Cranfield University

Press Release

19 Nov 2009 - Corporate Britain is failing women

A year on and the number of directorships held by women on the FTSE 100 corporate boards has remained at the same level as in 2008 at 12%.   There are currently 113 women holding 131 FTSE 100 directorships compared to 834 men holding 947 directorships.

The 2009 Female FTSE report from Cranfield School of Management, that details the number of women directors in the top 100 FTSE companies, reveals a discouraging picture for women.  The number of companies with female executive directors is down to 15 (from 16) and there has been a drop in the number of boards with multiple women directors to 37 (from 39). In addition there is a decline in the overall number of companies with women on boards resulting in one in four companies having exclusively male boards.

There has also been a drop in the number of women holding key positions in FTSE 100 companies. Last year saw the highest number with five female CEOs and three regional CEOs. Today there are only four female CEOs.

Minister for Equality and Women, Harriet Harman said: "When I drew up the Female FTSE Report in 1999, it was clear there was a lack of women in boardrooms. This report shows that we are moving in the right direction and there is still much more that needs to be done.  Businesses that run on the basis of an old boy network and do not draw on the talents of all the population will not be the ones that flourish and prosper in the 21st century."

Top of the league for diversity this year was a draw between Alliance Trust and Burberry.  Alliance Trust was new to the FTSE 100 last year and top of the rankings with three of its seven (43%) board members being female. It is a similar story with Burberry, new to the FTSE 100 this year, and also with three out of seven female board members.

In Alliance Trust both the Chairman and the Chief Executive are women, whereas in Burberry both the Chief Executive and the Chief Financial Officer are women. In both companies an additional woman holds a non-executive directorship (NED).   In third place is Diageo, with 36%, the only FTSE 100 company with four female directors (all NEDs).

Of the 156 new appointees to the FTSE 100 in the past year, only 23, just 14.7%, were women.  Of the 23 new female appointees, 14 had not previously held FTSE 100 directorships, which is a small increase on last year’s new intake to the pool of female FTSE directors.  What is interesting is that of the 14 women new to the FTSE boards, only one is a British national, suggesting that nationality may be an important element of their human capital for board appointments.

One of the few positive findings from this year’s report was the considerable increase in the number of women at executive committee level. 77 of the FTSE 100 companies (up from 71 last year) have a total of 175 (substantially up from 139) women (executive directors and/or listed senior executives) in their top executive teams. This is significant as the percentage is approaching 20%, meaning fewer women are experiencing always being the only woman in the meeting and are closer to future board directorships.

In a year when there has been considerable focus on the financial services sector, the banks have delivered the biggest disappointment.  Within the five banks among the FTSE 100 companies, just 9% (down from 12%) of board members are female. 

“It would appear that instead of becoming a time for change the economic climate of the last year has left the top companies more male dominated.  As recent research increasingly suggests it is only when a critical mass of women in the boardroom is attained – with three or more female board members – that real culture change can occur”, said report co-author Dr Ruth Sealy.

Dr Sealy went on to say: “Interestingly, for both men and women, there has been a decline in the percentage of directors holding two seats and an increase in those holding three seats. This suggests that some organisations are sticking with the elite pool of directors that they know. Obviously, this does not help expand the talent pool.  The lack of increase is worrying, particularly during a year when there were opportunities to increase the diversity of our top boards.”

As in previous years, there are some significant differences between companies with and those without female directors. Market capitalisation is again significantly higher in companies with women on the board, although firms with female directors do not have significantly larger workforces. Board size is also higher averaging 11.1 directors for companies with female directors compared to 9.5 directors for all-male boards.

For the first time, this year’s report looks at Norway and the Nordic countries (Norway, Sweden, Denmark and Finland) and Spain, and examines their progress on increasing the number of women on corporate boards in their countries.  Dr Marit Hoel Director of the Center for Corporate Diversity (CCD) in Norway provided the evaluation and data from the Nordic countries and Dr Celia de Anca, Director of the Center for Diversity in Global Management at IE Business School in Madrid, provided the evaluation and results from Spain.

The common theme characterising both Norway and Spain is that they are actively trying to increase the number of women on their corporate boards through government initiatives and want significant, as opposed to incremental, increases. Interestingly, both countries were at a lower starting point than the UK when their governments took action. But today, due to their action they are progressing at a faster pace than the UK.

In 2004, 83% of ASA companies (now regulated) in Norway had women on their boards. This has now moved to 100%.  30.5% of directorships on Norway’s top 100 ASA company directorships are held by women.  The percentage of companies in Spain with at least one female director is 55% (up from 40% in 2006) and the percentage of companies with multiple female directors has more than doubled, going from 8.7% in 2006 to 19.2% in 2008.

Dr Marit Hoel, Director of CCD commented: "The concerns expressed about the quota law have not been born out. The study reveals that women who entered the boards were significantly higher educated than the men they replaced and younger. The widespread argument that the quota law would lower the level of skills and competence in the boardroom was not confirmed. In addition, what is interesting is that the companies who were not regulated by the law have also shown significant increases in the number of female Chairs and the number of female executive directors."

“Although the data differs across countries, as do the strategies to promote equality, the overall numbers are low and the path towards true gender diversity slow,” said Dr Celia de Anca, Director of the Center for Diversity in Global Management at IE Business School in Madrid.  “However, by continuing to work together, we will achieve equality in corporate Europe and this latest report is an important step towards that goal.”

Another addition to this year’s report is a list of 100 ‘Women to Watch’.  There are now 2,281 women (up from 1,877 last year) on the corporate boards and executive committees/senior teams of all the FTSE listings.  The report authors have identified 100 women who are currently on the executive committees of the FTSE 100 or 250 companies that should be seriously considered for boardroom appointments.  These women were selected from the largest organisations, but there are an additional 2,181 women in the huge and growing pipeline of female talent available to the FTSE 100 boards.

Professor Susan Vinnicombe OBE, co-author of the report said: “This year’s report demonstrates unequivocally that we have a huge and growing pipeline of female talent to FTSE 100 corporate boards.  We support the proposal made earlier this year of a voluntary quota of 30% women on corporate boards over the next ten years.”

ENDS

Further information

For further information please contact: Naomie Stanford-Jones, Press Officer, Cranfield University, tel: +44 (0) 1234 754999

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Press release number: PR-09-09-SOM