Women make up 25% of FTSE boards: so what comes next?

30 October 2015 -

The findings of The Davies Review are welcome, but they raise just as many questions as they answer...

Matt Scott

The number of women serving on FTSE 100 boards has exceeded the 25% target set by government for the first time.

The news comes after Prime Minister David Cameron announced new rules this week that will require companies to publish gender information regarding bonuses in a further crackdown on inequality.

The Davies Review, published today, found that 26.1% of boards in the FTSE 100 are now women, up from 12.5% in 2010 (see below).

Furthermore, the report has also found that the number of women on FTSE 350 boards has steadily increased every month since 2011. This means that there are now 550 more women serving on these boards than four years ago.

The number of all-male boards has fallen to 15 from 152, while there are no longer any all-male boards in the FTSE 100.

Writing in the report, Minister for Women and Equalities Nicky Morgan and Baroness Lucy Neville-Rolfe said: “It is impressive to see such a significant culture shift in our top businesses across the country, with more women on boards than ever before. Women now make up over 25% of FTSE 100 board members, and we no longer have a single all-male board left – compared with 21 in 2011.

“These are important achievements we should all be proud of. Progress has been down to the forward thinking of business leaders who recognise that this is not only the right thing to do, but it is also good for business.”

Reports by McKinsey and Grant Thornton claim to quantify the positive impact of diverse boards: according to Grant Thornton, quoted companies in the UK, US and India with at least one female on the board showed a $430bn return-on-assets differential to men-only boards in 2014; McKinsey reckons that the most gender-diverse companies are 15% more likely to outperform the least diverse.

Work still to be done

Despite the encouraging progress, the fact remains that boards at leading companies are still dominated by men, especially when it comes to executive directorships.

Lord Davies has now recommended a new target for 33% of directorships to be held by women, across the entire FTSE 350, by 2020. While acknowledging the progress made in the last five years, Petra Wilton, CMI’s director of strategy and external affairs, called on businesses to ‘step up to the next challenge’ and move to get more women into senior roles.

“FTSE 100 companies are waking up to the fact that diversity in the boardroom is very good for business,” she said. “We’ve hit Lord Davies’s first target but there are many more milestones before we reach genuine gender balance in board-level roles.”

Executive roles remain male-dominated, with women holding just 9.6% of executive directorships in the FTSE 100. Wilton pointed out that this highlights the continued need to unblock the talent pipeline for women.

“All listed companies must step up to the next challenge of increasing the number of women holding executive directorships and CEO roles," she said. "This needs to be a voluntary initiative; just parachuting women into board roles will not lead to sustainable changes at the top. Companies must adopt measures to unblock the talent pipeline that prevents all too many women from aspiring to and achieving the biggest roles in business.”

In a separate report looking at women in boardrooms, the recruitment company Audeliss warned that the pipeline of female talent is “too slim” to sustain the progress made so far.

"As the government spotlight from Lord Davies dims, there is a very real danger that companies could go into reverse gear in terms of their boardroom diversity,” said Audeliss CEO Suki Sandhu. "We need companies to focus on nurturing the next generation of female talent with executive leadership programmes and by allowing more flexible working arrangements and other family-friendly policies."