House of Lords - Women on Boards - European Union Committee

Women on Boards - European Union Committee Contents

CHAPTER 6: DEVELOPING THE PIPELINE

125. So far in this report, we have sought to propose mechanisms to set in train changes to attitudes and behaviour in the corporate world. These measures seek to address issues of demand in a workable, achievable way. It is also important to address the supply-side of the equation to ensure long-lasting change.

126. To begin, we stress again that the issue at board level does not result from a lack of qualified female candidates. The Professional Boards Forum said that the "shortage of qualified women is perceived, not real".[229] Lord Davies of Abersoch agreed: "The supply is there. It is undoubted".[230] Indeed, as we have noted elsewhere, the Female FTSE Report identified 2,500 women ready for board positions.[231] The Government noted that this far outstripped the 99 additional women required to meet the Davies target of 25 per cent of board positions being held by women by 2015.[232]

127. Yet despite the wealth of talent, only 20 women—6.6 per cent of the total positions—sit on boards as executive members in the FTSE 100.[233] This is an increase from when monitoring began 13 years ago, when there were only 13 female executives.[234] The increase is also in the context, as the CBI outlined, of a halving in the number of executive positions on FTSE 100 boards overall since 1999.[235] Nevertheless, progress is lamentable. For the Fawcett Society, the figures represented "the fact that women in the United Kingdom face significant barriers to progressing to the very top of decision making structures".[236] Professor Susan Vinnicombe described "a leaky pipeline—a pipeline that leaks women at a number of different levels".[237]

128. We have sought elsewhere to tap into this available talent more effectively. We must also look to the future. As Professor Susan Vinnicombe stated: "long term I think that we have to address the sustainability of the number of women on boards".[238] This is imperative; to do so would move the corporate world towards true meritocracy.[239] We agree with Helene Reardon-Bond, Head of Gender Equality Policy and Inclusion at the Government Equalities Office, that "women on boards, or the lack of them" are "a barometer for what is going on deeper down in business."[240]

129. Witnesses insisted that changing this picture meant changing the attitudes and cultures of men at the top of corporate hierarchies.[241] Importantly, though, it also called for efforts to change the perceptions of women and build confidence. Sapphire Partners asserted that "part of the challenge historically has been that women have not been putting their hands up".[242] It noted that "women are much less likely to put themselves forward unless they have 120 per cent of the qualifications".[243]

130. There have already been positive efforts on both fronts. In the United Kingdom, the business and executive search communities have taken the lead, with initiatives in place to develop female candidates by providing opportunities to gain visibility, exposure and confidence. One aspect of this is mentoring—"a big issue" for Lord Davies of Abersoch.[244] The most prominent such scheme is the FTSE 100 Cross-Company Mentoring Scheme.[245] This matches Chairmen and Chief Executives of FTSE 100 companies, or their equivalents in the public sector, with appropriate candidates for mentoring. There have been 94 participants in the programme since 2003. In the last two years alone, 14 were appointed as non-executive directors, and there are plans to expand its reach more widely.[246] Training is linked to this work: Spencer Stuart referenced a "thriving, very effective industry out there, which trains 'newbie' board directors'".[247]

131. We also heard of efforts to develop networks to support talented women. The 30% Club has worked to set up a number of sub-groups and sector-specific infrastructures, such as a Partnership Pipeline Initiative for accountancy, law and consultancy firms.[248] Best practice for board appointments is exchanged through schemes such as the Professional Boards Forum.[249] Supporting these efforts, the Cranfield School of Management maintains a database of talented women[250] and the Government has established the Women's Business Council to suggest and take forward additional work programmes.[251] It is worth noting here too the efforts made by individual businesses, such as PWC, Aviva and Accenture, to address issues of gender diversity more effectively.[252]

132. There are examples to draw upon from elsewhere in Europe too. In Belgium and Denmark, female candidate databases have been set up to increase visibility on a more formal footing than the Cranfield model.[253] In Sweden, the government has commissioned a national programme focusing on women's entrepreneurship.[254] In Austria, the government established an action plan to address gender equality in the labour market.[255] As well as these public authority-led schemes, the NHO established a "Female Future" scheme in Norway to recruit and retain talented young people through mentoring and motivational work.[256]

