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More female FDs needed on company boards

Increasing the percentage of women at board level is as much about improving corporate boards as achieving social objectives

Lady Margery Corbett Ashby would have been dismayed. More than eight decades after she helped to win votes for women, only a tiny fraction of them have reached the top levels of British business.

Yet 30 years after her death, the percentage of women on the boards of FTSE-100 companies is a dismal 12.5 percent, and you can count the number of female chief executives in the FTSE-100 on one hand (yes, that’s five). In the FTSE-250, there are even fewer: just 7.8 percent. A long-awaited report from Lord Davies, former trade minister and ex-chairman of Standard Chartered, has called for 25 percent of members of British boards to be women by 2015, but stopped short of suggesting quotas.

While from a low base, it is apparent that real change is underway. The Financial Reporting Council (FRC) is considering amending the UK Corporate Governance Code to require listed companies to establish a policy concerning boardroom diversity, including measurable objectives for implementing the policy. It may require them to disclose annual summaries of the policy and the progress made.

Dinosaurs must die

However, there is still a disconnect between possible changes to the code enforcing compliance and current attitudes.

“The situation now compared with 10 years ago is that the number of women in executive and non-executive positions has barely moved,” says Aidan Bell, consultant at the chief financial officer practice of Spencer Stuart. “Companies have it higher on the agenda – but in reality, very little has changed.”

One can only imagine what Lady Margery would have thought of events at a recent City dinner. One guest, perhaps lulled by good food and wine and the vast preponderance of men in the room, delivered what another called “an unbelievably Neolithic perspective” on women in the boardroom.


“The reaction in the room was one of amusement, not shock, until a woman stood up. ‘Until you dinosaurs get a quota system you aren’t going to do anything about us,’ she declared. Her comment prompted much chuckling over the cheese among the older men,” the guest recalls. “That reaction is far from uncommon.”

These views are barely veiled. Unreconstructed Amstrad founder and Labour peer Lord Sugar is on record as saying that “the employment regulations for women whereby the prospective employer is not able to inquire about the interviewee’s status regarding children or childcare, or indeed their intention of becoming a parent, are counterproductive”.

And David Willetts, the minister for universities and science, drew fierce criticism when he declared recently that feminism was probably the single biggest factor contributing to the decline in social mobility since the 1960s, as working-class men failed to get the jobs taken by newly educated middle-class women.

Attitudes like these are hardly helpful, but not taking the issue seriously – or viewing it as a female-centred issue – is institutional, not just personal. Both the Confederation of British Industry and the Institute of Directors oppose statutory targets. However, there are points of light: Helena Morrissey, chief executive of money management group Newton and named the City’s most influential woman, has founded the 30% Club, intended to push the agenda for women to make up a third of boardrooms by 2015. And Peninah Thomson, founding partner of executive coaching company Praesta Partners, is co-founder of the FTSE-100 Cross-Company Mentoring Programme, which aims to pair company chairmen with female executives who have their sights on a board appointment. This is shortly to be expanded to FTSE-250 companies.

Encouraging debate

The threat of quotas is a real one. Lord Davies may have rejected them for now, but the European Commission (EC) is considering imposing them if a voluntary code does not work. Norway has a 40 percent quota (the numbers of female directors jumped to 44.8 percent in 2008) and some European countries are introducing them. Figures from 2008 show that only 25 percent of European companies have female directors, and women held only 9.1 percent of board seats, up just 0.5 percent from 2004.


The suggestions coming from the EC and the FRC are not designed simply for the empowerment of women. Post-recession, there is a real economic and business case for which finance directors – often also head of HR – and board members must be aware.

Diversity serves an important purpose in board effectiveness. Its potential benefits lie in widening perspective on issues brought to bear on decision-making, avoiding too great a similarity of attitude, and helping companies understand their customers and workforces.

Such low percentages of women on boards demonstrate a failure to make full use of the talent pool. Boards with no, or very limited, female membership may be weak in terms of connectivity with customers and workforce, and such boards offer little encouragement to aspiration among female employees.

“We need to encourage women earlier in their career and help them realise their ambition,” says Suzzane Wood, head of CFO practice at Russell Reynolds. “Analysis shows that entry into finance careers is 50-50 but falls off dramatically; we don’t know why or at what age. What happens inbetween? There are assumptions we are all making and we would love to know. I suspect it is because we are individuals.”

