Gender equality an ongoing challenge for firms

COMPANY boards should reflect society, says Sally-Anne Ogilvie

The quest is proving a long and difficult one with views divided on how best to create the environment to make gender equality happen. Picture: Editorial

With evidence showing that companies with gender-diverse boards strengthen their talent pipeline, increase innovation and perform better financially, equality in the boardroom seems like a no brainer. However, the quest to achieve it is proving a long and difficult one with views divided on how best to create the environment to make it happen.

In 2011, women made up just 12.5 per cent of the boards of FTSE 100 companies in the UK. As a result of the Women On Boards Report by Lord Davies in 2011, the UK set itself a voluntary target of 25 per cent female board members by 2015. The Davies Annual Review, published in March, reports the following progress:

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• Women now make up 23.5 per cent of board members of FTSE 100 companies and it is expected that the target of 25 per cent by the end of 2015 will be achieved.

• Women now make up 18 per cent of board members of FTSE 250 companies (up from 7.6 per cent in 2011)

• For the first time in the history of the London Stock Exchange, there are no all-male boards in the FTSE 100.

While the progress is significant, gender parity is still a long way off.

The fact that of 1,119 FTSE 100 board members, 263 are women, can be cause for only limited celebration.

Women executive directors stand at just 8.6 per cent, with few women appointed to chair or senior independent director positions. Meanwhile, in the FTSE 350 index, there remain 23 all-male boards.

There appears to be a level of consensus that certain barriers must be removed in order to achieve gender equality in the boardroom. Strengthening the talent pool by supporting women into management positions, support for women returning to work after having families and greater flexibility around working arrangements are just some ways of addressing these barriers.

Employment law developments such as the extension of the right to request flexible working and the introduction of shared parental leave should help. However employers need to create the right culture and environment to ensure that women can actually benefit from those provisions.

Cultural change is key and the debate is around how best it may be achieved. There are three methods which have been adopted throughout the world:

1 Voluntary targets - the method adopted by the UK.

2 Quotas - more than 20 countries have adopted legally enforceable quotas for women on corporate boards. The first, Norway, achieved an increase from 9 per cent in 2003 to more than 40 per cent in 2012. France also imposed quotas, plus serious penalties for non-compliance, and has seen an increase from 7.2 per cent in 2004 to 28.5 per cent in 2014. Germany has a relatively low ratio of women board members at 18.5 per cent.

3 Corporate transparency – several countries have imposed disclosure requirements for listed companies.

This tends to include the requirement to report on gender diversity polices and numbers of women in senior positions. In Australia, this has helped to double the number of women on boards.

Whatever the method applied, it is important that the focus on improving gender equality is not lost and that strides continue to be made towards making the boardroom a more diverse and equal place. Of course, gender equality is by no means the last frontier in relation to equality in the boardroom. It will be important to ensure for example that efforts are also made to improve representation of ethnic minorities.

Only then can we achieve the goal of creating company boards which truly reflect the strengths and diversity of our society.

• Sally-Anne Ogilvie is an Associate in the Employment Law team at Harper Macleod LLP