Women in Workplace - Business, Innovation and Skills Committee Contents

7  Women in senior positions

In the Norwegian experience, the women involved quickly became known—dare I say it—as the golden skirts. [Helena Morrisey, CE of Newton Investment Management, founder of 30% Club][186]

The current position

118.  On 1 March 2013, women accounted for 17.3% of FTSE 100 and 13.2% of FTSE 250 board directors. While these statistics might seem low, progress has been made since Lord Davies outlined his ten recommendations for increasing female representation on executive and non-executive boards, in his Report Women on Boards in 2011. His first recommendation highlighted the need for targets to ensure a greater percentage of women on boards by 2015:

All Chairmen of FTSE 350 companies should set out the percentage of women they aim to have on their boards in 2013 and 2015. FTSE 100 boards should aim for a minimum of 25% female representation by 2015 and we expect that many will achieve a higher figure.[187]

119.   His 2013 update highlighted this increase:

In 2010, when I was asked to lead this inquiry, women made up just 10.5% of FTSE 100 board members and 6.7% of those in the FTSE 250. This means that since our work began in 2010 the percentage of female held board appointments has increased by nearly 50%. Crucially, women have secured 34% of all FTSE 100, and 36% of FTSE 250 board appointments since 1 March 2012, clearly showing that businesses are making real efforts to find and appoint capable women to their boards. Only 6 all-male boards remain in the FTSE 100, down from 21 in 2010, and for the second year running, all-male boards in the FTSE 250 continue to be in the minority at 26.8% (67), down from 52.4% in February 2011.[188]

120.  The top ranking company in terms of female board representation is Burberry, which has 37.5%—three women directors out of a total of eight—with both the Chief Executive and the Chief Financial Officer posts being held by women; it is also the only FTSE 100 company that has two female executive directors.[189] The Cranfield University Report The Female FTSE Board Report 2013 cited the next two top ranking boards:

In second place is Diageo with four women directors out of 11 (36.4% of the board). In joint third place are Capita, GlaxoSmithKline and Standard Life, each with 33.3% of their board being female. A quarter (25%) of the FTSE 100 companies have already achieved the target set by Lord Davies in 2011.[190]

121.  However, while the statistics are encouraging, the number of women appointed to FTSE 100 boards has decreased since December 2012. As Lord Davies wrote:

Last August the number of women on boards surpassed 17% for the first time. In December the number reached a peak of 17.7%, it is now 17.3%. Progress since last August has undeniably been slow and this plateauing at the 17% mark is worrying. Government, regulators, investors and business must continue to work together to ensure that complacency is not allowed to set in and the good progress we have seen to date lost.[191]

122.  The Cranfield University report indicated that while the target of 25% female FTSE 100 board directors should be met in 2015, "from our analyses of the boardrooms of smaller listed companies, there has been little increase in the very low numbers of women on their boards (currently 7.6%)".[192] It also highlighted the fact that there had been a drop in the percentage of women on executive committees, from 18.1% to 15.3% since 2009, and stated:

It is therefore not surprising that headway is not being made in the numbers of women holding Executive Directorships. Out of 96 companies, 79 had women on their executive committees, with Shire and Next achieving gender balance. Despite women dominating Human Resources, Law and Marketing in general, this is not reflected at Executive Director level. Further, in terms of paths to executive roles, whilst 48% female Executive Directors were internally promoted the equivalent percentage for men was 62%. This bias forces women to seek promotion in other companies.[193]

123.  The increase in women on boards has been principally in non-executive posts, rather than executive posts:

As of March 2013
FTSE 100
FTSE 250
Female-held directorships
194 (17.3%)
267 (13.3%)
Female executive directorships
18 (5.8%)
32 (5.4%)
Female non-executive directorships
176 (21.8%)
235 (16.6%)
Companies with female directors
93 (93%)
183 (73.2%)
Companies with multiple women
67 (67%)
68 (27.2%)

Cranfield University, The Female FTSE Board Report 2013, page 6

124.  Lord Davies highlighted this difference in his April 2013 update:

Without demeaning the excellent overall progress that has been made to date, the executive pipeline continues to remain a challenge. Women currently hold 21.8% of FTSE 100 non-executive directorships (up from 15.6% in 2010) and 6.1% of executive directorships (up from 5.5% in 2010). Whilst in the FTSE 250, women hold 16.4% of non-executive and 5.4% of executive directorships. This translates, in numerical terms, to just 18 female FTSE 100 executive directors compared to 292 males, and just 32 female FTSE 250 executive directors compared to 558. The figures are stark and highlight just how far there is to go. Such evidence is shifting the debate from directorships as a whole to that of executive directors and the talent pipeline.[194]

125.  Much has been achieved as a result of the recommendations in the Davies Report of 2011. There are some exemplary organisations that have both promoted women to executive board level, and have ensured that women are progressing throughout the structure, and tangible results have been achieved. However, more needs to be done to consolidate that work and to ensure there are more women on boards, especially those on executive committees, and those holding executive directorships. The total number of women on boards can be deceptive, because there has been a drop in the percentage of women on executive committees, from 18.1% to 15.3% since 2009. The Government needs to monitor regularly the proportion of women holding both executive and non-executive directorships.



