When it comes to leadership roles at publicly traded companies, it’s no exaggeration to say it’s still very much a male dominated world. Only seven of the CEOs currently leading FTSE 100 companies are women, increasing by from four in 2014.
“Why are Britain’s boardrooms so stubbornly white and male? Despite a growing consensus that companies with more diverse boards perform better or take more ethical decisions, the percentage of female or non-white executive directors in the UK’s biggest companies remains pitifully small,” comments Marianna Fotaki, Warwick Business School professor of business ethics. As the co-author of Gender in the Organisation: Women at Work in the 21st Century, Fotaki looked into the biggest reasons why businesses in the UK are still headed by men, even after research proving the business value in having a diverse senior management team.
“Not only does boardroom diversity reflect the real world and the diversity of clients and customers, healthy debate from different perspectives can lead to better decision-making. Innovative ideas often spring from disruption of the status quo. And examples set in the boardroom encourage a trickle-down effect within organisations,” she says.
The UK government has taken a “carrot” rather than “stick” approach to encourage diversity in business, from Lord Davies’ review of gender diversity on FTSE boards to the more recent voluntary pledge through the HM Treasury’s Women in Finance Charter.
Using targets rather than legally binding quotas has seen a marked improvement on the gender pay gap in the UK. In Norway, the government enforced a law in 2008 stipulating that women must make up at least 40 per cent of boards at listed companies that have more than 10 employees. Norway was the first European country to force gender quotas on listed companies, but research by the Norwegian School of Management and McKinsey & Co revealed that the quota has done little to remove the glass ceiling. Women still lag men on the path to the boardroom in large firms.
Belgium, Iceland, Italy, the Netherlands and Spain have all enforced gender quotas, as well as family-friendly policies as a way around the working mum and mid-career stagnation issue facing women in finance.
Where are the women?
Research into gender and the workplace is relatively sparse, but increasingly an area of interest for businesses and governments as the corporate world struggles to bridge the gender gap even today. Evidence from whatever little research there is out there suggests that quotas and perks for women in the family way essentially reinforce the glass ceiling instead of tearing it down.
According to Dr Catherine Hakim, women are much more likely to reach top positions in management in the United States and the UK than in Scandinavian countries, despite their progressive stance on diversity at board level.
“In some respects, sex equality in the Nordic labour markets is equal to that in developing countries such as Angola and Senegal,” Hakim writes in her book, Key Issues in Women’s Work: Female Diversity and the Polarisation of Women’s Employment.
“Nordic countries have the highest level of job segregation, while the USA has the lowest level. What this means in practice is that about half of Nordic women are in female-dominated occupations, compared to about one-quarter of women workers in other industrialised countries.”
In the study she references, female-dominated occupations are those with over 80 per cent female workers, which generally constitute lower status, less qualified, and lower-paid jobs in any industry, even in the Nordic countries.
“Women are nurses while men are doctors; women are primary school teachers while men are university lecturers; women are secretaries while men are managers, and these patters are much stronger in the Nordic countries than in other OECD countries,” says Hakim.
An analysis of hourly pay statistics for full-time employees in the 1990s found pay gaps of about 20 per cent in Norway, Britain, France and Australia, about 25 per cent in the US and Canada, and about 30 per cent in Germany.
“Nordic women benefit from substantial family-friendly, pro-natalist policies but the effect of these is to impede equality with men in the labour market in terms of access to top jobs, occupations with authority, or higher pay.”
FTSE 100 CEOs are majority white
All-white executive teams run 69 per cent of FTSE 100 companies – that’s up from 65 per cent at the start of 2014, according to a study by Green Park Executive Recruitment, which found not a single person of Chinese or east Asian origin on the board of any of Britain’s biggest companies.
“Lack of diversity hurts businesses and gives the wrong message to younger generations. Diversity brings different perspectives, greater innovation, and people tend to behave more ethically, rather than conforming to the social norms of the in-group. Diversity is not just good practice – it’s simply the right thing to do,” adds Warwick Business School’s Fotaki.
Additionally, just four FTSE 100 CEOs are from BAME backgrounds, despite the black, Asian and minority ethnic communities in the UK making up 14 per cent of the population.
Working their way up internally
Research from recruitment firm, Robert Half has revealed the traits of today’s FTSE 100 CEO. Top line findings reveal that the number of CEOs promoted from within the company has doubled in the last three years. Organisations are also looking to nurture homegrown talent as the number of CEOs being promoted from within has doubled in the last three years. In total, 41 per cent of FTSE 100 CEOs have been promoted to the top position from within the company, while 11 per cent have been in the company for their whole career.
Technology skills are increasingly important
The annual Robert Half FTSE 100 CEO Tracker shows that in 2014, only three CEOs had a background in technology while today this number has increased to 11. The majority of CEOs continue have a background in finance, although this figure has fallen to 43 per cent from 55 per cent last year and the lowest level in three years. Of those CEOs with a financial background, nearly half are Chartered Accountants.
Only one in 10 CEOs has a background in technology, although this has trebled in the last four years.
“With digital transformation, automation and GDPR offering challenges and opportunities, growth remains the number one priority for all businesses – small and large,” says Phil Sheridan, senior managing director, Robert Half UK. “Strong leadership that can deliver profitability and create a sustainable advantage against competitors and new market entrants is key. As a result, all businesses are thinking carefully about who is positioned at the helm of the company and if he or she has the skills needed to navigate a complex business environment. Increasingly, CEOs who can combine current industry knowledge with the commercial acumen needed to navigate the fast pace of change is key.”
CEOs are older and staying on longer
The research revealed that there is a generational shift occurring in the FTSE 100. There are now just eight CEOs under the age of 50 on the FTSE 100, a quarter less than in 2010 when there were 33 CEOs under the age of 50.
The typical age of a CEO is 55 years old and the average tenure is five years and two months. Organisations are also looking to nurture homegrown talent as the number of CEOs being promoted from within has doubled in the last three years.
Social mobility: Oxbridge degrees no longer key
The study found that it is no longer necessary to have attended Oxford or Cambridge to achieve a CEO position. Since 2010, the number of CEOs with an Oxbridge education has declined from 23 per cent to 17 per cent. MBAs and other post graduate qualifications are also not a pre-requisite for achieving a top leadership position, with just under a quarter have an MBA and only four hold a PhD.