Cranfield Female FTSE Board Report 2016

Case Studies

The Female FTSE Board Report 2016

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Inquiry into fairness, transparency and diversity in FTSE 350 board appointments

Increasing diversity at board level – and throughout companies – is acknowledged as a priority by business, government and regulators as well as many shareholders and customers. Research has shown that companies with more diverse boards can operate more effectively, by understanding their customers, and more innovatively, by being more open to change. This can in turn lead to increased profits and returns to shareholders. In March 2016, the Equality and Human Rights Commission has published an extensive inquiry into fairness, transparency and diversity in FTSE 350 board appointments. The inquiry report shows that while there has been progress in improving the number of women on boards, there is more that can and should be done. Outdated attitudes and opaque selection processes make improving diversity a challenge. Our inquiry found continuing reliance on ‘old boys’ networks’ to source candidates, reluctance to cast the net more widely and selection based on vague notions of ‘chemistry and fit’, all of which lead to boards recruiting in their own image. Despite the evidence that many firms are now conducting board evaluations which look at diversity, too few actually translate these into setting proper targets and action plans. And a worryingly large proportion still believe that positive action to encourage talented women to apply for roles, or provide them with the skills to do so, has no place in their company. Companies need to look at ways of improving their appointment process so that it is objective, transparent and fair, and selects the best candidate on merit. They need to think about ways of broadening the candidate pool so they consider a more diverse range of people with suitable skills and experience. And, most challenging, if they are to create the female non-executive and executive directors of the future, they need to consider how they can improve the diversity of their talent pipelines – and this means thinking about how they recruit, retain, develop and promote employees.

Laura Carstensen Commissioner at the Equality and Human Rights Commission