30 March 2016 by Alexandra Jones
Debate continues this month on diversity in the boardroom.
The Equality and Human Rights Commission has questioned the truth behind headline progress of women on the boards of the UK’s largest companies. According to its inquiry, the well-publicised achievement that Lord Davies’ target of 25% female representation has been met is ‘masking a reality’. The report paints a stark picture – fewer than half of companies actually increased their female board representation and more than 60% of the FTSE 350 failed to meet the target. It appears that the back patting could have been a little hasty, as the report labels the alleged lack of progress ‘inexcusable and unacceptable’.
The report – which ICSA contributed to – goes on to uncover further unsavoury evidence that boards are still using outdated personal ‘old boys’ networks to identify new candidates. This point strikes a particular chord with me following a recent discussion I had with an industry professional that touched on this point. I asked why it is that many NED roles are not publicised, like every other job role – according to the report, just 2% are advertised on companies’ websites. In their view, corporates are well-advised not to do so as information about a company’s skills shortage could have an adverse impact on the share price.
Even if publicising this information could impact today’s share price, it can have a far more damning effect on tomorrow’s longevity if the very best people for the job are not considered. Businesses must remember that shareholder value is not the Holy Grail and instead put good governance at the forefront of every decision. We need to get away from paying lip service to an issue as important as diversity – doing so will only hold back talent and ultimately our companies.
That said, I am not aggrieved by the perhaps optimistic conclusions drawn from the announcement that Lord Davies’ target has been met. The situation is now such that boardrooms are no longer seen as inaccessible to women. The starting point was to redefine what is acceptable corporate behaviour – and that the top is not only a place for ageing, white men.