This article originally appeared in The Guardian on 20th June 2014 and was written by Emma Howard-Boyd, a Steering Committee Member of the 30% Club.
Real progress on diversity will be made not by “fixing the women” or “beating up the men”, but by aspirational and measurable targets for women at all levels
Earlier this month, the UK Financial Reporting Council published its guidance on the strategic report (pdf), which companies are now required to produce following new government regulations. The aim is to advise company directors on what information is most useful to shareholders. Part of that information centres on diversity. Companies are now required to report on the number of male and female directors, senior managers and employees that they have.
The 30% Club, of which I am on the steering committee, welcomes the introduction of this requirement. Growing the female talent pipeline needs to be high on the agenda for every board and executive committee. While progress has been made in increasing female representation on boards over the last three years, this has, on the whole, been achieved through an increase in the appointment of female non-executive directors.
The FTSE-100 has moved from 12.5% female directors in 2010 to 21.6% as of June 2014, while only 6.9% of executive directors in the FTSE 100 are women. Attention now needs to be focused on achieving real, measurable progress – not by “fixing the women” or “beating up the men”, but through men and women working together to improve business culture and achieve more diversity of thought at all company levels.
To do this, the guidance needs to go further and recommend that companies clearly set out their targets for the percentage of female representation at executive committee and the next two levels below. This means disclosing targets against which progress can be measured and a timeframe over which they plan to meet those targets. Female talent management is a crucial part of business strategy and a key determinant of future performance. A narrative discussion around this within the strategic report, in addition to the statistics, would be helpful.
This approach was introduced in Australia in 2011, following the publication of the ASX Corporate Governance Council’s gender diversity Principles and Recommendations. Research commissioned by the ASX, conducted by KPMG and published in April 2014, showed encouraging results: 172 companies (86%) in the S&P/ASX 200 have set measurable objectives; while in the ASX 201-500, 112 companies (56%) have set measurable objectives.
For a real step change to occur, more women must progress from senior management to executive board roles. Having the focus of a specific and measurable goal – an aspirational target, not a mandatory quota – can provide real impetus for change.
As the CBI notes in its position paper Building on progress: boosting diversity in our workplace published last week: “More firms should take on the example set by some leading firms of extending diversity targets, on a comply-or-explain basis, down through their middle and senior management cohorts.”
Notable examples include Lloyds Banking Group, which this year set a target of 40% of senior roles to be held by women by 2020 (currently 27%); and Diageo, which aims to grow leadership roles held by women from 28% to 30% by the end of 2014).
The CBI is leading by example and has also committed to becoming a more diverse organisation. Currently eight of its 14 senior managers are women, and the CBI Board has approved a target of 30% female representation at its events and in its policy making processes.
This chimes with our own ambition. Our original emphasis on boards (with an initial goal of FTSE-100 boards having female representation of 30% or more by the end of 2015) has widened to include developing the executive pipeline of female talent. We’re now aiming for 30% women at all senior levels by 2020.
Full article here: http://www.theguardian.com/sustainable-business/women-boards-diversity-senior-management-ftse-100