
The imbalance between executive and non-executive female directors is hard to miss. Institute of Directors’ (IoD) Senior Advisor for Diversity, Lisa Buckingham, says the improvement in the results featured ‘only a handful of female executive directors’, which means more progress still needs to be made as ‘the pipeline to nurture female talent throughout organisations is still in its infancy’.

Buckingham adds that, according to research from Breaking the Mould Awards, ‘the single most important factor in building a pipeline is the determination of the chief executive to improve diversity [which] must then be communicated throughout the company’.

Charlotte Rushton, Senior Vice President for tax and accounting AP/EMEA at Thomson Reuters, says that talent needs to be nurtured from the beginning: ‘We need to ensure young women entering the workplace understand that there are opportunities, they can get to the top and that the talent pipeline is nurtured throughout organisations to really effect change’.

Director at Robert Half, Estelle James, also stresses the importance of identifying potential early on, as according to their research, ‘many women are missing out on promotional opportunities … some female candidates underestimate themselves and their ability to succeed, which ultimately has a detrimental effect on their career’.

Tackling demotivation
Underestimating ability is thought to become more pronounced as individuals move up the career ladder. Eugene Burke, Chief Science and Analytics officer at advisory firm CEB explains that according to its data, ‘the on-the-job abilities of women and men are very similar, but women are becoming increasingly demotivated as they progress to senior business leadership roles, which are the stepping stones to board appointments’.

CEB executive director Jean Martin tells us that the way to counter this increasing demotivation is by building intelligence about the next generation of leaders within organisations: ‘consider their aspirations and motivations, and adapt boardroom culture to reflect that’.

She adds that when it comes to motivational factors, there are stark differences between what drives senior individuals across the world. Companies need to take this into account. In particular, she adds that CEB research has indicated that although ‘men in leadership positions are motivated by power and fear of failure, women are motivated by a constructive working atmosphere and receiving recognition. Moving away from an organisational culture framed by fear of failure to one founded on recognition for contribution and performance will be a stronger attraction for potential female leaders.’

Tackling barriers and actively encouraging women should also involve gathering data as another way of proactively addressing the gender imbalance. Institute of Director’s Lisa Buckingham says: ‘Diversity needs to be measured – a senior executive needs to be put in charge of reporting on moves towards targets much as they would for sales or exports.’

Supporting this point, Partner at executive headhunting firm Odgers Berndtson, Anne Murphy says that having reliable data on the gender mix across an organisation is a powerful starting point. ‘Analysing data around promotion and selection processes, taking into account the gender of candidates longlisted, shortlisted and appointed, will help to highlight where to focus.’

Recruiting responsibly
Building the pipeline early on is one way of ensuring women move into senior executive board positions, but not the only way. Recruitment at senior level, whether carried out in-house or externally, is as important and just as lacking in method when it comes to employing talented women.

According to e-recruitment firm WCN, despite most major organisations striving for greater diversity, it is still something many struggle to achieve. It believes this is because many recruitment practices unwittingly have systemic sexism built in, for instance having interview styles and application processes that deter women or procedures that do not identify problems.

CEO of WCN Charles Hipp explains: ‘Few organisations set out to discriminate against women but there is no escaping that at senior management level, women are underrepresented. If we are to see a significant change to this over a short period of time, organisations must look at their recruitment process and all the tools at their disposal to find where women are being needlessly disadvantaged.’

WCN suggests using technology to reduce this gender bias – an e-recruitment system can anonymise candidates so the interviewer cannot see personal details when assessing applications. Technology can also monitor job offer rates; if this differs when everything else is equal, it can suggest some bias.

Recognising that recruitment is one of the hurdles women face, the UK government conducted an independent review looking for ways to boost female board appointments. Ex-International Head of Diversity and Inclusion for Nomura International Charlotte Sweeney found when conducting the review, there was ‘clear, articulated commitment from the majority of search firms to support the creation of more diverse and balanced boards. However, examples where the commitment was transferring into consistent and sustainable action were mixed.’

Overlooking talent
Business Secretary Vince Cable called the headhunting community a crucial catalyst in introducing more women in the boardroom. Of the 10 recommendations Sweeney made for tackling the gender diversity issue, one is head-hunters committing to putting forward at least one strongly recommended woman on the shortlist submitted to chairs for all board positions and creating a database of ‘board ready’ women, led by Lord Davies’ steering group, to be shared with other stakeholders.

Company secretaries form a significant pool of women that are not considered for board vacancies, according to Peter Swabey. He pointed out there are ‘30 FTSE 100 companies with a female company secretary and many others holding similarly senior roles in other organisations. These women have a very privileged position from which to observe boards in action and in many cases, more boardroom experience than many of the directors they work with.

‘Companies should seek to recruit directors who bring a diversity of skills and experiences to the board, making appointments entirely on merit. ICSA believe that female company secretaries are a suitably skilled and board-ready pipeline.’

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