The arguments for change
Our view, when we set up the FTSE 100® Cross-Company Mentoring Executive Programme, was that increasing gender diversity would have significant beneficial implications for the culture of organisations, their decision-making capabilities, their access to the full talent pool and their long-term success.
The year of the Programme’s launch, 2003, was also the year of the Higgs Report, and Sir Derek Higgs – and later Dame Laura Tyson, in her Report on the Recruitment and Development of Non-Executive Directors – were already highlighting the absence of women on UK Boards and recommending measures to bring about change.
There is a body of research that suggests that gender balance on Boards brings material benefits:
Better corporate governance and Board dynamics, enhanced performance and increased representation of the customer base are particularly pertinent in today’s global economic situation. As Peninah Thomson noted in A Woman’s Place is in the Boardroom "the problems that face our world are so complex and difficult that we will need all the talent available to solve them." Not applying the talent of half the UK population to deal with this continuing situation represents an enormous waste of resources, and one of The Mentoring Foundation’s prime motivations is to address this market failure.
From argument to action
The UK has now moved beyond a debate on whether action is needed, focusing instead on how more balanced Boards can be achieved most effectively.
The Lord Davies of Abersoch CBE, Government and British business have all stated a preference for a voluntary approach, in which companies set reasonable targets for Board appointments and progress is monitored.
Following Lord Davies’ 2011 Report and his recommendations for self-regulation, appointments of women to Board positions, which had plateaued at 12.5% for three years, stood at approximately 26.7% at the start of 2017. Lord Davies had set a target of achieving 25% representation at Board level in the FTSE 100 by the end of 2015, and this was met. Whilst more work needs to be done, this sharp increase in a short period of time demonstrates the efficacy of a self-regulatory model.
In the wake of the achievement of the Davies Report target, February 2016 saw the appointment of Sir Philip Hampton – a good friend and longstanding supporter of The Mentoring Foundation – to succeed Lord Davies as Chair of the Women on Boards Review being undertaken by the government. Sir Philip, then Chair of GlaxoSmithKline and former Chair of RBS and Sainsbury’s, set out his plans to focus on increasing the representation of women at the executive level of FTSE 350 companies, continuing the good work of Lord Davies in targeting board representation within the FTSE 100. He was supported by Dame Helen Alexander, Chair of UBM, as Deputy Chair to the Review.
Sir Philip attended the Foundation’s annual Colloquium in May 2016, when we were delighted to have the opportunity to discuss these issues with him in much greater depth.
Other progress has been made since the Foundation began work. In response to Lord Davies’ recommendations, the Financial Reporting Council (FRC), under Baroness Hogg – a Mentor on the FTSE Executive Programme – issued a consultation on diversity in 2011. The results led to the inclusion of certain guiding principles in the new Corporate Governance Code launched by the FRC in 2012.
The relevant principles relate to Provision B2 of the Code on Board composition and stipulate that:
"The search for board candidates should be conducted, and appointments made, on merit, against objective criteria and with due regard for the benefits of diversity on the board, including gender."
Companies were recommended to include in each Annual Report: "a description of the Board’s policy on diversity, including gender; any measurable objectives that it has set for implementing the policy, and progress on achieving the objectives."
The new Corporate Governance Code came into force in October 2012.
The work of the Foundation sits at the heart of the UK’s business-led approach, arising from the commitment, in 2003, of a group of Chairs to bringing about change through the operation and leadership of the FTSE 100® Cross-Company Mentoring Programme. The original Programme expanded to include more than 100 Mentors from the very top of UK business who, over the years, have given their time voluntarily through their mentoring activity and other generous-spirited support.
A report by the House of Lords European Union Committee, Women on Boards, referred to the importance of mentoring as part of the solution, and singled out the work of The Mentoring Foundation for specific praise: