& the Board

Time to walk the walk

In May, the UK government published a list of the worst explanations FTSE 350 companies gave for not appointing women to their boards. MerchantCantos Director of Sustainability, Ian Roe, and Investor Communications Adviser, Kay Kayachith, explain how communication is key to righting a bias that refuses to go away.

The government’s business department, Business, Energy & Industry Strategy (BEIS), published a list of the worst explanations from a range of FTSE 350 Chairs and CEOs for not appointing women to company boards.

The eye-opening excuses, including: “all the ‘good’ women have already been snapped up”, “women don’t want the hassle or pressure of sitting on a board” and our personal favourite - “the issues covered are extremely complex ”, arose from the government-backed Hampton-Alexander Review - an examination of gender representation within UK-listed companies.

First published in November 2016, the aim of the review was to assess and ultimately improve, the gender balance in FTSE leadership positions. Based on the results, the government is pushing for women to make up at least a third of boards for the UK's 350 biggest companies by 2020.

Latest figures were published on June 27th, and while the report shows that the situation is improving, it seems that unconscious bias is still rife on FTSE 350 boards.

What can companies do now to show that they are serious about gender diversity at board level?

They can start by publicly communicating their current board diversity breakdowns and articulating a clear business case for board diversity going forward -  an explanation of the mix of leadership skills, experiences, cultural backgrounds and gender identity that they will need to successfully govern the business.

They should next disclose the tangible steps they are taking to diversify their future board pipeline. Those who do will have an advantage over other companies – operationally and by alleviating investor concerns regarding “groupthink”.  

As Dr Ruth Sealy, co-author of the Female FTSE Board Report 2016 has stated, “For change to be sustainable, we must focus on the pipeline and ensure that women can progress through senior management ranks. Women account for only 10% of the most important senior executive and operational roles on these committees.”

Communication plays a critical role

On the heels of the publication of the UK’s first Gender Pay Gap reports – and the media storm that ensued; the BEIS Select Committee is among other organisations considering whether to require companies to address executive and gender pay, rather than simply pushing for more transparency. It is therefore clear that articulating a clear position on gender parity, diversity and inclusion more broadly will be of great importance going forward.

Companies could, and should, be better communicating their efforts to redress gender and opportunity imbalances. We suggest they report their ambitions, plans and progress on the recruitment, development, promotion and retention of women annually, at a leadership level and beyond. This can be tackled within existing reporting structures: legislated Gender Pay Gap reports, and within the people, board or Nomination Committee sections of the annual report; or elevated to a stand-alone report to further emphasise the importance of the inclusion and diversity to the business.

Reporting can be a catalyst for action

The role of reporting cannot be underestimated. Disclosure of gender diversity within the board, and targets and KPIs specifically, could be the necessary catalyst for board level discussion and action. As the old adage goes, ‘what gets measured, gets done’. Through reporting, companies will also be held accountable to their employees, other stakeholders, and the media to make progress on the issue.

We think now, more than ever, is the time to for boards to put gender diversity on the agenda. With a global movement underway towards gender parity, companies who are not part of the conversation or do nothing should be prepared for the brand-damaging media coverage that could follow. Whatever the way forward may be, companies need to move beyond talking the talk about gender diversity and inclusion and start walking the walk by putting more women on their boards and stop making disgraceful excuses.

For more information, please contact Kay Kayachith, Investor Communications Adviser and Ian Roe, Director, Sustainability,  MerchantCantos