“Institutional inertia” is to blame for the fact that only 33 FTSE 100 companies have heeded Lord Davies’ call to set targets for increasing the number of female directors on their boards.
A progress report due to be unveiled at a Downing Street reception this afternoon will also reveal that, of the 33 firms that have set targets so far, only 11% aim to boost female representation by more than 10%, although Lloyds Banking Group and Rolls-Royce are going for hikes of 22% and 23% respectively.
Lord Davies’ review, which was published in February, recommended that FTSE 100 companies aim for a minimum of 25% female board representation by 2015.
Among FTSE 250 organisations, however, a mere 17 have announced their targets. But Prime Minister David Cameron is set to confirm that he plans to write to the bosses of companies that have failed to disclose their plans to date and intends to “name and shame” them into taking action.
The progress report, written by Cranfield School of Management, will also show that nearly a third of appointments at the UK’s largest companies have gone to women over the last six months.
Limited talent pool
The proportion of females on FTSE 100 boards has crept up to 14.2% from 12.5% last December. Since last February, women have accounted for 22.5% of all appointments – the equivalent of 25 out of a total of 83 – although the figure is below the 33% recommended by Lord Davies.
According to the Telegraph, however, research from headhunters Augmentum Consulting showed that half of all board appointments from now until 2015 would need to be women in order to hit the voluntary quotas. At current rates of progress, females will comprise 21% of FTSE 100 directors by 2015.
To make matters worse, some 16 of the women hired since February have held or currently hold at least one non-executive directorship at another company, raising questions over the size of the available talent pool. Of the remaining nine, one was already an executive on a FTSE 100 board, while six were new to the main board but were likely to have come from executive committees just below the top table.
The problem with this scenario, warned Andy Davies, head of Augmentum’s board practice, was that the talent pool was likely to run out “pretty quickly”. The more “attractive” FTSE 100 companies would be able to lure the best female candidates, but smaller FTSE 250 firms would find it more “challenging”, he said.
As a result, they would need to start looking beyond the corporate world to academia, charities and the public sector for potential candidates.
In another twist, the Financial Reporting Council also confirmed yesterday that it would amend the UK corporate governance code to require listed companies to report annually on their boardroom diversity policy and their progress towards hitting stated goals. The changes will apply from October next year.
