One in five of the UK’s biggest companies are failing to increase diversity on their boards of directors at a quick enough pace, according to the Investment Association (the trade body which represents UK investment managers).
Out of 350 companies in the FTSE index, 69 still have just one or no females directors on their boards. Such companies have been criticised for “tokenism” rather than adopting true diversity.
The Hampton-Alexander Review set a target of 33% women on boards and in leadership teams by 2020o. The Investment Association has asked the companies which are lagging behind with achieving this target to outline what action they are taking to address the situation internally. It has also stated that it will alert investors about those companies which have just a single woman on their boards – the so-called “one and done”.
Lack of women fuels the gender pay gap
Having low numbers of women in senior, leadership positions is the main contributor to large gender pay gaps. With politicians putting pressure on companies to reduce the gender pay gap, one solution is to ensure more women are appointed to the board. On current predictions, if the rate of progress does not speed up, the gender pay gap will not be closed until 2052!
The pipeline is blocked
The business case for diversity in the boardroom may have become widely accepted but, the practicalities of getting women to remain in the workforce long enough to acquire the skills and experience to take on senior roles have not been resolved by employers.
It is well documented that women start to drop out of full-time work once they have children (often around the mid-point in their careers); giving up work altogether or moving to part-time work means many women fail to reach their full potential in the workplace.
Possible barriers to retention and progression include:
- the extremely high cost of childcare,
- unbalanced division of domestic responsibilities,
- negative attitudes to flexible working,
- the stress of long-commutes; and
- the stigma of part-time work as part-time commitment.
With more men then filling senior positions, the gender pay gap is perpetuated.
Only by fully understanding why and how they are losing women can companies put in place effective measures to hold on to their talented female workforce and ensure the pipeline to the top remains well populated with women. This is likely to takes significant resource and commitment by employers.
What can be done?
Until there is a greater shift in society at large towards more shared parenting then employers will not be able to move mountains on their own. However, they can nudge things in the right direction by offering proper paid parental leave for fathers and partners so that child caring is not mainly the responsibility of the mother – currently there are good economic reasons why this is often the case as the father earns more.
Enhancing the status of part-time work so that it is not seen as a career cul-de-sac would also help , as would reducing the stigma around men applying for flexible working.
There are no quick fixes but, it is clear that investors will increasingly be publicly holding companies which fail to improve their boardroom and senior management diversity to account – doing nothing is not an option.