The government is looking at the legality of introducing all-female shortlists for board level roles and is considering making it compulsory to have at least one woman on the shortlist in the selection process to improve the gender balance in top management
The move follows the publication of an independent review into ways to improve the transparency of the headhunting process for board appointments conducted by Charlotte Sweeney, who was previously international head of diversity and inclusion for Nomura.
Sweeney reported that while the majority of search firms said they support the creation of more diverse and balanced boards, ‘examples where the commitment was transferring into consistent and sustainable action were mixed’.
The review’s recommendations for updating the executive search firms’ Voluntary Code of Conduct, which was introduced in 2011, state that headhunters should commit to putting forward at least one strongly recommended woman on the shortlist submitted to chairs for all board positions.
In addition, the Equalities and Human Rights Commission should create guidance for the headhunting industry on the legality of women only shortlists, and a database of ‘board ready’ women should be created.
Sweeney says search firms should look to go beyond the minimum standards set out in the Code and should share their statistics on the male/female candidate ratio during the various recruitment stages with government, and work with government and the Financial Reporting Council to raise awareness about the existence of the Code. Companies should also challenge search firms to include in their contract that they will comply with the Code
Business Secretary Vince Cable said: ‘The headhunting community is a crucial catalyst to introduce more capable women in the boardroom. However, they can often be one of the first hurdles that talented, board-ready women face when trying to reach the top, so I welcome any efforts to improve the transparency of the industry.’
Lord Davies's 2011 Women on Boards report called for 25% of FTSE 100 directors to be female by 2015. At the time, just 12.5% of FTSE 100 directors were women and 7.8% of the FTSE 250 and this has now risen to 20.4% and 15.1% respectively. Davies’s annual report on Women on Boards is due out later this month.
