15 May 2014
Earlier this year, the government released Women on Boards, a report which warned Britain’s largest companies that women had to fill more seats on their boards if they wanted to maintain their competitive edge. Vibeka Mair compares the results with the Charity 100 Index.
Business secretary Vince Cable commissioned former Labour trade minister Lord Davies of Abersoch to produce the report, which investigates why so few women reach the top echelons of FTSE100 companies. In his executive summary, Lord Davies says there is a “clear business case” for increasing the number of women on corporate boards:
“Evidence suggests that companies with a strong female representation at board and topmanagement level perform better than those without and that gender-diverse boards have a positive impact on performance.”
The following analysis by civilsociety.co.uk compares Women on Boards’ research on FTSE100 companies with the picture in the Charity 100 Index.
Women on Boards cites a number of studies investigating how strong female and male presence on boards affects an organisation’s performance.
Women Matter, an annual report from international management consultancy McKinsey, says research shows that strong stock-market growth among companies is most likely to occur where there is a higher proportion of women in senior management.
And The Bottom Line, written by Catalyst, an international membership organisation for women in business, found that companies with more women on their boards outperformed their male-dominated rivals, with 42 per cent higher sales and 53 per cent higher return on equity.
However, despite growing evidence that organisations with women on boards achieve better performance results, in 2010 women made up only 12.5 per cent of the members of the boards of FTSE100 companies, according to Cranfield University’s FTSE 100 Board Report 2010.
In the voluntary sector, our research shows the picture is vastly better than amongst leading companies. Women make up 31 per cent of members overall on trustee boards of the largest 100 charities in the UK.
Lord Davies expects all FTSE100 boards to aim for a minimum 25 per cent female representation by 2015. The majority of Charity 100 Index charities exceed this minimum.
However, while the top 100 charities meet Lord Davies’ target collectively, 27 of them miss the mark. Six charities in the Charity 100 Index have no women on their boards, and it is noteworthy that, amongst this group, four are religious organisations – and one is the Football Foundation. These six charities also all have a male chief executive (CE).
In the private sector, 21 per cent of FTSE100 companies have no female director at all, either executive or non-executive, according to Cranfield’s report.
Women on Boards provides examples of other countries working on improving gender diversity on corporate boards.
For example, Norway, Spain and Iceland have all set mandatory targets of 40 per cent female representation on corporate boards and France has passed a bill applying a 40 per cent quota for female directors by 2016.
Our research found that 24 per cent of Charity 100 Index boards have at least 40 per cent female representation. However, while female representation at trustee board level is healthy among this group, men still dominate the top positions.
Some 63 per cent of the charities with more than 40 per cent of women on their board still have both a male chair and a male CE, while only 17 per cent have both a female chair and a female CE.
Conversely, no female chairs and CEs lead the charities which did not meet Lord Davies’ 25 per cent voluntary quota. In this group, 89 per cent had both a male chair and CE, while 11 per cent had mixed genders.
Further, in the Trustee Top 100 Survey 2010 conducted by civilsociety.co.uk last year, only 12 per cent of chairs in the top 100 charities were female.
Clore Social Leadership fellow Rowena Lewis says she has recognised a theme of women being under-represented at trustee-board level in her research on women’s progression into leadership in the voluntary sector.
“Women are well represented in the voluntary sector. They make up 68 per cent of the workforce. But they are not getting to the top roles. I would argue there is still much action that needs to be taken.”
Indeed, according to the Charity Commission, around 45 per cent of trustees of all registered charities are female. So, while 31 per cent female representation on top-100 charity boards is progressive compared to the FTSE100, when compared with the whole UK charity sector it falls short.
Lindsey Driscoll, a trustee and consultant in charity law and governance both in this country and internationally, suggests this could be because larger charities mirror the experience of FTSE100 boards.
Tessie Akpeki, lead consultant for governance development programme OnBoard, has found that the governance methods of some charities can stifle diversity.
“I worked with a big national household name. The CE wanted to encourage people who were from different backgrounds for board membership. But the board selects members and he was finding that they kept on selecting people they knew and were comfortable with.”
Stonewall had a similar problem on its board in 2003. It changed its governance methods and went from having eight out of 12 trustees all living in Islington to having half of its trustees being female, 20 per cent with disabilities and 20 per cent from ethnic minorities.
A report on how it achieved this features in The State of the UK Charity Boards from the Institute of Philanthropy.
The report notes that Ben Summerskill, CE of Stonewall, made the change during a period of profound difficulty for the organisation: “When I arrived the charity was on the brink of insolvency. It was very clear that things needed to change, and quickly.”
“The board began to address how it recruited new members. After conducting a governance review, the board now uses a skills audit which helps inform competencies needed when recruiting new trustees. The board also looks for people from a wide range of backgrounds. We believe that a diverse trustee board is probably more effective than one that is monochrome.
“Now half of new trustees in recent years are people that had no interaction with Stonewall beforehand. They’ve brought talents to Stonewall that we would not have come across had we not advertised openly.”
As charities look at different ways to tread the rocky road ahead, a focus on the gender balance of trustees could reap hidden rewards and help maximise the potential of your board.
Vibeka Mair is senior reporter at civilsociety.co.uk
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