Approximate reading time: 3.6 minutes
Ceram the French Business School has just produced a study showing that the fewer females a company employs the more its share price had dropped since the beginning of last year. This will be music to the ears of those who argue that companies are losing out by not employing more women, especially in senior positions.
The UK wastes a shamefully large percentage of our female talent and it seems to be getting worse not better. According to the Equality and Human Rights Commission (EHRC) the number of women holding senior posts in politics, the law and the media fell last year compared to the previous year.
Although women’s representation increased in eight areas, including company directors and the civil service, in 12 out of 25 job categories studied, there were fewer women holding top posts. Women faced a "concrete ceiling", not a glass one.
The realisation that companies are indeed seriously losing out in the talent wars by not recruiting, developing and promoting more women at the top is gradually penetrating male bastions, where key decisions are made about such appointments.
The trouble is, changing attitudes is taking an extraordinarily long time, given the wealth of facts about what women bring to a company’s performance record.
In Norway they simply stopped hanging around for the penny to drop. Dramatic legislation in effect told public companies:”recruit more women or risk being closed down by the end of the year.” Consequently Norway now has 44.2 percent women on boards as a result of its quota legislation, but apart from the Netherlands, the rest of Europe is moving with glacial slowness.
In the UK for example Just 11% of directors of the FTSE 100 are women. There are only 8 ethnic minority women directors in FTSE 100 companies and no Black British female directors in FTSE 100 companies.
The top 3000 European companies still have under 10% of women on their boards,though it has increased slightly since 2006. Of a total 5,146 board seats, women occupy a laughable 501.
Why shouldn’t Britain adopt a quota? If it worked in Norway why should it not work here? But quotas though demand political courage and timidity characterises most the political thinking currently available from whichever party.
The business case for more women at the top is rather like climate change–hard to challenge yet even harder to achieve concerted action that gets results.
Research by Catalyst and McKinsey have shown a correlation between gender diverse boards and greater company performance. And a McKinsey report showed that performance increases significantly once a critical mass of 30% women at board level is attained.
There are some perfectly rational arguments why Britain should adopt a quota like Norway. In Breaking the Mould for Women Leaders: Could boardroom quotas hold the key? [PDF]. The authors concluded that we must acknowledge that Norway’s has “demonstrated that a significant step-change in women’s representation is achievable.”
Have an enjoyable five minutes fantasising about the howls of fury erupting from The City and CBI if Gordon Brown suddenly announced that every UK public company must have one third of its non-executive directors as women by a suitably tight deadline. Delicious.
So what can HR professionals do to encourage the necessary shift towards more women at the top, apart from supporting a quota system? Based on ION’s analysisactions might include:
1) Engage the entire board in a comprehensive evaluation process that assesses both itself and its individual members in terms of their performance as well as their competencies.
2) Identify the strengths and weaknesses of the current board within the framework of the company’s strategic plan and the evolving marketplace in which it competes.
3) Develop a forward looking succession plan that places a priority on the gaps that are most important to fill in the short-term but that also takes into account anticipated vacancies and likely emerging needs.
4) Make sure that the succession plan reflects an attention to diversity, including but not limited to gender, race, background and international experience, as well as industry and functional skill sets.
5) Be open to change. Be willing to make room for new directors even if it means replacing some current directors who have provided valuable service to the company in the past.
6) Push for flexibility so as not to unduly limit the candidate pool by imposing unnecessary criteria that are unrelated to the board’s strategic needs. Reach out beyond current colleagues and acquaintances to identify qualified candidates.
7) Start to build a pipeline of future directors and get to know individuals who have the qualifications to meet the company’s needs going forward.
8) Develop relationships with potential candidates who are women and minorities, as well as with individuals and organizations that can identify non-traditional candidates who meet the company’s needs.
9) In connection with any board search, insist that the nominating committee interview and give serious consideration to women candidates.
10) Instruct any retained executive search firm to include several women and minority candidates in any slate it submits to the nominating committee.
11) Consider constructing or requesting an all-female shortlist of candidates, especially if the board does not currently include any women.
12) Avoid “tokenism.” Make sure that the board includes a critical mass of women and minority directors.
