Why women are in Britain’s boardrooms – but not in the top jobs

Measures to reduce the gender gap at the top of our big firms have led to greater representation, but not where it actually matters, as Chris Blackhurst explains

In the right place but the wrong role? (Getty)

There is no doubt that the cause of women at the top of British business has advanced considerably in recent years. This requires putting in context: the starting point was low and there is still a long way to go.

On the surface, the figures look reassuring. In its 2024 UK Board Index, headhunter Spencer Stuart reports: “There has been significant progress in female representation in senior board roles.”

With just a year left until the deadline to meet the FTSE Women Leaders Review target for women holding four senior board and leadership roles – chair, CEO, CFO and senior independent director (SID) – 71 per cent of boards have at least one woman in these four roles, up from 60 per cent in 2023.

Now in its 29th year, the Spencer Stuart index is a comprehensive review of governance practice in the largest 150 companies in the FTSE rankings, according to market value. Dig deeper, below that topline 71 per cent figure, and a different picture emerges. Some 43 boards still have men occupying all four roles, and in contrast to the 113 boards where men hold both chair and CEO roles, women hold both those positions at just three companies. Then there is this: of the 40 women appointed to the four senior board roles in the past year, 67 per cent, or 27, were appointed as SIDs.

In other words, more women are sitting around boardroom tables – but they’re SIDs or senior non-executive directors (NEDs). Nothing wrong with that, they have clout, but nowhere near as much as the chair or the two top executive directors.

Within boards, NEDs are the juniors. Not for nothing did the late tycoon Tiny Rowland contemptuously dismiss NEDs as possessing as much use as “baubles on a Christmas tree”.

What’s going on here is that companies tasked with promoting women to their boards are taking what Chris Gaunt, head of Spencer Stuart’s UK boards practice, describes as “the path of least resistance”.

He suggests this hopefully could point to an increase in female chairs in the years to come, although term limits make it a less likely direct promotion path for existing boards. “We would encourage all companies to avoid reliance on the easy fix of appointing a female SID and renew their focus on chair appointments and CEO and CFO pipelines to ensure future generations of diverse talent.”

It was always going to be like this. For years, the 30% Club enjoyed enormous publicity as it pushed the idea of women securing 30 per cent of large company directorships. The aim was laudable, but by keeping the definition broad and not specifying the types of roles they should be obtaining they gave companies a get-out. Women found themselves in demand as non-execs, while becoming chair or reaching the top of the executive ladder was a path reserved for the boys.

By saying the targets now include the SID role, the identical error is being repeated. All companies must do to meet their obligations is make a woman the most senior non-executive director. Meanwhile, the real muscle resides elsewhere. Until women chair our largest corporations and are appointed chief executive and chief financial officer, genuine advancement will be elusive.

Sadly, the same is true regarding those from ethnic minorities being made director. Spencer Stuart found that after an initial surge in efforts to improve ethnic minority representation on boards, “progress continues to stall” with just 12.5 per cent of all directors (186 out of 1,515) coming from a minority ethnic background. Of the 196 new directors appointed in the last 12 months, just 4 per cent (seven out of 196) were from a minority ethnic background, compared with 15 per cent last year.

Another review, the Parker Review, set a target for all FTSE100 boards to have at least one director from an ethnic minority background by December 2021, which led to 96 of the leading 100 companies currently meeting that target. Among the smaller FTSE250 companies, that goal of one is also largely being met.

The problem, though, is that number: it’s only one. Shami Iqbal, Spencer Stuart’s UK managing partner, says: “It is disappointing to see a further slowdown in progress on minority ethnic representation on UK boards. Diversity means having talent around the boardroom table representing a wide range of views and backgrounds, seeing this as a strength and leveraging this talent to the company’s advantage. While the Parker Review results show concerted action, boards must be careful not to adopt a ‘one and done’ mentality.”

And while companies are exhibiting a reluctance to move away from the traditional, white, male line-up, they’re not rushing to appoint younger directors either. The Spencer Stuart analysis found that the proportion of newly appointed NEDs under the age of 50 fell from 12 per cent to just 6 per cent this year, with over-50s now representing 94 per cent of all NEDs.

Why does that matter? Because, as Gaunt says: “Many boards are electing to appoint experienced hands over younger directors who would be more likely to bring direct operational experience in areas such as AI and technology transformation.” In the face of rapidly changing technology, British boards are not hearing from those with a keener grasp of tech and UK plc is putting itself at a competitive disadvantage.

Companies maintain they do not have sufficiently large talent pools from which to promote women executives, those from ethnic minorities and the under-50s. That’s true, but until those resources increase, little will alter. The last thing they need with everything else going on is a legislative hammer to make them act but it’s clear that merely asking, and not being specific, is insufficient. Government must toughen up and that means threatening draconian measures and being serious about introducing them, or else Britain’s boardrooms will stay firmly rooted in the past and other countries will pass us by.