133. We are entirely supportive of efforts in all of these areas. They will go a long way to developing a more diverse and extensive talent pool, allowing women to progress to more senior roles and changing the perceptions of senior male figures in the process.[257] Significantly, they also develop female role models that inspire women to pursue high-level careers.[258] Reflecting this fact, Spencer Stuart noted that, though only 16 per cent of directors on Standard and Poor 500 companies were women, the figure increased to 33 per cent at the 20 companies on the index with female CEOs.[259]

134. The benefits and importance of developing the pipeline are clear, but the question remains as to the role for the Government and EU institutions in this work. Some witnesses supported their intervention. The Fawcett Society wanted to see a Government-commissioned database;[260] GC100 also wanted a database, but thought that this could be done at EU level.[261] The EHRC wanted European Social Fund grants to be directed towards schemes to ready women for board appointments.[262] An Inspirational Journey, an organisation that develops initiatives to improve the representation of women in senior corporation positions, wanted to see a nationwide awareness campaign to make the business case for improved female representation.[263]

135. In our view, such initiatives are most effective when they are business-led.[264] This avoids the risk of duplication, but it also gives businesses a greater sense of ownership in the work being done and allows work to be better tailored to specific sectors.[265] ILM identified the coming years as particularly opportune for real shifts in this sphere;[266] business should be given the opportunity to seize this initiative.

136. We would resist the use of European Social Fund money to foster the development of talent in the highest echelons of the corporate world. This Committee has called for the European Social Fund to focus on the least skilled and the most in need in the longer-term, and funding for high-level corporate appointments would not accord with that aim.[267] Similarly, given the high profile of the issue of gender diversity in the corporate world, a wide-ranging awareness campaign would be a misdirection of resources in the area.

137. Our judgment does not rule out a role for the Government. They must make sure that business leaders remain engaged in this work, and they should also be prepared to step in to support and develop the many excellent schemes that we have identified.[268] The Government should also use their influence to expand those schemes across a wider span of the United Kingdom, and to encourage businesses to look beyond the narrow confines of the private sector when identifying prospective talent.

138. One way of doing this would be to work with Cranfield to put the database of female talent onto a stronger footing, in line with schemes in other parts of Europe. An expanded scheme could encompass a wider range of female talent and become a vital resource for businesses. Dr Barnali Choudhury suggested funding this scheme by charging firms a yearly maintenance fee, with free registration for candidates.[269] This would be one sensible way to cover the costs of its expansion, but we do not prescribe its format.

139. The EU can play a part as well, but it should respect Member State competences in this sphere—addressing pipeline issues is a legitimate area where governments can point to cultural diversity as a reason for developing tailored national approaches.[270] Its most effective role would be in highlighting excellent programmes and efforts in individual Member States, as it does at present in its Women in Economic Decision-making in the EU progress report and associated database.[271] If our recommendation to develop this reporting regime was taken up (see paragraph 87), this role would only be strengthened.

140. The EU should in particular seek to facilitate initiatives that operate across Europe. These include the database of talent compiled by the European Roundtable of Industrialists;[272] the European Professional Women's Network;[273] and the guidelines for action issued by the European Trades Union Congress.[274] To this end, we welcome the Commission's support for the Women on Board initiative, which published a list of 7,000 "board-ready" women from across the EU.[275] This more collaborative form of action would be more appropriate for the EU than quotas. It would allow the EU to set out the political importance of sustained action and to monitor the results over the next five years.

