Women on Boards Vanessa Williams Managing Director, Awen Consultants Limited Founder, Governance for Growth Director & Lawyer, Excello Law Limited
AGENDA Personal background/perspective Information sources Where are we now UK? Where have we come from: FTSE 100 FTSE 250 Comparison with Europe What approaches can be taken? The business case What next? Conclusion
Personal Background/Perspective Business Lawyer/Founder member of EWLA Career as board member of London law firms NED & Company Secretary, Women of the Year NED & practising lawyer, Excello Law Limited Managing Director, Awen Consultants Limited: Business advisory Investment facilitation Governance for Growth Author, Due Diligence: A Practical Guide
Information Sources Annual Female FTSE Report latest version March 2015 Annual Davies Review on Women on Boards latest version March 2015 Egon Zehnder 2014 European Diversity Analysis (covers companies with min. market cap of 4 billion or min. 5 largest companies in a country)
Where are we now UK? Overview: FTSE 100: 23.5% women on boards No all male boards 263 women in total FTSE 250: 18% women on boards 23 all male boards 365 women in total
Where have we come from FTSE 100? FTSE 100 keyfacts 2010/11 2015 Change 2010-2015 Representation of women on FTSE 100 boards 12.5% 23.5% +11 percentage points Number of companies with 25%+ representation 12 41 +29 Total number of women on FTSE 100 boards 135 263 +128 Number of women Non-Executive Directors 117(15.6%) 239(28.5%) +122 Number of women Executive Directors 18(5.5%) 24(8.6%) +6 Number of women Chairmen 2(2%) 3(3%) +1 Number of women Chief Executives 5(5%) 5(5%) unchanged Number of all-male boards 21 0-21 Number of women appointments in the year 18 (out of135) 52 (out of164) +34 % of women appointments in the year 13.3% 31.7% +18.4 percentage points
Where have we come from FTSE 250? FTSE 250 keyfacts 2010/11 2015 Change 2010-2015 Representation of women on FTSE 250 boards 7.8% 18% +10.2 percentage points Number of companies with 25%+ representation 17 63 +46 Total number of women on FTSE 250 boards 154 365 +211 Number of women Non-Executive Directors 127(9.6%) 340(23%) +213 Number of women Executive Directors 27(4.2%) 25(4.6%) - 2 Number of women Chairmen - 8 - Number of women Chief Executives 10 9-1 Number of all-male boards 131 23-108 Number of women appointments in the year 19 74 (Out of310) +55 % of women appointments in the year 13% 23.9% +10 percentage points
How does this compare to Europe? Companies % Boardpositions held bywomen Austria 6 10.7% Belgium 8 20.2% Denmark 8 20.2% Finland 6 32.1% France 58 28.5% Germany 44 16.6% Greece 6 9.9% Italy 19 20.2% Luxembourg 7 8.9% Netherlands 22 19.5% Norway 7 38.9% Portugal 6 5.2% Republic of Ireland 14 16.3% Spain 20 15.5% Sweden 21 27.5% Switzerland 34 13.9% United Kingdom 70 22.6% Europe Overall 356 20.3%
How does this compare to Europe? League table: 1. Norway 38.9% 2. Finland 32.1% 3. France 28.5% 4. Sweden 27.5% 5. UK 22.6% Range: 5.2% - 38.9%
What approaches have been taken? Voluntary Targets Central to UK approach: 25% target by 31.12.15 Supported by: Voluntary Search Code set of principles agreed by search firms Changes in Corporate Governance Code publish diversity policy and no. of women Government requirement for narrative reporting: companies must disclose number of women at different levels Regular letters from government Regular research reports naming companies Peer pressure Engagement with Chairmen
What approaches have been taken? Quotas More than 20 countries have adopted Norway first and most prominent target 40% non-compliant companies face being dissolved 9% 2003 40% 2012 France also committed to quota: 40% by 2017 7.2% 2004 28.5% 2014 Belgium target 33.3% by 2018 23.4% 2015
What approaches have been taken? Corporate Transparency: Reporting on gender policies and numbers of women: EU non-financial reporting directive: large companies to disclose information about diversity of boards Australian Stock Exchange corporate governance code amended comply or explain policy to include gender diversity Ontario Securities Commission has proposed similar comply or explain requirements UK Narrative Reporting Regulations 2013 require gender breakdown at board, senior management and across workforce EWLA has recommended more visible statistics in annual reports 8 th Congress, Zurich
The Business Case Micro-economic perspective: Improved company performance: McKinsey & Company: companies with most gender-diverse management teams had 17 % higher stock price growth between 2005 and 2007 / their average operating profit was almost double the industry average between 2003 and 2005. Catalyst: companies with more women on boards achieved 42 % higher return in sales, 66 % higher return on invested capital and 53 % higher return on equity. A gender-balanced board is more likely to pay attention to managing and controlling risk.
The Business Case Micro-economic perspective: Mirroring the Market: women control about 70 % of global consumer spending. more women in management provide a broader insight in economic behaviour and consumers choices, leading to market share gains through the creation of products and services more respondent to consumers needs and preferences. Enhanced Quality of Decision-making: Diversity boosts creativity and innovation by adding complementary knowledge, skills and experience. Diverse boards contribute to better performance because decisions are based on evaluating more alternatives compared to homogenous boards.
The Business Case Micro-economic perspective: Improved governance and ethics: Various studies have shown that the quality of corporate governance and ethical behaviour is high in companies with high proportions of women on boards. Better use of talent pool: More than half of students graduating are women. By not including them in decision-making positions, female talent would be underutilised and the quality of appointments may be compromised. Systematically including suitable candidates of both sexes ensures that board members are selected among the best distribution of both men and women.
The Business Case Macro-economic perspective: Ageing population/shortage of skilled labour: poor career prospects discourage women from continuing in paid employment - puts increasing brake on economic growth. absence of women in senior positions may trigger vicious cycles that further widen both gender employment and gender pay gap. Strong economies and sustainable pension systems: will depend on higher female employment rates and high wage returns on paid jobs. incentives needed for women to stay in workforce, including credible prospects of career progress includes opening door to top management positions.
What Next? Building pipeline of executive women encourage women earlier in careers Change organisational culture agile working, flexibility Transparency within board appointment process recruit from wider pool e.g. entrepreneurs, lawyers, academics Higher board turnover to create more opportunities shorter terms Encourage champions of change within companies Chair & senior managers set culture
What Next? Encourage champions of change outside companies including investors, pressure groups etc Promote good practice amongst recruiters Encourage social policies that support women e.g. shared parental leave, tax credits for childcare Training for women Role models Improve female confidence
Conclusion Quotas have had quickest impact Voluntary regimes are progressing, if more slowly There are clear social and economic benefits from getting women on boards It is becoming unacceptable to have male only boards Change needs to continue Diversity needs to be addressed in all its forms this is just the beginning
Contact Vanessa Williams: vwilliams.awenconsultants@yahoo.co.uk +44 (0) 7425 873 030 @ivjw