Achieving gender balance – breaking the bias

Let’s start with the good news. Women are becoming more visible in the leadership teams (as defined in the Review) of FTSE 350 companies. The Review sets a voluntary target of a minimum of 40% of women on boards and in leadership teams for FTSE 350 companies by 2025. The FTSE 100 are almost there, with women’s representation now standing at 39.1%, and the FTSE 250 are not far behind at 36.8%.

While the overall picture shows an upward trajectory, the Review shows that gender bias is still alive and kicking in respect of functional roles. As an example, women occupy human resource director roles in 70% of FTSE 250 companies, whereas for finance director roles it is 18% and 8% for chief information officers. The number of women in the CEO seat remains flat and stubbornly low, and the Review identifies that there is more to do on executive committees too.  

The arguments in favour of a diverse leadership team are not new: in his speech to launch the Review, the Rt Hon Kwasi Kwarteng highlighted that more diverse companies are more likely to outperform less diverse peers on profitability (as set out in a 2020 McKinsey report). Diversity is also becoming part and parcel of investors’ reviews of a company’s ESG profile. The Review notes that IVIS will continue to issue warnings for companies with 33% or fewer women on its boards.

Breaking these biases, however they arise, will take time, but the statistics in the Review suggest that the UK’s voluntary, business-led approach to gender diversity is having a real impact and that steady progress is being made on this topic. 

Interestingly, as part of the next phase of the Review, the UK’s largest 50 private companies by sales have been invited to share their progress against the same targets. It’s not clear yet how “sales” will be defined, but the Review makes clear that the term “private companies” includes private equity-owned companies, partnerships, entrepreneur/founder owned companies, family owned companies or companies owned directly by management and staff. For private businesses already anticipating change under the Government’s broader ‘Audit & Corporate Governance Reform Package’, bringing diversity expectations in line with publicly listed companies may represent a significant shift in culture and practice. 

At a time when employers are thinking very seriously about how to attract and retain the best talent post-pandemic, it is clear to us from discussions with our clients and our colleagues in @A&O Consulting that a large part of this talent conversation involves creating a workplace culture in which everyone, irrespective of gender, ethnicity or background, can thrive and give their best. Happy International Women’s Day.