Despite the Government setting a target of 33% women in leadership roles at FTSE 350 companies by 2020, and despite a flow of formal reviews, our results show this has been little to no progress. The Pipeline’s fourth consecutive, independent report of the FTSE 350 found that:
We call on (hover for more detail):
Government nationally and locally to adopt a target of 33% females on executive committees as a requirement in public procurement for organisations with annual turnover in excess of £100 million.
Fund managers to take the 33% minimum target of women on executive committees into account when making investment decisions.
Pension Fund trustees must also require their fund managers to provide an action plan and timetable to achieve 33% female partners making their investment decisions, as greater diversity leads to better decision making.
FTSE 350 companies to have minimum targets of 33% female representation on their executive committee and at least one woman executive director on their main board.
The inability of the UK’s major businesses to appoint and develop female talent into the most senior positions is, sadly, mirrored in countries across the world. It is an international problem.
Currently, only 6% of FTSE 100 CEOs are women, an extremely low level of achievement. For companies listed on each major domestic stock exchange, in India (Nifty 50) and Germany (DAX 30) there are no women CEOs, whilst in China (SSE 50), Hong Kong (HSI 50), the USA (Dow 30), Spain (IBEX 35) and France (CAC 40) there is only one woman CEO running big businesses in each country. It seems that across the world, familiar problems and barriers remain for talented businesswomen.
Although traditionally an industry sector with a high proportion of women on the workforce, this is unfortunately not represented by the ratio of women in P&L roles or as Executive Directors. No change was achieved since last year, but a slight increase was noted in the number of women on Executive Committees in this sector.
The representation of women on Executive Committees and as Executive directors at Board level within the administration and support services sector is largely unchanged since last year, with women in P&L roles on Executive Committees and women Executive Directors both being under 10%, which is particularly disappointing given the female dominated workforce in this sector.
This sector has been the focus of much recent media attention in terms of how women are treated within the industry; a more significant increase in female representation in P&L roles and on the Executive Committees could go a long way to helping this sector tackle its issues.
Banks are showing a disappointing drop of 5% in women’s representation on their Executive Committees (20% in 2019 from 25% in 2018). Also the representation of female Executive Directors at Board level almost halved in the last year (5% in 2019 from 9% in 2018).
Despite a concerted effort by construction to recruit more women into the industry, they continue to be under-represented in critical roles and as Executive Directors on the Board of Executive Committees. Also only 13% of Executive Committee roles are held by women remains unchanged since last year.
Women are still under-represented on Executive Committees (despite communications companies being dominated by women, 66% according to the PRCA). A slight rise from 9% to 13% of women Executive Directors on the Boards of companies in this industry still results in women being woefully overlooked for these roles.
The representation of women on Executive Committees in P&L roles and Executive Directors on Boards in the insurance industry is low and has dropped by 1% since last year. A very small rise (3%) was seen in the representation women on Executive Committees which shows a great deal of work still to do. The appointment of Penny James as CEO of Direct Line has been a very positive step and if another company were to follow suit this could make a huge difference in this industry.
Interestingly, Direct Line Group bucked the trend in insurance and we have shared further below the inside story on their inclusion journey.
Within the manufacturing and engineering industry, women have doubled their representation as Executive Directors on their Boards, but even that rise only leaves them at 12%. Women on Executive Committees that hold key P&L roles remained stagnant at a very low 4%.
No women are to be found on the Executive Committees or as Executive Directors on the Boards of Mining and Quarrying, and a mere 12% of Executive Committees in this sector boast women representatives. This is clearly unacceptable in 2019 and in an industry that claims to be keen on engaging women.
We’ve seen mixed results in this sector. Pharma has almost tripled their representation of women on their Executive Committee (now at 26% up from 9% in 2018) however the representation across P&L roles has halved (now to 4% down from 8% last year). There was also a drop in representation of women Executive Directors on boards (down to 6% from 10% last year). This points to women taking on functional roles on Executive Committees not P&L roles or Executive Directors roles which are key roles to coming CEOs and possible future chairs of PLCs.
The number of women represented on Executive Committees in Profit and Loss roles in this sector has actually dropped from just 7% to 6% over the last twelve months. A rise from 8% to 11% of women as Executive Directors has done little to counteract this when we consider the vital role in the day to day running of organisations in this industry played by P&L decision-making positions.
The representation of women on Executive Committees in the Retail industry has increased from 22% to 24%, and the percentage of women on Executive Committees with P&L responsibility, roles directly linked to the day to day running of the business, has increased from 8% to 13%. Sectors, like retail, with a high proportion of women in their customer base appear to be more likely than others to realise that their leadership should reflect their customer base. Bearing in mind however that Retail is the single largest private sector employer in the UK, employing almost 1 in 10 members of the UK workforce, these figures are still on the low side and we look forward to better progress next year.
The transport and storage sector has seen a very small rise an across the board in women on Executive Committees and in Executive Director roles. However, in such a male dominated industry there has been a 5% drop with only 3% of Executive Committee roles held by women with P&L responsibility.
The Utilities industry is already in the top quartile for women on Executive Committees and as Executive Directors at Board level, and it continues to improve its position. A quarter of those on Executive Committees are now women (up from 18% in 2018), and 22% of Executive Directors on the Boards being women (up from 13% in 2018). The representation of women in P&L roles is still low, even though this had almost doubled since last year (up to 9% from 5% last year). This trend is a concern as these roles are vital to increasing the pipeline of women likely to be appointed as future CEOs.
It starts with the CEO every time and can’t be ducked. They set the priorities for the business and work out how to bring them to life. Delivering better gender balance in key company positions is like any other challenge; it requires commitment from the person at the top. It needs to be owned by them and central to the strategic direction and day-to-day operations of the business. If the boss really wants it, it will happen.
Businesses run on targets. Sales made, profits achieved, level of share price – all are familiar topics for any CEO, bringing focus to strategic activity and supporting accountability. To create an empowered and ambitious group of women who aspire to succeed for their business requires organisations to embrace hard targets. Company leaders must be held accountable with specific numbers and firm deadlines for the appointment of more women to their executive committee. CEOs must leave behind bland aspirational gender statements and start taking direct action to meet clear targets.
Measure, measure, measure and publicly report. In far too many FTSE 350 businesses the number and role of women on the executive committee is treated as classified information. It is good that more companies than before are disclosing details, but this is far from universal. As a minimum requirement, companies should publish full details of executive committees within their annual reports, alongside their company’s gender balance targets. They should also put the gender balance of executive committees on their risk registers. The failure to develop over half of the workforce is a significant risk and should be treated as such. Finally, all the relevant information should be available to external scrutiny through the company website.
Money talks. If a public company is refusing to take action on addressing the lack of women on their executive committee appropriate influence should be used to force the change that’s needed. Government can have a big impact with such organisations, through regulation and the award of public sector contracts. Pension funds can also use the power of their financial investments in businesses to make leaders understand the need to change. We have set out above our ‘call to action’ for government nationally and locally, fund managers, pension fund trustees and FTSE 350 companies.