Thursday 24 February 2011

Lord Davies' review, Women in the Boardroom now published


Lord Davies' review, Women in the Boardroom, which calls for firms to adopt voluntary targets in order to achieve a minimum of 25% female representation on boards by 2015 has been published today 24th February 2011.

Jackie Orme, Chief Executive at the Chartered Institute of Personnel and Development (CIPD), has today welcomed the publication. In the CIPD Press release - Jackie Orme said: "We welcome Lord Davies focus on a voluntary approach. His review marks the start of a process. It is the right start, but everyone involved in the governance of British firms now needs to step back and recognise that there needs to be a fundamental shift in established perceptions of what a great board member looks like. That is the only way we will ensure we get to and beyond the 20% target swiftly and in a sustainable way.

"That means far more than setting internal targets and filling them in a tick-box way. From my own experience in business, I know that a range of opinions, backgrounds and perspectives is always better than what is often referred to as 'group think'. But I also know that we face a challenge to some severely entrenched attitudes in many boardrooms. I was once told a startling story by a woman who, being interviewed for a non-executive director role at a FTSE 100 firm, was told: 'Don't worry; we're not interviewing you because you're a woman. We've already got one of those'. It is precisely that kind of tokenism and numbers game we need to avoid.

"Meeting Lord Davies' objectives must be about more than skirts on seats. It needs to be about a concerted challenge, lead by chairs of boards and headhunters themselves, to the established views of the skillset, background and range of experiences that make great board members.

That board members should be appointed on merit is a truism - but the definitions of what constitutes 'merit' have been allowed to become too comfortable and too static - to the detriment of corporate performance. We need to get better at drawing from non-traditional sources - and the benefits of that approach will extend far beyond getting more women in the room. It holds out the prospect of generating a vibrant new generation of board members, capable of challenging orthodoxy, banishing group think, and generating more sustainable growth for their firms.

"By seizing this opportunity to challenge established norms, we'll do so much more than just ensuring women are allowed to make up the numbers. Lord Davies has created a platform we can build on - but everyone involved in the governance of our biggest firms now needs to step up and play their part."


Commenting on the publication of ‘Women on boards – Independent Review by Lord Davies of Abersoch’, Miles Templeman, Director-General of the Institute of Directors, said: “We are pleased that the report stops short of advocating gender quotas for the boardroom. Quotas would have been incompatible with a meritocratic approach. However, it was unhelpful that Lord Davies did not rule out quotas once and for all. With only 11 per cent of the respondents to Lord Davies’ consultation – of which 88 per cent were women – supporting the idea of quotas, I question why he thinks the threat of quotas should remain.

Mr Templeman added: “A greater diversity of people on boards in general is necessary, and this clearly means we need more female directors. The way to do this is to increase the pool of female senior executives from which directors can be recruited. Improving flexible working opportunities for aspiring female executives will be central, with companies rather than Government taking the lead in creating these opportunities.

“We also believe that Lord Davies is right to argue that a combination of entrepreneurs, existing providers and individuals needs to come together to consolidate and improve the provision of training and development for potential board members. This is an area in which the IoD is ready to make a major contribution through its Chartered Director programme and other professional development activities.”

Key IoD points on the substance of the Davies Review:

•We are pleased the report stops short of advocating gender quotas for the boardroom. It is striking that only 11 per cent of the respondents to Lord Davies’ consultation (of which 88 per cent were women) supported the idea of gender quotas.


•However, we are concerned that Lord Davies continues to threaten gender quotas at a later date if “the recommended business-led approach does not achieve significant change”. This attitude is unhelpful. Gender quotas for boards should have been rejected once and for all as being incompatible with a meritocratic approach to senior level appointments. Furthermore, they would be demeaning and undermining for female directors and aspiring female directors


•The report recommends that listed companies should establish policies and new reporting requirements for female participation on boards and amongst senior executives. These measures are not desirable as they distract companies from establishing a board and management structure that best reflects their specific needs.


•Adding further requirements to the UK Corporate Governance code in respect of gender diversity would not be a positive development. The Code already states 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”. Further requirements in terms of gender diversity policy will increase the risk that the Code becomes viewed as a list of political requirements for listed companies rather than a guide to improved effectiveness.


•We agree that non-executive director appointments should be more widely advertised. Furthermore, Lord Davies is right to argue that “A combination of entrepreneurs, existing providers and individuals needs to come together to consolidate and improve the provision of training and development for potential board members”. This is an area in which the IoD is ready to make a major contribution through its Chartered Director programme and other professional development activities.


•A greater focus on director development would also assist in the achievement of one of the reports other recommendations; that women from “outside the corporate mainstream, including entrepreneurs, academics, civil servants and senior women with professional service backgrounds” play a greater role on boards. Appropriate development and mentoring activities – tailored to the specific needs of women – could contribute a great deal to the achievement of this objective.

The CBI today welcomed Lord Davies’s report, Women on Boards.

Helen Alexander, CBI President, said: “The lack of women at board level needs addressing urgently, and the best way of achieving this is through companies reporting on their progress.

“We believe firms should report against internally-set targets that reflect different starting points, the nature of particular sectors, and the size and structure of the board.

“Lord Davies’s report rightly proposes that chairs of FTSE 350 companies should set the percentage of women they aspire to have on their boards, based on the characteristics of their business.

“A Government-set target for FTSE 100 directors would not reflect the different circumstances of individual companies. It should be for companies, not the Government, to set an appropriate target.

“The report contains good ideas to develop and sustain the talent pipeline to the boardroom, including harnessing the role of investors, executive search firms, and mentoring. The review has also been wise to avoid quotas, which would not have addressed the real issue of how we bring about a cultural change.”

Source: CIPD,IOD,CBI

For the past ten years jml Training has been delivering specialist training programmes for women in management. For further information follow this link http://www.jml-training.com/Training_Development_for_Women.htm

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