A tougher code to advance boardroom equality

Code includes requirement to share progress with Davies Steering Group

Head hunters have designed a new ‘enhanced code’ for their industry in a bid to increase the number of women appointed to boardroom posts across the FTSE 350.

The code, launched today by business secretary Vince Cable, has been created in response to findings in the Sweeney Review that executive search firms could do more to tackle gender inequality in top roles.

This beefed up code builds on the original 2011 voluntary code that more than 70 search firms signed up to. It followed the 2011 Lord Davies Review, which set targets for the FTSE 100 firms to have at least 25 per cent female representation on their boards by 2015. And while the percentage of women sitting on boards in the FTSE 100 is now more than 20 per cent there has been broad criticism of the rate of progress.

Under the reworked code, signatories agree to do more to support aspiring women by developing internal programmes to raise awareness of unconscious bias among their own staff and sharing best practice on how they did it with other firms. The code also requires search firms to provide evidence on their progress to the Davies Steering Group. To comply with the code head hunters will need to show they have supported the appointment of at least four women to FTSE 100 and 250 boards over the last year and helped women achieve their first FTSE 350 board appointment. They will also need to show how they achieved at least 33 per cent female appointments across all their FTSE 100 and 250 board work and have fully delivered against more qualitative aspects of the enhanced code, for example changing employee attitudes, in their day to day working.

Charlotte Sweeney, who led the Sweeney review and is formerly the head of diversity at bank Nomura International, told PM: “The original voluntary code was a good starting point, while the new enhanced code has more teeth and shows what’s going on in the industry.

“If organisations are signing up for a code then it’s absolutely right they should show evidence of their progress and it’s great that we will have more data to back up what progress is being made [on getting more women into top roles] from a hiring point of view. Then we can see what is happening at the long and short list stage around who is being hired, which will help to identify future hotspots.”

She told PM that she felt the code encompassed the right level of provisions for now including putting an emphasis on raising awareness and providing training around culture and unconscious bias within search firms. However, she added: “I think as we progress over the years success will be about making this progress sustainable, because it’s not purely about hitting the targets in 2015.

“We’ve created more transparency with the code, but in the future it would be great to see companies talk about who they’re using to find their executives and non executive directors, as well as talking about how they’re hiring. More transparency around how they’re looking outside the market would really help.”

Commenting on today’s launch, Cable said: “Executive search firms are crucial to achieving gender diversity in both executive and non-executive roles. Recruiters can best show their commitment to this work by embracing this new enhanced code.”

On June the 26th Glencore Xstrata’s appointment of Patrice Merrin to its board meant there are now no all-male boards left in the FTSE 100. Cable said: “Now that all FTSE 100 boards have at least one woman serving on them, and all key stakeholders have embraced the gender diversity agenda, we are confident that with sustained and continued action, we will meet the target of 25 per cent women on FTSE 100 boards by 2015.

“I am looking forward to finding out which firms have passed the higher standard set by industry.”