1. The UK’s Self-Regulatory Approach Dr. Ruth Sealy University of Utrecht 9 th December 2015 Ruth.Sealy.1@city.ac.ukRuth.Sealy.1@city.ac.uk @RuthSealy 1

2. Glacial Progress of women on boards 2 1999 women make up 6.9% FTSE 100 board directorships 2009 women make up 12% FTSE 100 board directorships

3. Female Attrition 3

4. Just give it time… 4

5. Supply or Demand problem? 5 I’d be happy to place a woman but I can’t find one that fits…

6. 2,000+ Invisible Women (in 2010) From a talent pipeline of 2,281 women…

7. 7 Lord Davies Review & Report Main Headline: Target of 25% women on boards set for FTSE 100 companies by 2015 (Feb 2011 figure 12.8%) Considered a stretch target as would require 33% new appointments each year to women

8. 8 The Davies Recommendations  Chairmen set targets & be accountable for the proportion of WoB  CEOs monitor & increase number of women on Executive Committees  Metrics should be reported for WoB, ExCo & across whole firm  Financial Reporting Council (FRC) amend the UK Corporate Governance Code to require companies to establish a policy on boardroom diversity, including measurable objectives and disclose annually their progress  Institutional Investors should play close attention to these recommendations when considering companies  Executive Search Firms should draw up a Voluntary Code of Conduct addressing best practice for gender diversity on boards  Steering Committee meet & report every 6 months  Expand talent pool from where to find women  Boards to publically advertise non-executive directorships

9. 9 “Women need to be more ambitious” “ Women need to be better at networking ” “Women should be more assertive” “Women should behave more like men”

10. 10 Recognition of systemic flaws…  That there are flaws in the selection and appointment processes;  Flaws in talent management systems; and  Flaws in accountability

11. 11 “ Government must reserve the right to introduce more prescriptive alternatives if the recommended business-led approach does not achieve significant change.” Lord Mervyn Davies, 2011 “…important to have as a nuclear deterrent” Business Secretary Dr Vince Cable, July 2014 The residual quota threat…

12. The figures 4 years on… FEMALE DIRECTORS ON FTSE 100 BOARDS 20112012201320142015 Female held Directorships 135 (12.8%) 163 (15.0%) 194 (17.3%) 240 (22.8%) 286 (26.1%) Female Executive Directorships 18 (5.5%) 20 (6.6%) 18 (5.8%) 22 (8.4%) 26 (9.6%) Female Non- executive Directorships 117 (15.6%) 143 (18.3%) 176 (21.6%) 218 (27.9%) 260 (31.4%) Women holding FTSE 100 board Directorships 116141169205 244

13. Women on FTSE 100 Boards 2014 No. of All Male Boards DateNo of Boards with Women 21 March 2011 79 11 March 2012 89 6 March 2013 94 0 June 2014 100 Number of FTSE 250 all-male boards has fallen from 131 to just 15.

14. Executive Search Firms Code of Conduct 14 Executive Search Firms should draw up a Voluntary Code of Conduct addressing best practice for gender diversity on boards  Initial group of eight firms who conducted 80% of all FTSE 100 board searches  Within three years 85+ firms signed up  Competitive nature led leading firms to set up ‘Super Code’, where recognition is ‘awarded’ by Steering Committee, based on metrics of WoB appointments

15. The Pace of Change 15

16. 16 Predicting percentages of WoB 2010-2020

17. But it is by no means ‘sorted’… 17  Across the FTSE 100 the figure may be 26.1% but…  It ranges from 50.0% to a token 9.1%  Actually only 55/100 companies have hit the 25% target  The FTSE 100 figures are the best…further down the listings the figures still languish at ~10%  EU quota aimed at ALL listed companies, >250 employees or turnover >€50m (circa 900 co.s)

