Laura Sanderson, who leads the Board & CEO Advisory Practice in Europe for Russell Reynolds Associates shares her views with Business Leader on the state of gender equity in boardrooms in the UK.
The current state of women on corporate boards shows how far we’ve come – and how we haven’t come nearly far enough.
In February, the Hampton-Alexander Review reported that it had achieved its target of 33% of board positions on the FTSE 100 and FTSE 250 being held by women, a remarkable milestone given where things were five years ago, but still well short of the percentage of women in society or in the workplace. Remarkably, these percentages are better than what we see when we look at women in executive roles – the other part of the Review’s change effort.
The push for diversity at the top of organisations isn’t simply because that part of the organisation needs to change, but because until it does, we can’t meaningfully improve things lower down in the ranks. Leadership starts at the top.
Leaders must reflect the values and ethos of the companies they lead, motivating other parts of their business to make diversity standard amongst workforces. Businesses have increased the proportion of female NEDs on their boards, but driving forward the number of women in board leadership roles – board and committee chairs, independent directors, CEOs and CFOs – will catalyse the rest of the organisation to change for better and for good. And as the launchpad into these key roles, embedding diversity into Executive Committees today will ensure a diverse pipeline of talent tomorrow.
But in addition to changing people, we also need to change process.
It is crucial that those responsible for selecting director candidates address and remedy their usual selection processes and biases. Boards must push themselves to look beyond traditional titles, roles and the intuitive “good fit”. Rather than focusing on job titles and qualifications, there is a need to focus on leadership attributes. Digging a little deeper will widen the candidate pool beyond the small pool of current CEOs and recently retired former executives, almost all of whom are white males. Boards should consider appointing women earlier in their careers – looking at those who have grown start-up companies, led major initiatives at large public companies, or demonstrated relevant success in other settings.
The challenge organisations face is constantly evolving. So, too, must our understanding of the experiences and perspectives we need on the board.
Boards with little to no diversity lack the necessary breadth of perspective, hindering their ability to develop truly innovative and impactful strategies. McKinsey’s 2019 diversity analysis found that companies in the top quartile for gender diversity on executive teams were 25 percent more likely to have above-average profitability than companies in the fourth quartile. Everything points to the fact that diverse boards are better at decision making that drives improved business performance.
As we begin to address the lack of diversity, we must simultaneously improve inclusion.
Growing and nurturing a culture of inclusion that permeates throughout the company from board level down is essential to attracting and retaining diverse talent at all levels. Those in the minority in the boardroom can often find their voice drowned out. The Chair has a vital role to play here in making sure that all directors are given an opportunity to contribute, but the entire board must embrace diversity, and be structured and run in a way that welcomes outside views.
Reversing practices and structures that have been centuries in the making is far from easy but is crucial to evolving the business landscape to remove the glass ceilings and sticky floors, and to reflect the vibrant and diverse world we live in today. At board and executive level, leaders have the power to implement effective change to their businesses. The last few years have seen promising progress, but momentum must continue to pick up pace if permanent change is to be achieved.