Boards still falling short on diversity

Boards still falling short on diversity

Female directors bring difference. They align more closely than men with social performance, feel more responsible for others’ wellbeing, and avoid harm where they can. The positives are clear, so why are so many companies failing to advance them onto the board? Nada Kakabadse, Professor of Policy, Governance and Ethics at Henley Business School considers the issues.


Some of the UK’s biggest companies stand accused of failing to reach gender board diversity targets in circumstances that could seriously damage both organisational reputations, and the opportunities offered by embracing different styles of leadership.

In 2016 The Hampton-Alexander Review, an independent, business-led framework supported by Government recommendations, produced guidance on how FTSE 350 companies needed to improve the representation of women on their boards and in leadership positions.

The Review set a minimum 33% target for women on FTSE 350 Boards, alongside the two layers of leadership below the board – the Executive Committee, and the Direct Reports to the Executive Committee – by the end of 2020.

Now it is clear that significant action is needed from all FTSE 350 companies to achieve these goals.

While some have succeeded in improving their leadership team gender balance a significant number remain unmoved. In 2018 women made up only 22.7% of UK board seats, 4.2% were board chairs and 5.1% made CEO.

Almost five years on from The Hampton-Alexander Review’s launch two FTSE 350 organisations – property group Daejan Holdings, and software firm Kainos Group – reportedly still have no women on their boards at all. A further 39 have only one female board member and 20 FTSE 100 companies have yet to meet the minimum 33% target of women on their boards.

This shortage of female directors is puzzling, particularly given the extensive research which provides clear evidence that organisations with senior female leaders financially outperform those with no women at the top.

There are a number of reasons for women’s slow ascension to the board. Their career journey can be influenced directly by work-life demands and raising children, as well as the persistent old boys’ network which excludes women from the information and relationships needed to move into C-suite roles.

At the same time many women are unable to see themselves as top executive material, while some male leaders can overlook them as potential successors because of this exact same preconception.

Unfortunately there are now even more questions about how female leaders will fare in the wake of the economic stagnation brought about by COVID-19. While companies are struggling with uncertainty and volatility, decision-making and the process of finding the appropriate strategy are the primary challenges.

Will the impact of the pandemic mean that board diversity continues to be overlooked while more pressing issues take precedence, such as survival and digitalisation?

Despite this it is clear that having all-male boards, or little more than a single ‘token’ female director, is a serious disadvantage that needs to be addressed.

Many organisations continue to view leadership in terms that are considered to be typically male: self-reliant, assertive, competitive, risk-taking, independent, dominant, and task-focused.

Right or wrong, it may be the case that women need to master a mix of traditionally-perceived feminine and male behaviours in order to succeed and be viewed as ‘strong’ leaders.

As well as bringing a different perspective to leadership challenges when compared to their male counterparts, research shows that female directors more often possess values which are closely aligned with social performance.

They tend to feel responsible for others’ wellbeing, avoiding harm where they can, and are more benevolent and inclusive than men. Women are also less likely to come from a business background and can offer unique experiences and knowledge.

By doing so they can help boards better reflect upon the implications of strategic decisions that affect a wide range of corporate stakeholders.

Frustratingly, even if women are invited onto the board, they are often not heard. It takes a wise Chair to allow and encourage diverse talent to flourish.

Having the right number of women on the board is a first step to diversity, but the chair’s most important function is to make sure these numbers count.

Boards need to become more inclusive of a variety of talents that embrace variations in age, ethnicity, cultural background, skills and experience, and most importantly a diversity of perspectives.

The pressure and focus on the chair’s performance is greater than ever before during this time of crisis. Part of the solution is to bring in exceptional individuals who are willing and able to fulfil the demands that come with the job, and assume personal accountability for an entire organisation.

Looking to the future, women (and men) should adopt new leadership models that are inclusive, collaborative, caring and considerate of others.

There is little doubt that all organisations can benefit from having more diverse boards.

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