18. Female Executive Directors 18 “ We expect all Chief Executives to review the percentage of women they aim to have on their Executive Committees in 2013 and 2015. “ Davies Report 2011 YearFemale Executive Committee Members Female Executive Board Directors 2009175 (18.1%)17 (5.2%) 2010161 (17.2%)18 (5.5%) 2013176 (15.3%)18 (5.8%) 2014 2015 160 (15.6%)24 (8.2%) 26 (9.1%) From Female FTSE Report 2014 and Boardex data collected Oct 2015

19. Linking Women on Boards and ExCo 19 CompanyOn ExCoOn Board Admiral42%31% Diageo40%44% UU Group39%25% Land Sec Gp 33%27% Next33%27% Royal Mail31%36% Capita28%44% Sainsbury27%30% WPP25%32% Astrazeneca25% CompanyOn ExCoOn Board GlencorXs0% Fresnillo0%8% Schroders0%9% Shell0%10% Melrose0%11% Persimmon0%11% Aggreko0%17% Tullow Oil0%17% Babcock0%18% Standard Life 0%18% Top 10 and Bottom 10 Companies for women on ExCo From Female FTSE Report 2013

20. Poor promotion to Executive Committee Internally promoted Female Internally promoted Male 48% 62% From Female FTSE Report 2013

21. Changes in Code and Law on Diversity Reporting 21 Corporate Governance Code requests reporting on Boardroom diversity policy Measurable Objectives Progress against measurable objectives  Regular reporting, highlighting ‘best practice’ 2013 Change in Company Law to require reporting of gender breakdown for Whole organisation ‘Senior management’ The board  Infographics in annual reports, very visual messages

22. Gendered perceptions 22 Institute of Leadership & Management, 2011. Sample: 2,960 practising leaders/managers

23. Clients are demanding Diversity “Clients have asked us to respond on gender diversity indicators when evaluating our proposal – we need to meet their KPIs to get the deal” “We’ve entered pitches with an all-male team to come across a team with 50% women on the client’s side and faced an adverse reaction” 23 30% Club Professional Service Firms Initiative 2012

24. 24 Mark Carney, Bank of England Governor says: “targets are essential to build a diverse workforce and for embedding diversity into talent and performance management” Although business hates the idea of quotas, it can see that targets are a useful mechanism for change They are enjoying the positive publicity Targets

25. 25 Many banks and most big law firms have publicly declared senior management targets for (gender) diversity.  Lloyd’s Banking Group stretch target: 40% of top 5,000 global senior management positions to be held by women by 2018.  Linklaters: 30% female Executive Committee and International Board by 2018  Royal Bank of Scotland: 30% “ExCo-3” female by 2020 and 50% by 2030  Ashurst: 40% of all partner promotions; 25% of Equity Partners; and 25% of all Management positions to be female by 2018 Targets

26. 26 Joint CEO of Herbert Smith Freehills, David Willis, said “These targets have tangible benefits for the whole business – as well as promoting the best talent, they will help us meet the needs of our clients and bring diverse perspectives to our business and the business of clients” Why are they doing this?

27. 27 Why are they doing this? Because they know it makes sense in terms of: Actual benefits Perceptual benefits - Being seen to be addressing the issue In line with ‘best practice’ highlighted by corporate governance codes

28. 28 And so, what next?...  Continue voluntary ‘business-led’ approach  Increase target to 33% for all FTSE350 companies  All stakeholders to work together to increase numbers of Chairs, SIDs and Executive Directors  ALL remaining FTSE listed firms to take action  Extend best practice from boards to Executive Committee and Senior Management  New independent steering body to reconvene as catalyst, to monitor and report…

29. Some resources: 29 Thank you for your attention October 2014 Financial Reporting Council Monitoring Report of Corporate Governance Diversity reporting of FTSE 350: http://bit.ly/1s4bBc2 The Female FTSE Report March 2015 for updated boardroom figures and qualitative study from 30 senior leaders: http://bit.ly/1Bqaqs5 Lord Davies Five Year Closing Report October 2015 http://bit.ly/1Wki02p