141. The role we foresee for the Government and the EU, then, is one of fostering best practice. In our evidence, we heard calls for more fundamental changes in social policy to address pipeline issues and to take account of the varied obstacles that women face, which can be compounded by discrimination based upon disability or ethnicity. Some witnesses felt that, to develop a truly sustainable pool of talented women, Member States needed to offer more extensive childcare provisions, facilitate more flexible means of working, alter the nature of parental leave and better tailor teaching in schools to give pupils a sound grounding in financial literacy.[276] The Minister, for example, drew attention to the need to look at the "culture of the way that we work".[277] The Norwegian government pointed to the family policies in Norway as an important reason for the longstanding engagement with gender diversity there.[278]

142. There are some policies in development that look to address these concerns. In the Queen's Speech in May 2012, which set out the Government's legislative programme for the present Parliamentary Session, the Government committed to introducing a system of shared parental leave.[279] The Minister repeated the commitment to bring forward proposals in evidence.[280] There are also consultations taking place at EU level on the possible revision of the Working Time Directive.[281] These are sensitive, complex policies that reflect important cultural judgments; it would be inappropriate to seek to address them as a small part of this inquiry. We nevertheless welcome the focus on this issue and the willingness of the Minister to be "pretty radical" in thinking about these issues.[282] We hope in doing so that the Government and the EU consider the implications of any fundamental changes in the round, to ensure that measures do not hold back the progress of women in the labour market unintentionally.

143. It is imperative to develop a sustainable supply of talented women who are ready and able to take on board positions. Training, mentoring, networking and visible databases of female board candidates all help to boost confidence and ensure that capable women are not ignored. These efforts are central to improving the participation of women in executive board roles and in the highest levels of management, where there are such stark imbalances at present, and to improving gender diversity in the boardroom on a sustainable basis.

144. The development of this supply should be led by the business community. This ensures that businesses are engaged and able to see the benefits of the work, furthering their commitment to the agenda. The Government should use their influence to support the expansion of the best initiatives that emerge, such as the FTSE 100 Cross-Company Mentoring Programme, filling gaps in funding where appropriate. They should also work with the Cranfield School of Management to expand its database of talented women to encompass a wider span of female managers and sectors. We do not propose a particular form.

145. The Commission should respect this voluntary approach and focus on highlighting best practice. The best vehicle for these efforts is through its existing, excellent work on women in economic decision-making. The Commission's role would be enhanced if this work was expanded, as we recommend elsewhere (see paragraph 87). In particular, the Commission should use its influence to develop initiatives that operate on a pan-European basis, such as the European Roundtable of Industrialists' database of female talent.

146. Developing a sustainable supply of female talent may also require broader cultural reform of working practices. A detailed consideration of such changes is beyond our remit. Nevertheless, we welcome the broad focus at both national and European level on these important issues, as part of a sustained effort to deliver a more equal and effective world of business.

229 Professional Boards Forum Back

230 Q52 Back

231 Cranfield University School of Management International Centre for Women Leaders, The Female FTSE Board Report 2012: Milestone or Millstone, op. cit. This was cited at Q90 (Dr Karen Jochelson, EHRC), Q170 (Kate Grussing, Sapphire Partners; Lesley Brook, Brook Graham) Back

232 Q35 (Jonathan Rees, GEO) Back

233 Cranfield University School of Management International Centre for Women Leaders, The Female FTSE Board Report 2012: Milestone or Millstone, op. cit. Back

234 Q198 (Professor Susan Vinnicombe) Back

235 Q145 (Neil Carberry) Back

236 Fawcett Society. See also ABI Back

238 Q198 Back

239 NAPF, Supporters of Heather Jackson, PWC, Brook Graham, Fawcett Society, IMA, IDDAS, An Inspirational Journey, IDDAS, The Mentoring Foundation, ABI, TUC, ELA, Spencer Stuart, Mary Honeyball MEP, NAWO, CBI, QCA, Professional Boards Forum, EHRC, Q86 (Dr Karen Jochelson, EHRC), Q116 (Liz Murrall, IMA), Q133 (Joanne Segars, NAPF), Q160 (Simon Walker, IoD), Q221 (Professor Susan VInnicombe), Q267 (Helena Morrissey, 30% Club), Q282 (Sonja Lokar, EWL) Back

240 Q36 Back

241 Brook Graham, IDDAS, Fawcett Society, Elin Hurvenes Back