News analysis
Gender balance on UK boards still ‘a very long way’ away
The gender balance on UK boards may have changed in recent years. However, women are still underrepresented where it counts.
The UK may look like a beacon of progress regarding corporate governance diversity, but a new report has suggested that despite impressive performance, there is still more work to do.
The report, titled Hidden Talent: The Expertise Listed Company Boards Are Lacking, was researched and written by governance advocacy network Women on Boards in partnership with business consulting firm Protiviti.
It suggested that diversity is still an important issue that needs attention when it comes to executive board positions.
What does Hidden Talent say?
Any positive vibes coming from the UK about gender diversity in the boardroom are significantly dampened by the Hidden Talent report.
It stresses that the UK is “still a very long way from a gender-balanced executive voice in the boardroom”.
The “executive” part is critical in this report because, while it acknowledges that there has been overall progress among the UK’s top boards, it also criticises a certain lop-sidedness.
“A lot of the progress on gender diversity on boards has been made through the non-executive appointments,” it said.
Quick recap: The difference between executive and non-executive directors
Executive directors sit on the board and have a role in the company’s day-to-day management. CEOs are the most common examples of executive directors because they oversee senior management and, by extension, the company’s staff.
Non-executive directors do not have this day-to-day management responsibility. Their only role is board duties. Companies primarily value non-execs for their expertise and impartial guidance.
So, how far behind is progress at the executive level, according to the report?
Excluding company secretaries, the report says that just 10% of executive directors in the UK are women.
This is consistent across the FTSE All-Share, and AIM listed companies, it added. In other words, the trend is the same for bigger, well-known companies as well as smaller ones.
What does this mean?
It means that companies find it easier – or have more desire – to fill non-executive board seats with female candidates than with executive roles. In other words, when we zoom in, the gender imbalance continues.
What’s the broader context?
These figures are a markedly different – and more negative – way of looking at the overall trends in the UK.
The UK has recently had a reputational boost with the news that women filled 40.2% of FTSE 350 board seats. Coming three years ahead of target and on the back of a voluntary campaign, it contrasted the EU next door. Here, new laws (rather than a voluntary movement) will force this change, and the bloc hasn’t reached the same goals yet.
But now, we see that the UK figures are boosted by the non-executive element. Progress at the executive level still needs work, according to advocates.
Why are executive roles so important?
Because they are among the most influential.
Aside from CEOs, executive board roles can also include CFOs and COOs. Grouped with senior independent directors (SIDs) and chairpersons, they form a nucleus of power and leadership at the governance level.
If women don’t fill more of these positions, advocates for gender balance in the UK will continue to criticise them, and say that the gender balance on UK boards still needs to be fixed.