Top 50 private firms challenged to match FTSE 350 gender parity targets

2nd March 2022

By Pascale Gara

The largest private businesses in the UK have been challenged to match listed companies on boardroom and leadership gender parity in a government-backed review.

The FTSE Women Leaders Review recommended that FTSE 350 companies and the biggest 50 private businesses in the UK by sales set a target to increase women’s representation in board and leadership roles to 40 per cent by the end of 2025.

The 78-page report, published last week, also recommended each company appointed at least one woman in the Chair or Senior Independent Director role on the Board, and/or one woman in the Chief Executive or Finance Director role – also by the end of 2025.

Currently, female representation on boards stands at an average of 39.1 per cent across the FTSE 100, 36.8 per cent across the FTSE 250 and 37.6 per cent for the FTSE 350.

But the review found that out of the 414 women in FTSE 100 board roles, 385 were non-executive positions. Just 29 women held executive director positions at the UK’s biggest companies last year – 13.5 per cent.

It reported women held 31.5 per cent of FTSE 350 leadership roles in 2021 but only a quarter of positions on executive committees — with just 18 female chief executives and 49 female finance directors.

The review follows the five-year Hampton Alexander equality review which ended last year, concluding its target for women to fill a third of board positions had been achieved on average across the FTSE 350.

Denise Wilson, chief executive of the review team, said: “A lack of women in the boardroom was the original challenge and represents the area of greatest progress, but we need to achieve the same gains and more, for women in leadership.

“While we continue to build on good practice from the earlier years, we need to firmly shift focus in this next phase to leadership roles, and those at the top of the organisation, including the Chief Executive Officer roles where women remain few and far between.

“There is no shortage of experienced, capable women, ambitious for themselves and their companies across all sectors of business today. Yet…the appointment rate today is significantly skewed in favour of men, with almost two out of every three available roles in the year going to men. This needs to change.”

Robin Budenberg CBE, Chair of Lloyds Banking Group Plc said in the FTSE Women Leaders Review report: “In my view, women are more likely to want to be part of an organisation if they see women at the top.

“At Lloyds Banking Group, women make up 40 per cent of our Board and 34 per cent of our leadership population. But we have much more to do and have set new aspirations of 50 per cent women and 13 per cent Black, Asian and Minority Ethnic colleagues in senior roles by 2025. And our Board will mirror those ambitions. Diversity around both the Board and Executive table is a source of real competitive advantage.”

Michelle Scrimgeour, Chief Executive at Legal & General Investment Management, which has a 50 per cent gender split in its management team, is calling for investors to use voting powers to speed up change, for executive teams to remove barriers that block women’s progress through their senior leadership pipelines, and for data disclosure for all listed companies.

She wrote: “In my career I’ve witnessed the benefits of more balance in a workforce (different perspectives, wider talent pools, stronger innovation) and I’ve seen what women as individuals can bring. There has been real progress in normalising and celebrating gender diversity in senior leadership roles in recent years. However, I’m impatient for more.”

The onus is on executive search firms to work with boards and executive leadership teams to help them achieve increased diversity and inclusion – not just in terms of gender, but also non-gender diversity characteristics.

The business case for this is clear; research by McKinsey & Company* showed that companies with ethnically diverse leadership are 33 per cent more likely to outperform on profitability and 21 per cent more likely to have above-average profitability with gender diverse leadership teams.

This is why HW Global signed up to HM Treasury’s Women in Finance Charter in 2019, making a series of pledges to promote diversity within our business and assisting our clients to meet their own diversity and inclusion targets.

They include:

  • Aim to deliver shortlists comprising at least 30 per cent female candidates.
  • Advise and guide clients to be more flexible about candidates in order to meet diversity targets, considering candidates from different sectors, backgrounds and experience.
  • Focus on promoting non-gender diversity characteristics within our recruitment strategy such as varied age, ethnicity, disability, socio-economic background, LGBT+.

But we understand that truly striving for greater diversity and inclusivity in the workplace is not about writing lengthy strategies or discussing empty promises. It is about actually delivering a genuinely diverse list of candidates for every role we seek to fill.

When we search for talent, one of the techniques we employ to promote gender diversity is to look and contact certain leader groups relevant to the role to tap into their network and find truly exceptional women.

We also ensure that we learn from conferences and events that champion ethnic diversity, discovering how we can be an agent of positive, anti-discriminatory change in our marketplace. For example, we consistently target the Women of Colour Conference, which looks at all facets of diversity through the BAME lens.

We are very conscious of bringing the principles of boardroom diversity, be it gender and/or ethnicity as well as diversity of thought to each shortlist meeting so that they complement what already exists at the Board table.

HW Global advertises all our non-executive roles on Women on Boards and Dynamic Boards to increase our reach a diverse range of candidates. In 2020, 67 per cent of our successful non-executive placements were representative of a gender diverse or ethnic background and in 2021 it was 69 per cent.

We proactively connect globally with a variety of organisations which promote ethnic diversity on main boards. On a recent search in the USA we connected with Chief and the Executive Leadership Council – both well known for promoting women and ethnicity within their networks.

Our other techniques to promote diversity include:

  • Operating with a broad set of search criteria that encompass all varieties of experience, educational background, and racial heritage.
  • On occasion, conducting blind CV presentations to reduce unconscious bias in the selection of candidates.
  • Actively challenging our client’s perspective on hiring to not only prevent them from limiting their horizons but acting as a positive influence in the proliferation of diversity in all industries.

Delivering exceptional candidates that add value through their diverse perspectives and background is an essential part of how we operate and something that we believe contributes to better, richer, longer-lasting hires.

* McKinsey – ‘Delivering Through Diversity’ 2018

Pascale Gara is Head of the Chair and NED Practice at HW Global.