Although female representation on the boards of the UK’s biggest companies is rising, the number of women in the CEO role remains stubbornly low. More needs to be done to accelerate change
If you visit any of the websites of the UK’s biggest businesses and check out the photos of their CEO, your odds of seeing a face that isn’t male and white are almost as long as they were a decade ago. Despite efforts to diversify the boardrooms of the country’s largest companies through investigations such as the Davies review in 2011 and the Hampton-Alexander report in 2016, the number of women in the CEO role at the UK’s top firms has barely grown.
This was highlighted in a report this month by Cranfield School of Management, whose headline finding was that only eight women occupy the role of CEO in FTSE 100 companies. Although the number of women on their boards is rising – now at 38%, exceeding the 33% target set by Hampton-Alexander – the percentage of executive directorships occupied by women was flat for a second year at 13.7%.
One of the report’s co-authors is Sue Vinnicombe, professor of women and leadership strategy at Cranfield. She says: “The good news is the percentage of women on the board has gone up. But the thing that isn’t changing is the pathetic number of women in the executive director jobs of CEO and finance director.”
Getting opportunities at the top
The role of CEO is considered the pinnacle of an executive career. In order to become one, prospective candidates need to demonstrate a breadth of commercial experience. Vinnicombe explains that this requires them to serve in different functions, which means that “the current CEO and chair need to identify potential candidates early to help them get that experience”.
She cites Alison Rose, CEO of NatWest Group, as a prime example of this approach. Early on in her career at the bank, where she started as a graduate in 1992, Rose was identified as a high-flyer. As a result, she had the chance to fill a number of senior leadership roles across the business before becoming CEO.
But too few women are given the same opportunities, according to Vinnicombe, who observes that “fewer women proportionally get promoted than men. It’s the same for Black and minority ethnic candidates as well. Talent management and succession planning have to be taken more seriously. You won’t suddenly get more female CEOs unless you’re developing them within the business.”
Responsibility for the selection of a new CEO usually lies with the incumbent and the chair – another position that Cranfield’s Female FTSE Board Report 2021 identifies as male-dominated.
“There’s a lot of bias going on there,” Vinnicombe says. “The board needs to have more of an oversight on how that planning takes place.”
How to address diversity at the top
This is an issue that PensionBee’s CEO, Romi Savova, is also acutely aware of. She says: “When it comes to appointing CEOs, decisions are made by the board and, more often than not, boards are male-dominated. This doesn’t lay the foundations for a gender-balanced approach to appointments or other strategic decisions.”
The online pension provider, which floated on the London Stock Exchange in April, has worked hard to ensure that both its board and its senior management team have an equal number of men and women. It has also introduced a gender-balanced parental leave policy, which entitles all employees to six months’ full pay.
Savova believes that “one of the biggest obstacles to women taking up senior roles is the lack of access to appropriate and affordable childcare”. Both the government and businesses have a role to play in better supporting parents, she argues, adding: “Too many maternity policies encourage women to stay away from the office when an integration of home and work life would be better.”
Societal attitudes towards gender roles in childcare are an important element of the challenge that needs to be addressed, but women who chose not to have children are also being disadvantaged. So what else needs to change?
Fiona Daniel, founder and CEO of diversity and inclusion consultancy FD2i, says: “Companies need to start understanding the intersectional aspect of diversity and approach this in a broader way that incorporates ethnicity, sexuality and disability too.”
She believes that progress has been slow because companies aren’t addressing the root causes of this lack of diversity. She advises business leaders to check the talent and succession systems they have in place, challenge these to determine whom the process is excluding and change it accordingly to make it more inclusive.
“You have to do more than just say you’re committed to gender diversity. This has to be followed by action,” Daniel stresses.
Given the Cranfield findings, is a new set of targets to improve the gender diversity of boards needed? For Vinnicombe, this seems unnecessary. “The focus has to be on the executive pipeline now. I don’t see any point in having any more gender targets,” she says.
Although diversity measurements remain important, now is the time to back these up with action.