Every year, Cranfield University (with the support of its sponsor, EY) publishes an analysis of trends in female representation on FTSE 100 and FTSE 250 boards. This year’s Female FTSE Board Report published on 7 November 2022 acts as a stark reminder that whilst there are more women in boardrooms than ever before, there is a long road ahead to achieving gender parity.

 

Overall, important progress has been made with the percentage of women on FTSE 100 boards at 39.6% and FTSE 250 boards at 38.9%. In total, 48 FTSE 100 companies and 110 FTSE 250 companies have met the target of 40% women on their boards set by the FTSE Women Leaders Review (the same target set by the FCA for listed companies from April 2022). However, delving deeper into the figures reveals an alarming difference in progress for executive roles when compared with non-executive roles.

 

Whilst women hold 413 directorships on FTSE 100 boards, only 36 of these are executive directorships (up sluggishly from 31 last year) including just nine CEOs. And a similar stagnant trend emerges at FTSE 250 board level. For the third year in a row, only 47 out of 752 female directorships are executive positions, showing that companies are still failing to reflect diversity at executive levels.

 

The FTSE Women Leaders Review set a target of all FTSE 350 companies to have at least one woman in the Chair or Senior Independent Director (SID) role and/or one woman in the CEO or Finance Director role by the end of 2025. However, the Female FTSE Board Report argues that grouping these roles together allows companies to meet the target without disrupting the male dominated executive pipeline. 

 

Instead, they note, the key to achieving more women in executive roles is by appointing more women to Chair and CEO roles. According to Women Count 2022 Report, female CEOs are not only four times more likely than male CEOs to appoint women executives to their board, but they are also more likely to appoint women to executive committees and P&L roles which are ‘vital stepping stones to the top’. With just 35 female Chairs and 12 female CEOs across the FTSE 250, it is clear that few women are making it to these two key decision-making roles. 

 

Whilst companies are managing to increase female representation at the upper echelon of FTSE companies, the distribution of power remains a challenge. The report argues that moving attention away from purely meeting gender diversity targets on boards to engaging with gender proofing executive succession planning is critical, a process of which only a handful of companies seem to have mastered. 

 

They make a number of recommendations for chairs and boards, including revisiting guidelines for Nominations Committees so that their remit in terms of improving gender diversity is more explicit and increasing CEOs accountability for meeting diversity objectives and improving gender balance.

 

Concluding remarks

Meeting diversity targets is only part of the story. Taking the board level figures at face value masks the underlying lack of gender diversity in the most pivotal roles of FTSE companies – Chair and CEO. This metric may arguably be even more telling in assessing progress (or lack of) than diversity on boards as a whole. 

 

The poor progress in the number of women in the executive ranks highlights that more is needed beyond targets to generate and accelerate meaningful change, such as gender proofing the executive succession planning process, and the business case for doing so is clear.