Quotas have boosted total of non-executive women directors – but number in senior management stubbornly low
The lack of women in executive roles is highlighted by two reports which also show compulsory quotas to install women in boardrooms have not increased their prospects of running big businesses.
Research for the High Pay Centre and the Guardian shows quotas have boosted the number of non-executive women directors, but left the number in senior management stubbornly low. A separate report by the Association of British Insurers warns that a “key area of concern for shareholders remains the lack of women executives in boardrooms”.
The High Pay Centre research, by headhunters Korn/Ferry Whitehead Mann, shows Norway leads the way with 35% non-executive women directors after firms were ordered to ensure that 40% of boardroom seats were held by women from 2008.
However, the number of women in senior management has only risen from 15% to 18% in the past five years, with no female chief executive of any major Norwegian company.
The country with the highest number of female chief executives is the US where there are no quotas but where women are in charge of 20 of the S&P 500 leading companies.
“The research … begs the question as to whether quotas are truly effective in driving material change at the executive level, with many of those European countries that do have board quotas having few female senior leaders, and several having no female chief executives,” said Sonamara Jeffreys, managing director of Korn/Ferry Whitehead Mann.
The fresh evidence of the low levels of full-time executives comes less than a month after the business secretary, Vince Cable, called on the eight FTSE 100 companies with men-only boards to improve their diversity. The ABI, whose members control a fifth of the stock market, warns in its report on boardroom effectiveness that the lack of women executives also has an impact on the number of women who become non-executive directors.
“The low number of women on boards is in part a symptom of insufficient numbers emerging at the top of the management structure and the under-representation of women in senior management generally,” the ABI said.
“We continue to encourage companies to recognise their role in developing the potential of women in the corporate pipeline,” the ABI said.
From 1 October 2013 UK companies will need to disclose the proportion of women and men in boardrooms, in senior executives positions and through out the organisation. The ABI wants companies to begin disclosing the proportion of women they employ and in their boardrooms before then.
The ABI, which remains opposed to compulsory quotas and opposes legislation, argued that legislation would fail to address the underlying issue of how women progress through their organisation.
The High Pay Centre report warned: “There is a danger that appointing women to non-executive board positions is used as window dressing for companies that are doing little to promote women through the executive ranks.
“There is a danger that governments believe they have fixed the diversity issue by introducing quotas on overall board membership whilst not addressing the dearth of women actually running companies.”
By comparison, in the UK, which takes a more voluntary approach brought in after Lord Davies recommended women make up 25% of FTSE 100 boardroom positions by 2015, there has been an increase from 11% to 17% in female representation on boards, with women in senior management positions up to 19%. However, the departure of Cynthia Carroll from Anglo American and Marjorie Scardino from Pearson leaves only two women bosses in the FTSE 100 – Angela Ahrendts at Burberry and Alison Cooper at Imperial Tobacco. All except Cooper are American.
Consideration is now being given as to whether such quotas should be introduced for the FTSE 250, where the ABI’s research found that 59 companies still had no women on their boards. Eight FTSE 100 companies have no female representation on their boards.
The Korn/Ferry Whitehead Mann research found that the biggest companies in France, Germany, Japan, Belgium and Italy all had no women chief executive.
Other countries with legislation include Spain, with a 40% women quota by 2015. However, since the quotas were announced, female board membership has increased from 7% to just 13% – almost all in non-executive positions, while women in senior management has increased from 7% to 10%.
In Sweden, which also has a target of a 50/50 gender balance by 2010, new rules appear to be working, with 25% of women sitting in boardrooms and the highest number of female senior management, at 22%.
Last month the EU had hoped to introduced mandatory quotas of 40% across Europe. However, this was watered down after opposition orchestrated by the UK, leaving the decision to individual member states.
In the US, where no boardroom quotas exist, just 17% of board members are women – a number which has remained unchanged for the past seven years.
And according to the Catalyst Census of Fortune 500 women board and executive directors, only 14.3% of executive officers were women, the same level for a third year in a row.
They also found that the gender imbalance over pay remains, with female workers making up just 8% of the highest earners in the country.
Non-white women held only 3% of board seats and more than 65% of Fortune 500 companies had no female board members from ethnic minorities at at all.
However, in terms of total women chief executives at the head of major companies, the US tops the worldwide list. There are currently 20 running companies in the S&P 500.