UK: The Merits and Shortcomings of a Voluntary Approach

Abstract

This chapter examines the situation of women on boards in the UK. The chapter begins by providing an overview of the country’s political and economic context, outlining gender equality trends and the nature of workplace equality and diversity policies in the UK. Second, the chapter discusses the UK corporate governance system and its landmark ‘comply or explain’ approach. Third, the chapter outlines trends in gender representation on FTSE boards, analyzing national-level policy on women on boards over almost two decades, with an emphasis on the relatively successful Davies Review (2011–2015). The achievements and limitations of this voluntary approach are then critically discussed, drawing particular attention to the effectiveness of a multi-stakeholder approach, but also to the fragility of change secured through voluntary measures.

Appendix 1

Provisions of the Voluntary Code of Conduct for Executive Search Firms (2014 version)

• 1. Succession Planning: Search firms should support chairmen and their nomination committees in developing medium-term succession plans that identify the balance of experience and skills that they will need to recruit for over the next two to three years to maximize board effectiveness. This time frame will allow a broader view to be established by looking at the whole board, not individual hires; this should facilitate increased flexibility in candidate specifications.

• 2. Diversity Goals: When taking a specific brief, search firms should look at overall board composition and, in the context of the board’s agreed aspirational goals on gender balance and diversity more broadly, explore with the chairman if recruiting women directors is a priority on this occasion.

• 3. Defining Briefs: In defining briefs, search firms should work to ensure that significant weight is given to relevant skills, underlying competencies, and personal capabilities and not just proven career experience, in order to extend the pool of candidates beyond those with existing board roles or conventional corporate careers.

• 4. Longlists/Shortlists: When presenting their longlists, search firms should try to ensure that at least 30 percent of the candidates are women—and, if not, should explicitly justify to the client why they are convinced that there are no other qualified female options, through demonstrating the scope and rigor of their research. Search firms should seek to ensure that the shortlist is appropriately reflective of the longlist, discussing with their clients each woman on the longlist and aiming to have at least one woman whom they would ‘strongly recommend’ that the client should meet.

• 5. Candidate Support: During the selection process, search firms should provide appropriate support, in particular to first-time candidates, to prepare them for interviews and guide them through the process.

• 6. Supporting Candidate Selection: As clients evaluate candidates, search firms should ensure that they continue to provide appropriate weight to intrinsic competencies and capabilities, supported by thorough referencing, rather than over-valuing certain kinds of experience. Search firms should, as necessary, advise their clients on how to run their interview process to demonstrate the required rigor and professionalism and share best practices on how to avoid unconscious gender bias.

• 7. Induction: Search firms should provide advice to clients on best practice in induction and ‘on boarding’ processes to help new board directors settle quickly into their roles.

• 8. Embedding Best Practice: Search firms should ensure that best practices in supporting clients on enhancing board gender diversity are well-documented and shared internally and that adherence to the Code is effectively monitored.

• 9. Signaling Commitment: Search firms should signal their commitment to supporting gender diversity on boards, and their adherence to the Code, through their websites, marketing literature and client discussions. They should share data on their track record on their website as appropriate and include case studies of their success.

• 10. Broadening the Candidate Pool: Search firms should seek to broaden their own databases of potential candidates, leveraging as appropriate external lists produced by organizations such as Cranfield. They are encouraged to invest time into developing relationships with the pipeline of future female candidates.