As we recognise International Women’s Day on 8th March, progress is definitely being made. Kamala Harris becoming the first female Vice President of the United States, and Jane Fraser becoming the first women to lead a major US bank are positive developments.
In the UK, the news that there are now no all-male boards in the FTSE 350 should be welcomed. The UK government-backed Hampton-Alexander review showed the number of women on boards has risen from 682 in October 2015 to 1,026 in January this year, and overall the percentage of women on FTSE100 boards has risen from 12.5% to 34% since 2011.
This is all encouraging. However.
Benefits of greater board diversity
There is still a huge amount to do. For example, the Hampton-Alexander Review found that only 26.5% of FTSE100 executive committee members are women. At the same time, in the UK’s top 100 companies, only eight CEO and 11 board Chair roles are held by women.
We need to continue to affect more change for a variety of reasons. Most fundamentally of course, it is about having balanced representation in our companies and public bodies. This is needed from both a gender perspective, as well as other demographic factors. Boards need to reflect their wider organisations and that of society.
Second, there are significant business reasons for having greater leadership equality. Numerous studies show that boards with a greater female representation perform better financially (Post & Byron, 2015; Credit Suisse, 2019), on measures of corporate social performance (Byron & Post, 2016; Cook & Glass, 2018), better financial reporting (Dobija, et al., 2021) and make better decisions in both the private and public sector (Institute of Business Ethics, 2020; Sealy, 2020).
Third, there are increasing demands from regulators, investors and consumers for better diversity. How organisations behave, their brand, how they are run and by whom is ever more important and is transparent for all to see (Institute of Business Ethics, 2020; Financial Times 10/02/2019; 02/03/2020).
What do we need for more progress?
The key factor to changing the gender balance within a board or senior executive team is the purposeful intention of the leader. Just as when they embark on any other change programme, if the leader makes increased diversity part of their strategic goals, with measurable objectives, evidence-based interventions and accountability, progress is more likely.
Gender-balanced boards are no longer the rarity that they were in the past. For example, across all 215 NHS hospital trust boards in England women hold 44.7% of directorships (Sealy, 2020), and 59 of the FTSE100 companies now have four or five women on their boards (Hampton-Alexander Review, 2021).
However, attempts to increase diversity fail when a more ‘wishful thinking’ approach is taken by leaders – handing down the responsibility to individuals with very little real power, often in Human Resources, who are told to instigate some ‘diversity initiatives’.
Evidence-based interventions for increasing board and top management team diversity that are proven to work include:
- Monitoring and reporting diversity metrics
- Purposeful recruitment, working with agencies with track records in producing diverse candidates
- Intentional talent management strategies, working with potential internal executive candidates
- Ensuring inclusion and integration are goals, rather than focusing just on headcount
The role of business education?
In the past some aspects of business education were guilty of perpetuating the lack of diversity at the top of organisations, with a focus on the romantic image of the heroic, individualist masculine corporate leader. While that is now less of an issue, a cursory glance at some business school curricula reveal still too few role models of female leaders, case studies with female protagonists, or a lack of diversity within student cohorts.
At Exeter, we are taking a long hard look at our approaches to the issue of diversity, both within our operations, our research and our teaching. For example, on the Exeter MBA, the cohort is 50% male, 50% female. In 2021 all teaching faculty are asked to audit their courses on multiple dimensions of diversity. Environmental Social and Governance (ESG) issues feature across the business school with expertise and research centres in Sustainable Finance, Circular Economy, Environmental Economics and Purposeful Leadership.
Like many business schools, we have work to do and it is important that there is always progress. A key part of our purpose is to help develop the leaders of tomorrow, and we need to do all that we can to encourage, enable and empower the best talent, wherever it lies.