Gender Diversity on Corporate Boards – Does it Matter?

Dean’s Distinguished Speaker Series University of Auckland Business School

Professor Susan Vinnicombe OBE Cranfield School of Management

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Profile of FTSE 100 boards

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Myths of women and boards

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Why does it matter?

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What can we do?

Female FTSE Index 1999 - 2008

Female FTSE 100

Female held directorships Female Executive directorships Female NEDs Women holding directorships

2008

131 (11.7%) 17 (4.8%) 114 (14.9%)

1999

79 (6.9%) 13 (2.0%) 66 (10.8%) 113 66

Changes in Board Composition

FTSE 100 Boards

Total FTSE 100 NEDs Total FTSE 100 Executive Directorships Total FTSE 100 Directorships

2008

763 353 1116

1999

610 645 1255

Multiple Women on Boards

22 all-male boards 39 boards with multiple women

Critical Mass: Does the number of Women on a Corporate Board make a Difference?

(Erkut, Kramer and Konrad, 2008)

“Our results show that while individual women directors’ expertise and skills play a role in how much leadership they exert on boards, they are more likely to be effective leaders on boards that have reached a critical mass or tipping point of three women.”

Women in Top Roles

There’s been an increase in the number of women holding key positions in FTSE 100 companies: • • Five female CEOs Two female Chairmen Alliance Trust is the first FTSE 100 company to have both key positions of CEO and Chairman occupied by women.

Comparison of FTSE Listings

Index

FTSE 100 FTSE 250 FTSE smaller listings* %age Female Board %age Snr Mgrs No. Board Directors No. Snr Mgrs 11.7% 12.1% 113 123 7.0% 5.6% 13.7% 12.76

% 122 660 200 1217

* Includes FTSE AIM, SmallCap, Techmark100, Techmark All-share, Fledgling

New Appointee Pipeline…

149 new appointees to FTSE 100 boards

Only 16 (10.7%) went to women

5 Female CEO FTSE 100 4.8% of Exec Directors of FTSE 100 are female 14.9% of NEDs of FTSE 100 are female 13% Exec Committee Directors are female 18% of senior managers are female 30% of managers are female 30% – 60% graduate entry is female

2008

Myths around Women and Boards

Myth 1

Women aren’t interested In a study of women directors on FTSE 350 executive committees, 80% reported that they would like to have a NED on a FTSE 100 corporate board

(Cranfield, 2008)

Myths around Women and Boards

Myth 2

Women aren’t seen as having the right leadership style Once women are appointed onto FTSE 100 boards, they are more likely to hold multiple directorships (14% as opposed to 12%)

(Cranfield, 2008)

Myths around Women and Boards

Myth 3

Women haven’t got the right experience   Male CEOs say there aren’t more women on boards because they lack general management experience and they haven’t been in the pipeline long enough Female directors say there aren’t more women on boards because of male stereotyping

(Catalyst 1999)

Work experience of new FTSE 100 directors 2001 - 2004

Financial Institutions Management Consultancy Accountant Law Political Academia Public Sector Voluntary/Charity Sector Other/Government Male (n = 72)

31.9% 13.9% 20.8% 6.9% 4.2% 5.6% 18.1% 13.9% 13.9%

Female (n = 72)

44.4% 27.8% 19.4% 15.3% 11.1% 12.5% 31.9% 22.2% 23.6%

Previous Directorship Experience

FTSE100 FTSE101-350 Minor Board Male (n = 72)

41.7% 12.5% 38.9%

Female (n = 72)

22.2% 16.7% 62.5%

Previous Directorship Experience

Number of individuals appointed to FTSE 100 boards without FTSE 100 board experience Females Males = = 56 363

Myths around Women and Boards

Myth 4 Women don’t take risks

Data

Women are more likely than men to be appointed onto corporate boards when the companies share prices have fallen (Ryan and Haslam, 2005)

Why does it Matter that so Few Women make it to the Top

• • • • • • By 2010 just 20% of the workforce of the UK will be white, male and under 45. 80% of workforce growth will be among women. Women will form a significant part of the available talent pool. If we select our leaders from only half the population – waste of talent Females outperform males at every level of education 80% consumer decisions made by women Women own 48% Britain’s personal wealth and this will rise to 60% in 2025 Companies with women on the board perform better financially (ROE) and have better corporate governance Better corporate decision making. The biggest difference shown by Canadian Research is in non-financial performance measures by boards with more women (e.g. innovation, CSR, employee satisfaction, customer satisfaction, communication, strategy implementation)

Why does it Matter that so Few Women make it to the Top

• • • • • Overall corporate financial status (e.g. in USA Pension Funds vet companies for investment in terms of presence of women on boards) Reputation as an employer of choice for women.

Increasingly scrutinised as a criterion in the procurement of projects In a meta analysis of leadership studies in USA in 2002, concluded that women have more transformational leadership styles than men and these styles are connected with a greater effectiveness Contributions to corporate women employees in terms of mentors, role models, female retention and better understanding of issues facing women at work

Homosocial Reproduction Can women ever get past this?

“Frankly, Dinsdale, we like the look of you”

Pipeline to FTSE 100 Boards

200 women FTSE 250 Exec. committees 142 women FTSE 250 Exec and non Exec. directorships 139 women on FTSE 100 Executive committees

Bottleneck, not a Glass Ceiling

149 new directorships 2008 in FTSE 100 boards 481 Female Directorships in FTSE 350 Plus Women directors in: - Public sector - Voluntary sector - Unquoted companies - Private equity Women entrepreneurs

Key Change Makers

     Chairmen CEOs Women Directors Search Consultants Government

The Way Forward?

Talented Women in the Pool Chairmen keen to appoint high quality women to their boards Search Consultants

Recommendations from Female FTSE Report

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All directorships in the private sector be advertised (as occurs in the public sector).

Long lists for director appointments reflect an aspirational target of 30% female candidates.

Search consultants be more proactive in building relationships with potential female NEDs.

Companies set gender targets and report on progress in annual reports, including setting and monitoring of KPIs at each level of the pipeline.

Consideration be given to female candidates for new board positions in recapitalised banks.