126.  Changes to the UK Corporate Governance Code came into effect in October 2012. The Code requires companies to report on their boardroom diversity policy, including policy relating to gender, on measurable objectives, and on progress made against such objectives. The Employment Lawyers Association believed that this change could have a positive impact:

Although the Listing Rules do not require compliance with the code, there is a 'comply or explain regime'. Consequently, these changes may improve transparency at top level, which may then flow through to the rest of the organisation. The rate of progress in UK corporate redressing the gender imbalance of their boards should be kept under review to determine whether the current voluntary approach is effective.[195]

127.  Jo Swinson, Minister at the BIS Department, spoke of the benefits of this change:

As of October—and next October for quoted companies—companies have to report on their diversity policy and on the number of women not just on their board but at the next two senior levels in their organisation. What is so important about that is that it starts to address the pipeline issue. You cannot deal with women at very senior levels of the organisation; you have to deal with how that progression works throughout their careers. It is a key tool to drive behaviour.[196]

128.  We welcome the changes to the UK Corporate Governance Code and the new policy of 'comply or explain'. Boards will now report annually on their boardroom diversity policy, including gender, and on measurable objectives for implementing the policy.


129.  In November 2012, the European Commission published a draft Directive to "improve the gender balance among non-executive directors of companies listed on stock exchanges and related measures".[197] The aim of the Directive is to ensure that listed companies have at least 40% female non-executive Directors on their boards by 2020. The Directive contains no binding quotas and also no Community-led sanctions. The 40% objective will apply to non-executive board members of publicly-listed companies only and will not cover SMEs. We heard from Aurel Ciobanu-Dordea, Director of the Equality Directorate of the European Commission who explained the position of the European Union:

Our assessment was that there is an increasing divergence in the practice of the member states that has repercussions on the performance of companies and on the situation and participation of women in such economic decision-making bodies. This can lead, in the future, to problems in the internal market, so more decisive action is necessary at the level of the European Union with due respect for the principles of subsidiarity and proportionality. This is what we have tried to do with this proposal that, on the one hand, is ambiguous, because it defines an objective of 40% by the end of this decade to be reached not on the basis of being women or men in those companies where men are under-represented, but on the basis always of competence, experience and qualities. On the other hand, while making an ambitious proposal, we have also put on the table a system and a solution that is flexible and take mainly into account the different points of departure across the European Union.[198]

130.  We heard strongly felt arguments both for and against the use of quotas.[199] The National Association of Pension Funds was emphatic in its criticism of quotas:

Mandatory quotas are blunt, unsophisticated instruments which address the symptoms of an issue as opposed to solving the root cause; they do not solve the broader issue of diversity nor the underlying problem of women coming through the senior management pipeline, instead leading to unintended consequences.[200]

Margaret Mountford, a lawyer and trustee of the Bright Ideas Trust, also told us that the problem would not be solved by quotas, but by women progressing into senior positions:

The point is not sticking token non-executives on boards; the point is having women at senior executive levels coming through. Nobody wants anybody as a non-executive on their board who does not have relevant experience. Nobody wants to be a token woman on the board.[201]

Conversely, the Discrimination Law Association (DLA) was emphatic in its support of quotas:

Supplementing the education of senior executives on the commercial benefits of diversity within the board-room should be a system of quotas. Although there has been debate about the efficacy and validity of quotas, the DLA would support the inclusion of a requirement for quotas in the UK Corporate Governance Code.[202]

One organisation, the Women's Engineering Society, wrote that its members were split on the issue of quotas "but the number in favour of implementing them is increasing".[203]

In oral evidence, we heard arguments both for and against quotas. Anya Hindmarch spoke about the negative aspects of quotas:

I think it should be about inspirational women inspiring women. The idea of being even on a panel with everyone raising their eyes to heaven because you are the token women who must be interviewed in the process is so annoying. I think it demeans women; it could actually make a joke of the whole thing.[204]

