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CBI calls for action to boost numbers of women board members

15 December 2010

The CBI today called for all listed companies to be required to measure their progress on improving diversity in order to boost the number of women on boards, and it made the business case for greater female representation. In its submission to Lord Davies’ review, the CBI said the UK Corporate Governance Code should be revised to require listed companies to report on diversity on a “comply or explain basis”.

This would involve reporting progress against internally-set targets that reflect their companies’ circumstances and having to explain if they fail to deliver. For example, a media company with a high number of female staff may set a higher target for the number of women on boards, compared to an engineering firm with just a handful of female employees. A similar scheme due to be introduced in Australia next year has already resulted in a sharp rise in the number of female board appointments. The latest figures from the Australian Securities Council show 27% of new appointments were female in the first half of 2010, compared with 5% in 2009. Commenting on the CBI’s proposals, CBI president Helen Alexander (pictured) said:

“Boardrooms should harness the talents of the many, not just the few. Although women make up half of the population and more than half of university graduates, they remain woefully under-represented at board level. We need to see more women progressing through the ranks and do more to keep them moving along the career pipeline into the top jobs. Schemes such as flexible working, mentoring and networking have helped, but making progress at the very top levels of business will require more sophisticated talent management. What is needed is cultural change, not quotas, ratios or tokenism. That is why we are calling for a flexible system that will allow firms to set targets that reflect the realities of their businesses.”

The CBI’s submission makes a strong business case for gender diversity, including the benefits of having a wide range of views round the table for good governance; as a spur for innovation and creativity, and in helping to attract more women to work for the company.

The business group also highlights the declining total number of board directorships, which has further reduced the opportunities for women. Noting that currently female appointments are predominantly made in non-executive roles, the CBI argues that further progress needs to be made to ensure women are appointed to both executive and non-executive roles.

The CBI’s other recommendations for improving boardroom diversity include:
Harnessing the influence of the chairman. As well as setting the tone and culture of the board, the chairman should act as a mentor and advocate to female board candidates. The chairman’s role should also include encouraging women to take up non-executive directorship roles externally and shaping wider human resources policy at the company to support the female talent pipeline.

Improving transparency in board-level appointments, including requesting a diverse list of candidates from search consultants and considering skills acquired in non-linear career paths or less traditional roles.

Developing and sustaining the talent pipeline through to the boardroom, including ensuring women can see the path through operational and profit centre management roles; guiding employees on career choices and making the management of all talent a priority. This should go alongside the existing good practice of supporting women at natural break points in their careers, including returning from maternity leave; implementing flexible working policies; encouraging mentoring schemes and networking opportunities.

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