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The number of women on FTSE 100 boards has continued to rise this year (40%), but a new report released today highlights deep concerns about the lack of progress of women into key executive roles and suggests the increase has been driven – again – by boards appointing female Non-Executive Directors (NEDs) to comply with targets.
Cranfield University’s Female FTSE Board Report 2022, supported by EY, is critical of the slow progress of women being appointed into significant decision-making roles, such as Chair and CEO - and calls for executive succession planning to be taken more seriously at board level. To help address and tackle that failure the 2022 report includes a special project on how companies can boost female representation in the executive pipeline.
The Female FTSE Board Report 2022 reveals that ten companies in the FTSE 100 have 30% or less female representation. And, out of the 413 directorships held by women across the FTSE 100, just nine were CEOs, 18 were Chairs, and 377 were NEDs. The number of women in NED roles in the FTSE 100 has increased by 15% over the past year, whereas women in executive directorships increased by just 3% to 36.
Meanwhile in the FTSE 250, the number of women on boards has increased from 35% to 39% year-on-year, with 110 companies already meeting the 40% target. But despite this improvement, for the third year running only 47 women hold executive directorships in the FTSE 250.
Alison Kay, Managing Partner for Client Service at EY, UK & Ireland, commented: “The research shows that FTSE businesses are increasingly hitting the targets set for female representation. However, they are falling woefully short of the intended outcome - distributing the power and influence necessary to achieve true gender parity. My observation is that companies have exhausted all the so-called ‘low hanging fruit’ and now it is time for tough decisions to push further into root and branch reform.
“Companies must now dig much deeper and go beyond complying with board level targets to transform their business and boost its performance. It is time that we now turn our primary attention to addressing, in an urgent way, the alarming lack of progress in gender proofing executive succession planning.”
Lack of progress ‘frankly appalling’
Professor Sue Vinnicombe, Professor of Women and Leadership at Cranfield School of Management and lead author of the report, said: “We have come a long way since I started this report in 1999, but just having women in NED roles is not sufficient to have an impact on the executive pipeline.
“The lack of progress in terms of seeing women in these key executive roles is frankly appalling. For real change to happen, women simply must be in the significant decision-making roles of CEO and Chair.”
Executive succession planning is THE key
Evidence from Cranfield’s special project, conducted as part of the 2022 report, suggests the leadership provided by the Chair and the CEO is critical to developing a diverse executive pipeline.
Executive Doctoral Researcher at Cranfield School of Management, Michelle Tessaro, who conducted the analysis, commented: “In such competitive labour markets, it’s surprising that many companies continue to ignore 50% of the talent pool. Succession planning is often left to the CEO, but there must be more Chair, and indeed Board, accountability for delivering on diversity objectives. The Board must ensure the talent pipeline is developed so women are not ‘pushed out’ or ‘opt out’ of important career development opportunities.”
Recommendations include greater guidance for Nominations Committees – making their role in improving gender diversity more explicit; and for CEOs to recognise they have ultimate control and capability to disrupt the current hiatus.
Alison Kay concludes: “Whilst over 50% of the UK population is female, there is a significant absence of women from our top board roles at a time when diverse leadership is needed more than ever, to help navigate businesses through deep geopolitical and market uncertainty.
“This marks an opportunity for FTSE companies to take action beyond compliance and make meaningful changes that will help to transform their business for the better - now and in the future.”