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23 July 2018

Appointing more women to company boards is not just fair – it's good for business, too

Gemma Melius, Project Manager, Global Institute for Women's Leadership

Some companies are slow to recognise the value of having more women on their boards

Woman in board room
Woman in board room

Women don’t want the ‘hassle or pressure’ of sitting on a company board, apparently. Yep, our pretty little minds can’t understand the ‘extremely complex’ issues they discuss. At least, that’s what you might be led to believe if you accepted some of the reasons provided a couple of months ago – yes, not from the 1950s! – by various (I’m assuming all male) Chairs of FTSE 350 businesses for not appointing a gender-balanced board. Women ‘don’t fit in’ on boards anyway, so why don’t we leave it to the men?

Thankfully, however, a majority of FTSE companies have somehow managed to find themselves ‘good women’. New data shared by the Hampton-Alexander Review – which is supported by the UK government – shows a quarter of FTSE 350 board positions are now held by women, and the number of all-male boards has fallen to just 10.

The review launched in 2016 and challenged FTSE 350 companies to increase the representation of women on their boards to 33% by 2020. The figures suggest FTSE 100 firms are on track to reach their target (they’re currently at 29%), but their FTSE 350 counterparts are trailing behind (at 25.5%), having only just reached the target set seven years ago by the Davies Review. The Government Equalities Office claims that around 40% of all appointments will need to go to women in the next two years for the group to achieve the 33% target.

In April 2018, Sir Philip Hampton, Chair of the Hampton-Alexander Review, wrote to 35 companies who were falling short on their targets, urging them to up their game and commenting that some might be ‘quietly blocking progress’. A month later, the review published a press release highlighting these ‘pitiful and patronising excuses’ for not appointing women to boards. Suffice it to say, the public response was one of outrage, with the ‘explanations’ making headlines in the media. On 27 June, the Review published the names of the 10 remaining all-male boards, no doubt in an attempt to apply more public pressure.

So, what’s stopping some of the UK’s top companies seeing the value of having more women – or in some cases even just one woman – on their boards? Evidence is mounting that gender-diverse boards should no longer be considered a tick-box activity, but instead a business imperative.

Increased financial performance

There’s a body of research demonstrating that diversity at board and management level helps improve financial performance – the 30% Club published 10 studies across different geographies that corroborate this theory. Notably, 2014 and 2016 Credit Suisse’s Gender 3000 reports found that companies with more female top managers show a higher dividend payout and the higher the number of women in management, the higher the payout. Last year McKinsey & Company estimated that by unlocking women’s earning potential, as much as $12 trillion could be added to global GDP by 2025. Furthermore, companies with a diverse workforce are also primed to build a diverse talent pipeline up to senior leadership, which can also work to help reduce the gender pay gap – a win-win.

Improved understanding and communication

A 2006 Harvard Business Review study found that having women on boards can broaden the boards’ discussions to represent a wider set of stakeholders, including their employees. The study also found that women can be more persistent than men in pursuing answers to difficult questions – possibly because ‘the men feel a gender obligation to behave as though they understand everything’. Women can also bring a more collaborative approach to leadership, which can improve communication and relationships between board and management.


There is a growing awareness among investors that a diverse board is not only an economic imperative, but way of guarding against a ‘group mentality’ developing, which presents a high governance risk. ‘Gender lens investing’, which integrates gender diversity into decision making, is becoming an investment trend. Investors are certainly flexing their power; in 2015 the Australian Council of Superannuation Investors, representing AU$400 billion, threatened to vote down the re-election of 32 directors of some of Australia’s top companies if there were no women on their boards.

A Cranfield study concluded that ‘the chairperson’s role is vital in leading the change for recruiting with diversity governance in mind’. If this is the case, we must continue to apply pressure on Chairs to take up the mantle, and to champion investors that threaten to vote down those that oppose gender diversity.

The UK is currently ranked seventh globally for gender balance in the boardroom, behind France, Italy and a handful of Scandinavian countries. What would it take to get us into the top five? And what can we learn from these other countries? The Global Institute for Women’s Leadership aims to understand how initiatives from countries that are more successful in promoting women to leadership positions can be translated across national boundaries. The Institute aims to develop mechanisms to share this knowledge, which, in turn, might benefit the next wave of UK women on boards. I might just keep my eye on that top job after all.