Suggested actions

Actions for the chair of the board

It is very clear in the recommendations that the responsibility for setting and meeting the targets for women on boards sits with the chairman.  As part of holding this overall strategic responsibility, below are some actions all chairmen can take to ensure their company has a sustainable balanced board: 

1.   Ensure the board takes ownership

Ensure and lead joint ownership for increasing diversity on the Board in terms of leadership, succession planning and accountability. The recommendations advise that aspirational targets should be set within the next six months.  Analyse the rate of your board turnover in the previous five years and take into account any anticipated retirements and rate of tenure so that you are better able to predict the number of new appointments over the next five years. Agree actions that the board will take as a whole and as individual members to advance women on boards.

2.  Adopt a strategic focus

women’s leadership as a dynamic and strategic opportunity rather than an equal opportunities issue. Treating it as a ‘diversity strand” and relegating it to a compliance box sidelines rather than mainstreams it. Give the female talent market the same attention you would give major markets for your products or services. Integrate it into discussions of other operational matters. Ensure you and the board are clear about the business imperative of gender diversity for your organisation.

3.   Map board capabilities and gaps

Determine what’s needed by the Board going forward and actively research the pool of executive, high potential women across a variety of sectors who have or will be likely to have these skills when board vacancies arise. Widen possible candidates beyond current or former CEOs or Directors on other FTSE 100 boards. Cranfield has identified 100 women to watch who are currently on the executive committees of FTSE 350 companies or major financial institutions. Get to know these women through business events and corporate hospitality.

4. Empower a nominating committee

The role of the nomination committee is crucial in developing balanced boards.  If recommendation 5 is implemented companies will be required to “describe the work of the nomination committee, including the process it has used in relation to board appointments. Chairmen should disclose meaningful information about the company’s appointment process and how it addresses diversity in the company’s Annual Report including a description of the search and nominations process”.   Nominating committees should also consider Recommendation 7 which encourages companies to advertise board positions occasionally to encourage diversity in applications.  Appoint female board members to the nominating committee and increase its size if there are not enough places. Nominating committees on FTSE 100 companies that have three or more female board members are about 1 person bigger than those who do not. Have a non-executive chair and a majority of independent directors on the nominations committee. Have nominating committees instruct recruitment consultants to provide a diverse slate of candidates, involve professional HR expertise and interview candidates. Challenge your perceptions around ‘fit’.  It is better to break down this in terms of values and behaviours. Consider putting your nominating committee through unconscious bias training.

5. Analyse your use of Executive Search Firms

The nominating committee must require recruitment consultants to deliver a suitable list of diverse candidates. Challenge your search firm’s understanding of diversity and their track record in diverse placements when they are selected as consultants. They should have access to professional networks of women whether they are in law, finance banking or business as well as dedicated activities to create their own networks through events or mentoring. Challenge your search firms on how they would put together a bias free brief, ask for their recommendations on how they would overcome stereotyping. Recommendation 7 from Lord Davies calls on boards to advertise board positions periodically as a way of widening the selection pool.  This could help both the chairman and executive search firm to check that they are not missing well qualified candidates.     

The role of the nominating committee and the executive search firm are intertwined.  The Davies review recommends that Executive Search firms draw up their own voluntary code of conduct “addressing gender diversity and best practice which covers the relevant search criteria and processes relating to FTSE 350 Board level appointments”.  If this is to be effective nominating committees must hold search firms to compliance.  In advance of the anticipated publication of the code, consider asking the questions below of your executive search firm:

►    What is the profile of the board placements you have done in the past five  years?

►    Are you proactive in building a talent bank?

►    What are the characteristics of the talent bank?

►    How large and broad is the pool of women in it?

►    Are you tracking new high potential talent from across sectors?

►    Do you train your researchers and interviewers to eliminate unconscious bias?

►    Can you provide publications and research to your clients on the business case for board diversity?

6.   Ensure there is a clear induction process for new board members

The induction of a new board member should not only include introductions and briefing but the opportunity to meet with the Chairman on a one-to-one basis.

7.   Put diversity and talent management on the board agenda

As the Chairman controls or takes the lead on the board agenda. Have a Diversity Champion brief the board at least once a year on diversity and talent management and ensure a thorough, probing discussion of where blockages and problems are arising. Address the training needs of the board in terms of understanding diversity and addressing unconscious bias. Invite Chairman or board members from other companies that are successfully balancing their boards to meet with yours.