Gender Diversity on Corporate Boards – Does it Matter? Dean’s Distinguished Speaker Series University of Auckland Business School Professor Susan Vinnicombe OBE Cranfield School of Management

Profile of FTSE 100 boards Myths of women and boards Why does it matter? What can we do?

Female FTSE Index Female FTSE Female held directorships 131 (11.7%) 79 (6.9%) Female Executive directorships 17 (4.8%) 13 (2.0%) Female NEDs 114 (14.9%) 66 (10.8%) Women holding directorships 11366

Changes in Board Composition FTSE 100 Boards Total FTSE 100 NEDs Total FTSE 100 Executive Directorships Total FTSE 100 Directorships

Multiple Women on Boards 22 all-male boards 39 boards with multiple women

Critical Mass: Does the number of Women on a Corporate Board make a Difference? (Erkut, Kramer and Konrad, 2008) “Our results show that while individual women directors’ expertise and skills play a role in how much leadership they exert on boards, they are more likely to be effective leaders on boards that have reached a critical mass or tipping point of three women.”

Women in Top Roles There’s been an increase in the number of women holding key positions in FTSE 100 companies: Five female CEOs Two female Chairmen Alliance Trust is the first FTSE 100 company to have both key positions of CEO and Chairman occupied by women.

Comparison of FTSE Listings Index %age Female Board %age Snr Mgrs No. Board Directors No. Snr Mgrs FTSE %12.1% FTSE %13.7% FTSE smaller listings* 5.6% % * Includes FTSE AIM, SmallCap, Techmark100, Techmark All-share, Fledgling

New Appointee Pipeline… 149 new appointees to FTSE 100 boards Only 16 (10.7%) went to women

30% – 60% graduate entry is female 30% of managers are female 18% of senior managers are female 14.9% of NEDs of FTSE 100 are female 4.8% of Exec Directors of FTSE 100 are female 5 Female CEO FTSE % Exec Committee Directors are female

Myths around Women and Boards Myth 1 Women aren’t interested In a study of women directors on FTSE 350 executive committees, 80% reported that they would like to have a NED on a FTSE 100 corporate board (Cranfield, 2008)

Myth 2 Women aren’t seen as having the right leadership style Once women are appointed onto FTSE 100 boards, they are more likely to hold multiple directorships (14% as opposed to 12%) (Cranfield, 2008) Myths around Women and Boards

Myth 3 Women haven’t got the right experience  Male CEOs say there aren’t more women on boards because they lack general management experience and they haven’t been in the pipeline long enough  Female directors say there aren’t more women on boards because of male stereotyping (Catalyst 1999) Myths around Women and Boards

Work experience of new FTSE 100 directors Male (n = 72) Female (n = 72) Financial Institutions 31.9%44.4% Management Consultancy 13.9%27.8% Accountant20.8%19.4% Law6.9%15.3% Political4.2%11.1% Academia5.6%12.5% Public Sector 18.1%31.9% Voluntary/Charity Sector 13.9%22.2% Other/Government13.9%23.6%

Previous Directorship Experience Male (n = 72) Female (n = 72) FTSE %22.2% FTSE %16.7% Minor Board38.9%62.5%

Number of individuals appointed to FTSE 100 boards without FTSE 100 board experience Females=56 Males=363 Previous Directorship Experience

Myth 4 Women don’t take risks Data Women are more likely than men to be appointed onto corporate boards when the companies share prices have fallen (Ryan and Haslam, 2005) Myths around Women and Boards

By 2010 just 20% of the workforce of the UK will be white, male and under % of workforce growth will be among women. Women will form a significant part of the available talent pool. If we select our leaders from only half the population – waste of talent Females outperform males at every level of education 80% consumer decisions made by women Women own 48% Britain’s personal wealth and this will rise to 60% in 2025 Companies with women on the board perform better financially (ROE) and have better corporate governance Better corporate decision making. The biggest difference shown by Canadian Research is in non-financial performance measures by boards with more women (e.g. innovation, CSR, employee satisfaction, customer satisfaction, communication, strategy implementation) Why does it Matter that so Few Women make it to the Top

Overall corporate financial status (e.g. in USA Pension Funds vet companies for investment in terms of presence of women on boards) Reputation as an employer of choice for women. Increasingly scrutinised as a criterion in the procurement of projects In a meta analysis of leadership studies in USA in 2002, concluded that women have more transformational leadership styles than men and these styles are connected with a greater effectiveness Contributions to corporate women employees in terms of mentors, role models, female retention and better understanding of issues facing women at work Why does it Matter that so Few Women make it to the Top

“Frankly, Dinsdale, we like the look of you” Homosocial Reproduction - Can women ever get past this?

Pipeline to FTSE 100 Boards 139 women on FTSE 100 Executive committees 142 women FTSE 250 Exec and non Exec. directorships 200 women FTSE 250 Exec. committees

Bottleneck, not a Glass Ceiling 149 new directorships 2008 in FTSE 100 boards 481 Female Directorships in FTSE 350 Plus Women directors in: - Public sector - Voluntary sector - Unquoted companies - Private equity Women entrepreneurs

Key Change Makers  Chairmen  CEOs  Women Directors  Search Consultants  Government

The Way Forward? Talented Women in the Pool Search Consultants Chairmen keen to appoint high quality women to their boards

1.All directorships in the private sector be advertised (as occurs in the public sector). 2.Long lists for director appointments reflect an aspirational target of 30% female candidates. 3.Search consultants be more proactive in building relationships with potential female NEDs. 4.Companies set gender targets and report on progress in annual reports, including setting and monitoring of KPIs at each level of the pipeline. 5.Consideration be given to female candidates for new board positions in recapitalised banks. Recommendations from Female FTSE Report