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Another wasted year
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, The fourth consecutive report, Women Count, produced by Pipeline shows there has been little to no progress. This independent report of the FTSE 350 has found that:
- Only 3.7% of companies have female CEOs – and this is down from 4.6% two years ago
- More than 85% of companies have no women executives on their main boards#
- Only 9% of executive directors on main boards are women, unchanged since 2017
- A mere 17.1% of executive committee members are women, a tiny increase of just 0.8% since 2018
- One in five companies have no female members of their executive committees at all
- At the current rate of progress, it will be almost 2090 before executive committees achieve gender balance#
- Just 5% of executive committee positions are held by women in roles with profit and loss2 (P&L) responsibility
- More than half of FTSE 350 companies have no women on their executive committees in a P&L role at all
- This situation is replicated on the main indices of major economies across the world, with India and Germany having no women CEOs at all, while China, Hong Kong, the USA, Spain and France have only one each
The fact is that many FTSE 350 companies are failing to offer talented women access to key executive positions as such opportunities continue to be given automatically to men.
Why does this matter?
Evidence shows that the failure to draw on a wider pool of ability actually damages the companies themselves. Those FTSE 350 companies with 25% or more women on their executive committees last year achieved an average 16% net profit margin3 while those with no women achieved just 6%. P&L roles are the pipeline for future CEOs and if women are blocked at that stage then they will not get the chance to run companies and companies will not get the chance to benefit from their broader talent pool.
Why don’t companies address the problems of gender imbalance?
Where there are already women at the top of companies, the evidence shows they are much better at progressing other female talent. Research reveals that women CEOs have twice the average number of women in executive positions than their male counterparts, and FTSE 350 companies led by women have an average of seven times more female executives on their main board than those led by men.
It is hard not to conclude that where men are in charge, they tend not to want to let go of their grip and allow women a share of the action.
6 Key Facts
1: Business performance is maximised when they promote women
2: Women on executive committees
3: It’s not just about numbers, the type of role matters
4: Female leaders succeed at progressing all talent, where male CEOs fail
5: Company boards remain a male executive preserve
6: Across the globe, it’s still a man’s world
- MAKE IT THE CEO’s RESPONSIBILITY
- ESTABLISH HARD TARGETS
- TRANSPARENCY IS KEY
This year’s Women in Hospitality, Travel and Leisure 2020 Review shows improvement on gender diversity over the past year.
New analysis of gender diversity in the hospitality, travel and leisure sector shows the industry has made positive progress in the past year to address the number of women in senior positions. While improvements have been made, there is still work to be done to meet the 33% target of female representation across boards and executive committees by 2020, set by the Hampton-Alexander review.
The report shows the percentage of women in board level positions at FTSE 100 hospitality, travel and leisure companies increased to 32%, up 3% from 29%, slightly better than the cross sector average of 30%. There has also been improvement on the number of women holding executive committee and direct report positions (into the Executive Committee) in companies.
The sector review, led by Tea Colaianni, Chair of WiH2020, an independent cross-industry body supported by firms including PwC and The MBS Group, assessed the progress companies have made since gender pay reporting became mandatory for companies with over 250 employees in 2017. A total of 120 companies were interviewed and their data analysed as part of the review.
Tea Colaianni, Chair of WIH2020, said:
The FTSE 100 is one of the strongest performing groups of the hospitality, travel and leisure sector for gender diversity and the improvements they have made mean they are just shy of meeting the 33% target for women on boards.
However, there is a widening gap between those who are performing well and those who are not. Currently, only a quarter of companies are at target for both board and executive committee/direct report measures.
Progress in percentage of women in board level positions
FTSE 250 companies also saw an increase in the percentage of women in board level positions (22% vs 20% last year). Overall this percentage remains below the cross-sector average of 25%. However, for Executive Committee and direct reports, the FTSE 250 is outperforming the sector average of 25%, with a figure of 27.8% – marginally down in comparison to last year.