In contrast, Dr Ashley Steel, from KPMG, told us that "I do think you can have quotas and a meritocracy sitting alongside each other, but I certainly did not think that a year ago". Marie O'Riordan, Editor in chief, John Brown, also argued in favour of quotas:

To add to the complexity of the debate, the words 'tokenism' and 'gratuitous' are slightly dangerous. [...] Men traditionally have risen through the ranks. They are often mediocre men compared with the reluctant women who are missing out. I do not think it is about tokenism. Often, talent is genuinely being held back because of centuries of sexism, frankly.[205]


131.  There are a number of academic papers which claim that the imposed increase of women representatives on the boards of companies in Norway since 2003 has resulted in a financial decline in the performance of those boards.[206] Dr Catherine Hakim, a sociologist, wrote that "there is no evidence that Norwegian firms have benefitted commercially from the change, contradicting arguments about the 'business case' for quotas".[207]

132.  The Campaign for Merit in Business wrote that leading proponents of quotas have themselves disregarded the business case and "no longer claim a positive causal link with enhanced corporate performance".[208] This change of stance reportedly includes Catalyst (the American campaigning group that was the source of several studies cited by proponents of gender diversity in the boardroom).[209] However, Catalyst submitted written evidence to our inquiry, which—far from no longer claiming a positive causal link with enhanced corporate performance—stated the following:

Catalyst has studied the relationship between the representation of women on corporate boards and corporate financial performance. Our research on Fortune 500 companies finds a clear and positive correlation between women board directors and enhanced corporate financial performance, particularly when a company sustains its commitment to gender diversity over time.[210]

133.  Other contributors to the inquiry cited a body of evidence that indicated that greater diversity, including gender, can have a positive effect on corporate performance.[211]

134.  The Fawcett Society wrote about the benefit of increased women participation in the workplace, citing work done by the Women and Work Commission[212]:

The case for the economy is equally robust, given that the UK stands to gain £23 billion by better harnessing women's skills. Bold moves by other countries in recent years have overturned claims of any absence of female leadership potential, demonstrated that a significant step-change in women's representation is achievable.[213]

The Fawcett Society cited another example:

A 2012 study by the Credit Suisse Research Institute also demonstrates the substantial benefits of boardroom diversity for business. According to this study, companies with more female board members had a greater return on equity and higher average growth than companies with no female board members. The business of attracting, retaining and promoting the best talent is of primary concern to all UK businesses, particularly in the current financial climate of uncertainty.[214]

The 2012 study by the Credit Suisse Research Institute, Gender Diversity and Corporate Performance, analysed the performance of nearly 2,400 companies with and without women board members from 2005 to 2012. It concluded that

Relative share price outperformance of companies with women on the board looks unlikely to be entirely consistent, but the evidence suggests that more balance on the board brings less volatility and more balance through the cycle.[215]

135.  We have not attempted to establish whether a Board with female representation adds or diminishes the corporate financial performance. Instead, we have focused on whether a more equal and diverse board composition was a good objective in principle. This view was highlighted by the evidence of Dr Hazel Conley et al:

While the business case is important, especially as it is the only argument for diversity to which employers will respond, it can also be argued that having more women on Boards is a matter of equality and social justice and offers an opportunity for women to have a stake in the running of some of the most important and powerful business organisations in the UK, as decision-makers. Senior management, especially at Board level, is the area where women have made least progress in terms of breaking the cycle of vertical job segregation and its related repercussions for the gender pay gap.[216]

136.   Some of our witnesses believed that considering half the population was female, it also made wider business sense to include women in the strategic decision-making process of an organisation. Heather McGregor described the 30% Club's position in reference to this point:

The 30% Club is actually much more concerned about the effectiveness of boards, which does not necessarily mean financial performance. Financial performance will be heavily dependent on the CEO. We believe that more women on boards will deliver more effective boards and, apart from anything else, for many companies lots of their customers are women, for instance. I think it makes a lot of sense that Robert Swannell has a lot of women on the board of Marks & Spencer.[217]

137.  According to the Fawcett Society, the Equality and Human Rights Commission (EHRC) estimated that "at the current rate of change it will take more than 70 years to achieve gender-balanced boardrooms in the UK's largest 100 companies". [218] This rate of change is unacceptable, and if voluntary measures plateau or decline, the adoption of quotas must be considered. Indeed, in response to a question about whether the Government would ever consider quotas if voluntary measures do not work, the Women and Equalities Minister, the Rt Hon Maria Miller MP said:

I would certainly not rule them out, and I would want to ensure that companies knew that we were, as a Government, looking for real action here. It is only by making that clear that we can have the sort of effective action that is needed.[219]


