The benefits of targets have long been debated when it comes to diversity. But just how effective are they when it comes to improving the representation of women on boards? Recent research from Cranfield University and EY found that setting voluntary targets has been a great stimulus for progress, but accompanying them with efforts to change the culture and behaviours within an organisation is where the long-term value lies.
December 2020 is the deadline set by the Hampton-Alexander Review for FTSE companies to have 33 per cent female representation on their boards and leadership teams. Targets have no doubt helped to focus the mind and encourage businesses to consider how they can improve diversity within their leadership team and the wider organisation. However, Cranfield’s latest annual FTSE Female Board Report revealed that to achieve sustainable progress, targets must be coupled with cultural change. Notably, it outlined that one of the key ways an organisation can trigger a shift in culture is to have ‘active’ female leaders on their boards. The report concluded that women in senior influential positions spur others and a pipeline of female talent for the future.
Focusing on the 12 months up to the 1 June 2020, the research found that: the representation of women on boards in the FTSE 100 had increased from 32 per cent to 34.5 per cent; the percentage of female non-executive directors (NEDs) was at an all-time high of 40.8 per cent; and the number of female executives had risen slightly to 13.2 per cent.
There are still only five women CEOs, eight female chairs and 21 women senior independent directors in the FTSE 100. The report emphasises that “it is not sufficient to have a critical mass of women NEDs on a board to increase the number of women in an organisation’s talent pipeline for these influential board roles”.
The limit of targets
According to the businesses interviewed as part of the research by Cranfield and EY, diversity targets have become relatively normalised in the UK. There is now more of a recognition that they are necessary to convert ‘words into actions’. In addition, they have prompted organisations to do some ‘soul searching’ and understand the drivers behind any lack of representation of female board members or talent present.
The report found that when implemented thoroughly and ambitiously, targets created scrutiny and unrooted bias across key talent management processes. However, without greater accountability the effectiveness of targets is limited in achieving the full cultural shift required.
The businesses that are leading the way on diversity are focusing on identifying and addressing the invisible barriers that continue to exist within their own organisations. These barriers can include any deep-rooted policy, procedure, attitude or behaviour, which may inadvertently favour some people over others.
Longstanding ways of working, and even the historic pillars an organisation is built around, must be challenged, questioned and perhaps rewritten to achieve the cultural change needed for diversity and inclusion to thrive. For example, are interview panels diverse enough? Does the promotion process encourage individuals of diverse backgrounds to demonstrate their strengths? Do recruitment processes discourage certain groups from applying?
It’s no doubt positive to see how attitudes towards targets have evolved, with many companies recognising their value as a catalyst for change. However, to reinforce and cement that change into the everyday lifecycle of the business, and to help more women reach influential senior roles, there also needs to be a fundamental cultural change. Targets set a clear vision and can keep an organisation on track, but we need to see talent programmes, mentoring, sponsorship and allyship alongside a review of legacy talent processes and procedures – this will help companies achieve their diversity targets in meaningful way and get to a point where there is gender balance across all levels of an organisation.
Alison Kay is managing partner for client service at EY UK&I, and Sue Vinnicombe is professor of women and leadership at Cranfield University