There has been encouraging progress in the number of women non-executive directors (NEDs) with the rate at which women are appointed to NED roles over the past 12 months reaching 62%. Across the FTSE 350, 40% of NEDs are women. The number of women who are direct reports across the whole sector has reached 36%.
Elliott Goldstein, MBS, said:
This year, for the first time, there are now no all-male FTSE 350 hospitality, travel and leisure boards, which is a good step in the right direction. But this is not the time to get complacent. The vast majority of companies are below the cross-sector target for gender diversity on at least one key measure showing there is still work to do. Meanwhile, our research shows that just 1 in 33 leaders in the sector are from a BAME background, well below the cross-sector average so it is clear our sectors have much more to do to ensure true diversity.”
Improvements needed in BAME representation
The research shows areas that need focus to drive further improvement should include addressing the lack of women in key leadership positions, with just 7% currently holding the title of CEO across the sector in the FTSE 350. In addition, the number of people from a black and ethnic minority background is vastly underrepresented in the sector, with just one in 33 leaders (combined board, executive committee and direct report) in the industry identifying as BAME. With the UK Government launching a consultation on mandatory ethnicity pay gap reporting in October 2018, this is clearly an area that will be increasingly be in the spotlight for businesses in the coming months and years.
Jon Terry, Diversity and Inclusion Consulting Leader at PwC said:
Overall there has been encouraging progress across the sector, but there is still much work to do to increase the number of senior women and people from other diverse backgrounds. A focus on ensuring that everyone has equal opportunities to progress and for firms across the sector to better reflect their customers, brings benefits to business as well as to society.
Tea Colaianni concluded:
The statistics in the review show some encouraging progress, although more work needs to be done by many companies to achieve sustainable change. The report also sheds light on a number of never seen before collaboration initiatives across the sector such as Comeback to HTL, the ground-breaking first ever cross industry returners programme.
The number of talented women not returning to the sector after a career break is remarkably high. Comeback to HTL aims to welcome returners back to the industry, provide the appropriate level of support and flexibility and help them fast track their career to senior levels. The hospitality, travel and leisure industry, the third largest private employer in the UK, should and can lead the way in this area.
Half the appointments to board positions in the FTSE350 will have to be filled by women over the next two years
Figures in this year’s Hampton-Alexander Review report, reveal that the companies which make up the FTSE100 index are on track to hit the 2020 target (women occupying one-third of Board places) with more than 30% of board positions occupied by women. This has risen from 12.5% in 2011. However the Review also reveals that just under half of the index are currently underperforming on gender at board level. Swift action is needed now.
As for the FTSE 250 it stands at 24.9% up from 22.8% in 2017 but unless progress picks up considerably in the next two years, it is unlikely to meet the 33% target in the 2020 timeframe. Progress in the FTSE 250 should arguably be faster than the FTSE 100 given its lower starting place. However, this has not proven to be the case over time. Indeed, some companies have slipped back!
Within the FTSE 350 the picture is different. Almost one in four companies have only one woman on their board, and there remain 5 all-male boards.
The one piece of good news in these figures is that half the appointments to board positions will have to be filled by women over the next two years to hit the targets.
What needs to be done?
Addressing workplace behaviours
The Review reveals that companies pushing boundaries this year have turned their attention to workplace behaviours. They are lifting the lid on those micro-regressive behaviours, every day language and practice that unintentionally or otherwise, signal to women that their careers matter less and help reinforce deep-rooted cultures that reward and support the progress of men in the workplace.
These behaviours are reported as
- Assuming women sort the HR matters, organise socials, leaving cards, write up the meeting notes –all the dross list.
- My boss micro-manages my performance, in a way he wouldn’t dare do with male colleagues
- Being called “the girls”.
- Watching mediocre guys coast to high ranking positions based on likeability.
- As soon as I announced I was pregnant they started ignoring me and my work.