Wood says that it is not just having children but also feeling in control of your destiny that is important – and that is not specific to gender. “There are men who want to co-parent but feel they are in an environment where it is frowned upon,” continues Wood.

The City presents particular problems, she claims, as does any industry that is institutionalised in its behaviour. Many women say they do not want to go to director level in the City.

Will the Davies report itself have any direct impact? “Any talk about diversity helps. Anything that encourages debate is a good thing. Even age discrimination took a long time to shift,” says Wood.


Change is on its way, she says, and not just because of the report: “It adds to the debate. We increasingly see boards asking, ‘Where are the women on this list?’.”

Companies and recruiters are asking for more women. “Not because we are trying to buy a puppy from a shop, but because we want to encourage women,” says Wood. “We have not gone as far as positive discrimination yet, but the message I’d like to get across to companies is that they should look further down in their organisations at individuals with potential, even at those keeping their heads down.”

Critical step

Evelyn Bourke, who was CFO of Friends Provident until her promotion to executive director for strategy, capital and risk, is where most women would like to be. She joined Standard Life in 2005 as group strategy and planning director.

“It brought me a lot of opportunity to observe board meetings, particularly with Standard Life’s demutualisation and flotation. In mid-2006, I became finance director for life assurance and went on the board of the UK life company and other small boards,” Bourke tells Financial Director.

She explains that the critical step is often getting your first board position on the subsidiary of a plc. At the end of 2008, she was offered the role as CFO of Friends Provident, taking up the role in May 2009.

Bourke has always been in the financial services industry, training as an actuary and spending 10 years as a consultant. So why are there not more women at board level?

“Some of it comes down to the choices people make along the way,” she says. “I can’t speak about the stresses and strains of trying to build a family at the same time, but from personal experience, even with no children in the household, it’s still challenging.


“I’ve had colleagues along the way who have just decided that something has to give. I think the trick of re-entry in terms of addressing this issue has got to be around facilitating the re-entry of women into senior executive jobs if they have taken time out to focus on the family.”

The problem is that things move on fast in the corporate world. “After three or four years, it can be a completely different place. Companies are taken over, the tenure of the chief executive can end – these are factors that make it difficult to provide the same level of continuity as in the civil service,” explains Bourke.

“It’s hard to see the report as a big move forward. It’s not something you can change overnight. You can’t magic up people on the board with the requisite credentials and experience. Many chairmen want to increase numbers but the pool they can draw on is small. I don’t think there is a bias against having women on boards. There is a positive interest in having more of them.”

An unstoppable force

Bourke herself is the only female executive director at Friends Provident, but there is a female non-executive director and one other is due to join the board.

She makes the point that older men do not have much experience in working with women at the highest level. But the sheer force of demographics and the passage of time will naturally lead to a higher representation of women.


“It’s a criminal waste of talent for organisations to bring on women and then lose them because they are rigid in some way,” she says. “It’s crazy if they bring them on and invest in them and then let them walk out of the door.”

Some female FDs prefer to talk about the issue anonymously, fearing the negative press attached just to talking about it publicly. Another female board member with whom Financial Director spoke could have been Lord Sugar’s worst nightmare. She was appointed to the board of her company as CFO when she was four months pregnant. They didn’t know – but neither did she.

After giving birth to her daughter, she was out of contact for less than three months and after that began dialling back into management meetings. “I didn’t miss a meeting except when I was in hospital,” she says. “They forgave me for that one.” She came back in person after six months.

She has clearly combined family life with work successfully. So why are there not more women like her, and when will that change? “There are a number of complex reasons,” the CFO says. “To a certain extent, it’s demographics. Women are more than 50 percent of graduates, more than 50 percent of people going into the professions. Business won’t be capable of ignoring it any more, given the proportion of women coming up. Demographics will be an unstoppable force.”

The report from Lord Davies, therefore, has not so much created a storm sweeping the old regime away as a tiny tempest in a teacup. Not much will change until the old guard retires and the new wave of young female graduates begins feeding through to board level, taken on by younger, more progressive men.

The woman who was so incensed at that City dinner may be right. After all, we all know what happened to the dinosaurs.

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