Cranfield Female FTSE Board Report 2016

Executive Study

The Female FTSE Board Report 2016

02

THE EXECUTIVE PIPELINE Progress among executive ranks and in the executive pipeline remains very slow. Female executive directorships stand at 9.7% in the FTSE 100 and 5.6% in the FTSE 250. This year we expanded our analysis below board level and found that there are only 19.4% women holding roles on Executive Committees of FTSE 100 companies. This shortage of women in top senior roles will make it difficult to reach and sustain the new target of 33% women on boards by 2020. The Davies closing report encouraged FTSE 350 companies to extend the best practice seen at Board level to improve gender balance and look to fundamentally improve the representation of women on the Executive Committee and senior-most leadership positions. This challenge is being tackled by Sir Philip Hampton’s Government-backed Hampton/Alexander review and we hope this will spur on renewed progress. In this report, we make the case for the usefulness of gender targets below board level, and present case studies of organizations that are pioneering this approach. STRATEGIES TO MAINTAIN MOMENTUM MOVING FORWARD After a successful closing of the Davies Review in October 2015, we observe this year a concerning trend of stalled progress. We outline below key points to be considered for future action: –– The focus on boards must be preserved as the pace of change has not kept up after the Davies closing report. Chairmen and search consultants must ensure that boards are continually refreshed and that we return to a board turnover rate of at least 14%. A larger share of new appointments must go to women, and the board appointment process must remain robust, transparent and gender-inclusive. Organizations must ensure that women not only get on boards, but actually reach senior roles such as Senior Independent Director and Chairman. –– Greater attention should be paid to the female pipeline. Women are under-represented on FTSE 100 Executive Committees, especially in operational and C-suite roles, compared to functional roles. Future action should consider how organizations can develop talented women more effectively and how they can encourage more of them to take up operational roles. –– We need more robustness and transparency in reporting gender composition at Executive Committee level and below. Companies should be encouraged to monitor and report gender balance across all seniority levels. –– Metrics and targets are effective tools to create a disciplined approach to gender balance and cultural change in organizations. In this report we lay out principles of target setting and provide case studies of organizations that use voluntary gender targets. We invite other FTSE companies to consider how such measures might help them achieve progress towards gender balance in senior management ranks and below.