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Companies urged to cast wider net for female directors

Financial background should not be pre-requisite, Lord Davies review told
Top firms should be looking to appoint female directors from a wide talent pool, rather than being limited to those from a financial background and those who have directorships elsewhere, experts said at a breakfast meeting to discuss the progress of Lord Davies’ review.

[private]Statistics presented at the event, to mark the six-month monitoring report of Davies’ Women on Boards review, showed that 21 of the 93 board appointments in the FTSE 100 in the last six months have been women. Of these women, more than half came from a financial background such as accountancy.

“It’s clear that to stand a chance the majority of women have to have this financial and banking experience,” said Susan Vinnicombe, director of the International Centre for Women Leaders. “In my view one of the blocks to getting more women on boards is this straightjacket that executive search firms and chairmen put on.”

Denise Wilson, a member of the Davies Review steering group and formerly a director at National Grid, said that while “financial literacy” was important for board members, there was currently too heavy a focus on directors who come from a financial background and that it was not necessary for everybody on a board to be “a numbers person”. Having a diverse range of experience strengthens any board and makes business sense, she added.

Encouragingly, 72 per cent of the new female appointees did not have any prior FTSE board experience, countering fears that companies would bolster their boardroom diversity by hiring non-executive directors who are employed elsewhere.

However, Lynne Featherstone, minister for equalities, said in her speech to the event that despite the progress made over the last six months, there was still much room for improvement.

“There is still much more to do,” said Featherstone. “We have seen an increase of just 1.7 per cent [in total female representation at board level] since last October, and it is not good enough that two-thirds of our top companies have not yet made a commitment by setting gender diversity targets. Let me make it quite clear we are not asking for quotas; we believe in the right person for the right job. But business performance is key – the link between diversity and performance has been well demonstrated, and anything we can do to accelerate it should be encouraged.”

Change will have so much more of an impact if it comes from positive action from within, rather than imposed positive discrimination,” she said.

Of the 33 FTSE 100 companies which have set themselves targets – as required by the Davies review – only six are aiming for more than the suggested minimum of 25 per cent female representation: Anglo American, Lloyds Banking Group, Marks & Spencer, Old Mutual, Rolls-Royce and Morrisons Supermarkets. A handful, including Intercontinental Hotels, Centrica, Sage Group and Vodafone, have opted to set themselves a target of 25 per cent representation even though they have already achieved that figure.