Improving the Executive Search Community
13 Executive Search Firms that have qualified this year under the Enhanced Code of Conduct. These are the firms in the UK who are currently appointing more women than most to British boards and working hard to shift gender balance at the top. The Standard Voluntary Code of Conduct has been signed by over 40 UK search firms working to increase diversity at board level on FTSE 350 companies. This code sets out entry-level best practice on gender balanced recruitment and following publication of the Parker Review in 2016, also includes ethnicity.
Pressure from the Investor Community
Investors are increasing pressure on FTSE boards with a lacklustre approach to tackling diversity and this momentum has started to show clear results. Investors now see gender diversity as a core and critical business issue that boards and leadership teams should address. Companies with a diverse management team and pipeline make better decisions, drive innovation and are better positioned to deliver long term sustainable returns for investors.
It’s time to call out the 75 companies that with ‘One & Done’ boards, including one newly formed FTSE 100 company. Previous research has shown having a single female on the board is not effective and thee days, having one woman is little different from having none. Neither is it acceptable to say “we’ve had a woman (so we don’t need to have one again)”.
Many media commentators are calling for a consumer boycott of those companies the Review considers to be “poor performers” at both Executive Committee and main Board levels. This many well be easier said than done as many are not Business to Consumer organisations. However, there are comprehensive lists of “poor performers” including companies with NO men on Executive Committees and those companies with no woman sitting at main board level.
Women in the City comment: This Report is well worth reading – lots of facts and figures. If you’re looking for new roles, you can pick out those companies that are taking seriously the progress of women (and potentially avoid those that aren’t) and if you’re seeking Board roles, there are plenty of FTSE 350 companies that will need women in the next two years.
Check out our Project Diamond micro-website for information on becoming board-ready.
Despite progress in female representation on non-executive board positions, this year’s Female FTSE Board Index Female compiled by Cranfield University School of Management has identified the continued lack of women in executive roles on boards of the UK’s leading companies.
In a 48-page detailed analysis, experts from the school’s International Centre for Women Leaders scrutinise data provided by the UK’s top 350 companies. Drawing on 20 years of experience in this area, the Female FTSE Board Report’s authors identify the leading players in gender diversity in the FTSE 100, and highlight those companies that are lagging behind the rest.
Highlights of the report:
- FTSE 100 – while the percentage of female non-executive directors is at an all-time high of 35.4 per cent, female executive positions have flat-lined for a fourth consecutive year at 9.7 per cent. Despite this the percentage of women on boards has increased from 27.7 per cent in October 2017 to 29 per cent in June 2018, meaning it may be possible to reach the target set by the Hampton-Alexander Review of 33 per cent by the end of 2020.
- FTSE 250 – the number of female executive directorships dropped from 38 to 30 between October 2017 to June 2018. There has also only been a marginal increase in the number of women on boards, from 22.8 per cent in October 2017 to 23.7 per cent in June 2018 on the FTSE 250.
- FTSE 100 and the Gender Pay Gap – the top 10 companies for the proportion of women on boards, reported a slightly lower average gender pay gap than the bottom 10. The two best companies were Diageo (55 per cent women on boards, 4.1 per cent gender pay gap) and GlaxoSmithKline (45 per cent women on boards, 2.8 per cent gender pay gap)
- Female directors are on average nearly two years younger than their male counterparts, but serve for less time and have an average tenure of 3.7 years compared to 5.4 years for men.
Professor Sue Vinnicombe CBE, professor of Women and Leadership at Cranfield School of Management, said:
Now, more than ever, is the time for disruptive change. We need to think big and act decisively in order to move the needle. FTSE 350 companies need to treat gender diversity as seriously as they treat sales, risk management and innovation, otherwise nothing will change.
Aviva, a leading provider of insurance and asset management products has sponsored the Female FTSE Board Report since 2017.
