Cranfield Female FTSE Board Report 2016

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The Female FTSE Board Report 2016

Targets for Gender Balance

Chairmen, CEOs, directors, executive search firms and subject-matter experts 7 identified key drivers of success as: –– Setting targets that are ambitious yet realistic –– Monitoring progress six-monthly –– Effective championing by Lord Davies and his Steering Group –– Multiple stakeholder engagement Moving forward, progress must be made by building on the same principles and by expanding the focus to women on Executive Committees and in senior leadership roles. The intense public scrutiny generated by the Davies Review at board level needs to expand to lower organizational echelons. A recent EHRC inquiry 8 found that FTSE 350 companies are more likely to have diversity policies at board level compared to senior management level; only 57% of FTSE 100 companies and 42% of FTSE 250 companies have diversity policies for their senior management teams. This demonstrates the need to adopt a more disciplined and goal-driven approach below board level. While quotas remain incongruent with the UK’s approach and business culture, target setting at board level and below is crucial to sustainable change. But what are the differences between targets and quotas?

TABLE 16. LEGAL AND PRACTICAL DIFFERENCES BETWEEN QUOTAS AND TARGETS 9,10,11,12

Quotas

Targets

Definition –– fixed percentage or number imposed by the State to ensure representation of women, time bound and with sanctions –– contrary to commonly-held beliefs, quotas do not entail selecting a candidate only because of their gender; the proposed EU directive for gender balance on boards calls for companies to give priority to the candidate from the under-represented gender only if equally qualified –– do not entail discrimination against men or positive discrimination towards women Assumptions –– rely on the assumption that you need to change the numbers and ensure a critical mass, in order to eventually change the culture Pros and Cons –– address an intractable problem when other measures have failed, ensuring representation and critical mass, thus lowering risk of tokenism –– send a significant symbolic message from government or regulatory body that introduces them –– perceived as an imposition to business and unmeritocratic (an emotional rather than rational response) –– initially met with resentment, and generally normalised post hoc –– adoption can be relatively swift and uniform if legal penalties are in place –– progress is resilient as enforced by law

Definition –– voluntary aspiration identified and pursued by organizations, without regulatory sanctions imposed by the State –– enable positive action and ‘tie-break’ provisions whereby a company can treat a candidate from an under-represented group more favourably during recruitment or promotion processes, only if two or more candidates are equally qualified –– do not entail discrimination against men or positive discrimination towards women Assumptions –– rely on the assumption that you need to change behaviours and organizational processes, in order to change the numbers and the culture Pros and Cons –– can be more nuanced than quotas, and tailored to different pipeline challenges and talent management processes, rather than just the outcome –– incremental increases in gender diversity bring higher risk of tokenism –– perceived as business-driven and business- owned, which increases likelihood of buy-in from multiple stakeholders and acceptability once adopted –– adoption can be slower or uneven across companies without pressure (champions, roles models, public scrutiny) –– progress is fragile; intense championing and public scrutiny is needed to keep up the pace of change