Recommendations that FTSE 100 companies set voluntary targets for women to make up a minimum of 25% of their boards by 2015 rather than being subject to quotas have met with a mixed response.
Further proposals included in Lord Davies of Abersoch’s ‘Independent Review into Women on Boards’ were that heads of all FTSE 350 firms should set aspirational targets by September this year relating to the percentage of women that they intend to appoint to their executive committees. It also recommended that they review the situation during 2013 and 2015.
But the report likewise said that companies should be required to disclose the number of women at board level and in senior executive positions as well as female representation across the workforce as a whole on an annual basis, adding that compulsory quotas were a “real threat” if progress was not made.
Lord Davies also suggested that the UK Corporate Governance Code be amended to require firms to establish and report on policies that would ensure enhanced boardroom diversity in their annual reports.
Finally, he called on recruitment agencies to draw up a voluntary code of conduct to address gender diversity and lay out best practice when helping with FTSE 350 board level appointments. In fact, the entire appointment process needed to be “overhauled”, the report said.
Lord Davies pointed out that 18 FTSE 100 companies and nearly half of all FTSE 250 companies currently had no females directors at all, but only 135 women would need to be appointed to achieve FTSE 100 targets.
“We need to look at why they are not getting these positions. This is not about aiming for a specific figure and is not just about promoting equal opportunities, but it is about improving business performance,” he said. “There is growing evidence to show that diverse boards are better boards, delivering financial out-performance and stock market growth.”
But the reaction to the proposals was mixed. Jackie Orme, chief executive of the Chartered Institute of Personnel and Development, welcomed the focus on a voluntary approach but said that the review marked only “the start of a process”.
To ensure that targets could be met “swiftly and sustainably”, everyone involved in the governance of UK firms needed to “step back and recognise” that there had to be a “fundamental shift” in established perceptions of what board members looked like, Orme said.
But she recognised that there were “some severely entrenched attitudes” in many of today’s boardrooms, which meant that action must be about “more than skirts on seats”.
“It needs to be about a concerted challenge, led by chairs of boards and head-hunters themselves, to the established views of the skill set, background and range of experiences that make great board members,” Orme said.
Helen Alexander, president of employers’ lobby group the CBI, likewise welcomed the fact that no quotas had been introduced as she believed they would not address “the real issue of how we bring about cultural change”.
“A government-set target for FTSE 100 directors would not reflect the circumstances of individual companies. It should be for companies, not the government, to set an appropriate target,” she added.
But Anna Bird, acting chief executive of women’s inequality charity the Fawcett Society, warned that the failure to recommend quotas was a “missed opportunity”.
“Leaving business alone to tackle the problem on a voluntary basis isn’t working. Continuing with this approach means excluding another generation of women from the top table in business. The time has come to take radical action,” she said.
The evidence showed that positive action through the use of quotas was the only “sure fire way” to ensure female representation at board level, she said and called for the government to set a deadline to force companies to take action. “Wishful thinking and encouraging words are not going to bring about a step change we urgently need,” Bird added.