Sarah Morris, chief people officer and non-executive director at Aviva Investors Board, said:
There has been some progress over the last 20 years, and it’s encouraging to see the biggest companies in the UK on track to hit the 33 per cent target. But that is still only 33 per cent.
The benefits of greater diversity are clear so now it’s up to the FTSE 250 to increase their ambition. Still too little is being done to change the cultures which prevent talented women staying and rising to the top. We urge companies to act faster, for the sake of their people and their business.”
Professor Ruth Sealy, director of Exeter Business School’s Centre for Leadership and co-author of the report, said:
The lack of diversity amongst executives of so many FTSE companies, even in functions which have balanced or majority female intakes, reveals such poor management. Organisations must now be bold and decisive in designing senior roles and careers fit for the 21st century in order to optimise the available talent.”
Dr Elena Doldor, senior lecturer at Queen Mary University and Visiting Fellow at Cranfield School of Management, led the interviews. She said:
Our interviews show that men and women have different experiences of progressing into senior leadership roles.
The data in this Report make for depressing reading and it really is time to shift the dial and recognise that it’s less about “fixing” the women, less about “reports and initiatives” and more about shifting workplace culture.
Progress is flatlining at 16%
The Women Count 2018 Report published in July by The Pipeline unpacks the status of women in FTSE 350 firms, the number of women on executive committees, and the correlation between female representation and economic performance. It finds that businesses where at least 25% of decision-makers are women significantly outperform companies where women are underrepresented, or even completely absent.
If all the FTSE 350 performed as well as those with women on their executive committee, British companies could enjoy a £13bn “gender dividend”.
The report reveals that for the third year in succession the percentage of women on FTSE 350 executive committees is flatlining at 16%. The underlying figure of only 5% holding P&L roles identifies how much more needs to be done.
Younger people want progress on equality in the workplace and, if not achieved, they will simply go and
work for companies that do prioritise gender equality. Businesses that don’t promote women are increasingly out of step with the British public. Businesses that don’t understand the need to appoint more senior executive women are failing to meet their full potential.
- No progress in getting more women on executive committees
- Women promote women and make change happen
- Correlation continues between profitability and more women in senior roles
- Company boards – women executives do not break through
- Women still hugely underrepresented in other senior leadership positions
- Gender pay gaps are worse without women executives and CEOs
- Young people demand greater gender diversity at work
The following interventions offer companies a solution to the challenge of achieving greater gender diversity.
ONLY THE CEO CAN MAKE IT HAPPEN
Companies take their lead from the boss and if organisations are to deliver true gender diversity, it has to start at the top. Despite only 4% of companies having women CEOs, where they are in place they deliver positive change, making a substantial difference to the number of women executive committee members, with an average of 2.9 (up from 2.6 in 2017) compared to 1.4 for male-led businesses.
There is even more evidence of the difference made by women CEOs in the level of women executives in Profit and Loss (P&L) roles, as they employ four times the number compared to companies with male CEOs.
JUST DO IT
Too many organisations seek the perfect women candidate before making senior appointments. Yet for men it seems they are prepared to take risks.
FOCUS ON THE EXECUTIVE COMMITTEE AND PLAN THE FUTURE
Rigorous and actioned succession planning is vital for achieving gender diversity on executive committees. Know which woman is right for which job and be transparent about it.
WOMEN AND MEN AREN’T THE SAME
Recognise that men and women are different, and that specific interventions are needed for each, for example tailored leadership and development programmes. Women respond to clarity in job roles and reward packages, so organisations need to be more specific in these key areas about what they want if they are to attract and promote more women.
This report makes particularly depressing reading. It does, however, show that when CEOs are female, women in those organisations do better.
Having introduced our Future Leaders Award in 2010 with the specific aim of identifying women with the potential to reach the executive board, we’re delighted that this initiative is beginning to deliver on its promise and that the picture will hopefully improve. But progress is way, way too slow.