What next having just received the ‘Final’ report for the Hampton-Alexander Review?

As Sir Philip Hampton says on page 7 of the report released today “Whether another Review is established will be a matter for Ministers”. Sir Philip then goes on to day “the case for a similar commission Review is much less clear……..”.

The above statement causes me concern (no more reviews???)

In the report Sir Philip clearly believes there should be continued focus on data collection and in particular the executive level, given that there are still only 17 FTSE 350 CEO’s and 39 Board Chairs who are women. However, his term has finished and nothing for the future has been announced.

To read the full report click on this link (Hampton-Alexander review, HA)

We've come a long way with HA Review & 30% Club pressure on business and we are proud of the role Women on Boards UK has played supporting female candidates to step up.

HA Review offers 'proof of concept' that measurement and scrutiny can work, instead of quotas (which some Euro countries and US States have brought in). More long-term scrutiny and focus is needed now AND...

Scrutiny needs to be applied outside the FTSE350 to all listed firms, biggest need not mean best in this field. Sir Philip also makes this point in the report because he suggests that any future initiative, should they get ministerial support, needs to look at not just listed companies but also large private companies too. For example, the Wates Group, one of the leading privately-owned construction, development and property services businesses in the UK.

Sir Philip also suggests, bravely, that FTSE 350 companies should publish their gender pay gaps for their board and their executive committees. Something that we completely agree with because the current mean and median gender pay gap data is not granular enough for decision making. 

My worry now is what next?

This is the final HA government sponsored report so it seems we are about to stop collecting the data on the percentage representation of women on boards and committees. Only a government led initiative, or a regulator, has the power to collect this data. And we know without firms feeling compelled for forced to report gender data nothing will happen, as proved by the fact that last year 50% of companies chose not to publish their gender pay gap data.

Additionally, scrutiny needs to expand to consider ethnic diversity (and other forms, such as LGBT & disability) and diversity within executive teams (as most of the progress made is with non-exec directors, not exec). So who is going to lead this ‘Business-led and data-led approach’ which has now been shown to have worked for Women on Boards?

My view;

We have come a very long way since the Hampton-Alexander Review was established. Both in terms of the number of women on FTSE350 boards, and in understanding the business benefits diversity brings. However, there is no widespread consensus on the need to maintain and expand diversity in UK corporate boards to ensure the continued success of businesses, and the economy overall.

The HA review's success only goes to prove how vital scrutiny and measurement is. Progress is not linear - as we saw when all-male boards went extinct in the FTSE350 very briefly last year. Hopefully last week's announcements that we again have at least one woman on every board will remain the case for longer.

We also see internationally that our approach of measurement is effective. Other countries in Europe and US states are taking an alternative approach by bringing in mandatory quotas for board diversity, impatient with the glacial progress (even slower than in the UK at times).

Women on Boards UK (info link) have always said we don't like quotas, but we like the results they achieve. We now know the UK can achieve and maintain those same results with measurement and scrutiny - but only if this activity continues and it seems the focus and activity is about to stop.

We can aim higher, to truly untap the benefits of the rich diversity of the UK for our economy. Progress on ethnic diversity has been slower, and meeting the Parker Review target (for one 'director of colour' on each FTSE350 board, currently 2/3 meet this) is looking less likely by the day.

Gender or any other type of diversity in executive leadership teams is woeful. A greater focus on pay gaps, progression which aligned with objective performance standards at all levels and ultimately C-Suite diversity is by now overdue.

The Hampton-Alexander Review should be thanked for having provided 'proof of concept'. I hope that rather than ending, it has paved the way for the long-term focus and scrutiny on corporate UK's diversity which we need to ensure our businesses thrive.

This is no time to take your foot off the gas in regard to board diversity and diversity of executive teams.

No, we are not done now that the FTSE 350 has hit 33% in regard to Women on Board and these diverse board members do now need to step up in regard to ESG and the diversity with the C-suite Teams that report to them.

I agree with all of the points that Kate Grussing made in her recent Sunday Times article where she articulates her worries about to be lack of focus going forward and therefore the subsequent risks. 

The news that all male boards are once again extinct from the FTSE350 just shows how much truth there is in the old adage 'what gets measured, gets managed. And what gets managed gets done.'

It's vital that the scrutiny on board and executive diversity continues so we do not see a repeat of the backsliding that occurred after the last time we reached the 25% milestone.

Ultimately, we should be setting our sights higher. As the CEO of Diageo, Ivan Menezes, has done (page 18 of the HA report) by setting 50% leadership role targets for his organisation.

I am also inspired by Dame Helena Morrissey pointing out Green Park’s new board rule in page 25 of the HA report. The board at Green Park have what they call the ‘Green Park Rule’ which states that “any decision affecting 1% or more of our company’s annual revenue can only be taken by a group diverse in both gender and racial composition”.

It should not be inevitable that the FTSE350 is ahead on boardroom diversity as I point out in my Board Agenda article recently following the Company Matters report published last week on the FTSE Small Cap and AIM companies.

There is so much still to do. The HA report picks up on 10 things in page 13 of their report. My two big concerns now are;

-         The need for more executive 'buy in' to conscious inclusion, within firms, below the C-Suite for the benefit of all under-represented groups

-         The need for more (and continued) data on registered executive directors in the boardroom, not just the women and under-represented groups on committees where there is still a dearth of women and BAME individuals. Yes, I know the HA report collected data on executive committees and the leadership layers below the board but it is vital to now tackle why so few women and BAME get through this lay to become registered executive director.

So this is my call to action to anyone reading this article;

Please put pressure on the government to continue to collect data and widen the brief, as Australia have done. Australia now have legislation that forces all all companies that employ over 100 employees, not just 350 listed entities, have to report their gender data across the whole company via the Workplace Gender Equality Act 2012 (5 layers to the bottom of the company).

Fiona Hathorn, CEO of Women on Boards UK - 24th February 2021

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