138.  We heard evidence highlighting the fact that women lack confidence in the workplace, either where they are under-represented, or when they apply for senior posts. Evidence from the Mentoring Foundation, which operates the FTSE 100 Cross-Company Mentoring Programme, highlighted how women's perceptions of themselves can hold them back:

In our experience stereotyping and women's failure to progress to the top of large organisations result from complex and often invisible barriers such as lack of confidence, preconceptions about what it takes to succeed, lack of relevant role models for women and feelings of isolation and ambivalence. Interventions which tackle these root causes are needed and our work demonstrates that effective mentoring relationships with powerful business role models (both male and female) fulfil those needs and can bring about real change.[220]

The Mentoring Foundation advocates "well-run effective programmes of mentoring relationships across industries and starting in schools, targeted at schools, young women entering the workplace and beyond".[221] The benefits of mentoring were cited by many as having a positive effect on people's perception of their own ability, which was summarised by Dr. Steel, from KPMG:

We have mentoring for men and women—it is not gender specific. Not everyone who goes through some form of mentoring necessarily gets promoted or moves upwards. It is only one part of a much bigger, rich mix of things you have to do to help to support women—and men, and people of different diversities—through the organisation.[222]

139.  We are encouraged by the increase in the number of women on boards, and support the continued work of Lord Davies in his voluntary approach. We recommend that the Government highlights best practice of mentoring and networking initiatives run for women, in its Think, Act, Report initiative, in order to stress the importance of increased opportunities for women to apply for boardroom appointments. Those companies that are more successful nurture their potential leaders at all levels of the workforce.

140.  While we support the voluntary approach of Lord Davies, we are concerned that the number of women appointed to FTSE 100 boards has decreased since December 2012. The Government has put on record its intention to take tougher measures, in the form of quotas, if the voluntary approach does not work. The Government needs to set out clear figures, and a timescale, to outline to businesses what will be done if those targets are not achieved.

186   Q 183 Back

187   Lord Davies, Women on Boards,, February 2011, p18 Back

188   Lord Davies, Women on Boards April 2013, p 2 Back

189   Cranfield University School of Management, The Female FTSE Board Report 2013, April 2013, p 6 Back

190   Cranfield University School of Management, The Female FTSE Board Report 2013, April 2013, page 6 Back

191   Lord Davies, Women on Boards, April 2013, page 3 Back

192   Cranfield University School of Management, The Female FTSE Board Report 2013, April 2013, page 6 Back

193   Ibid, page 7 Back

194   Lord Davies, Women on Boards, April 2013, p 6 Back

195   Ev 172 Back

196   Q 449 Back

197   Council document 16433/12, COM (12) 614 Back

198   Q 340 Back

199   For example, those against: Ev w44; Ev w69; Ev w98; Ev w210. Examples of those in favour: Ev 239; Ev 168; Ev 229; Ev w81. Back

200   Ev w69 Back

201   Q 237 Back

202   Ev 166 Back

203   Ev w102 Back

204   Q 271 Back

205   Ibid. Back

206   Examples include Professor Kenneth Ahern and Professor Amy Dittmar, The Changing of the Boards: the Impact on Firm Valuation of Mandated Female Board Representation (2011); Professor Oyvind Bohren and Professor Oystein Strom, Governance and Politics: Regulating Independence and Diversity in the Board Room (2010); Professor David Matsa and Professor Amalia Miller, A Female Style in Corporate Leadership? Evidence from Quotas (2011). Professor Daniel Ferreira and Renee B Adams, Women in the Boardroom and their Impact on Governance and Performance (2008); Professor Allen N Berger, Thomas Kick and Professor Klaus Schaeck, Executive Board Composition and Bank Risk Taking (2012), Cited by Campaign for Merit in Business, Ev 157-158 Back

207   Ev 204 Back

208   Ev 157 Back

209   Ibid. Back

210   Ev w9 Back

211   For example: Ev 206; Ev 195; Ev w44.  Back

212   The Women and Work Commission wrote in Shaping a Fairer Future (2006) that increasing women's participation in the labour market and in higher grade roles could be worth between £15 billion and £23 billion a year to the UK economy.  Back

213   Ev 195 Back

214   Ev 196 Back

215   The Credit Suisse Research Institute, Gender Diversity and Corporate Performance, 2012, introduction. Back

216   Ev w21 Back

217   Q 71. As of March 2013, there were 15 Marks & Spencer board members, 4 of whom were women. Back

218   Ev 195 Back

219   Q 493 Back

220   Ev 207 Back

221   Ev 208 Back

222   Q 210 Back

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Prepared 20 June 2013