Lack of gender diversity in the top ranks of FTSE 350 firms is costing UK business billions of pounds, confirmed a new report.
A shocking 96% of CEOs in the FTSE 350 are men, revealing a huge gender gap at the top of British businesses. This is despite entry level recruitment often being close to 50:50. The result is that businesses are excluding the energy and talent of more than half the population, revealed The Pipeline’s seventh-annual Women Count 2022 report.
However, more balanced executive committees across all FTSE 350 companies could boost UK GDP by 2.5%. The report found that having more women on Britain’s executive committees could yield an additional £58 billion for the UK economy. That’s equivalent to the UK school’s budget and more than defence or policing. In fact, more women in exec roles would mean an average of £900 million in pre-tax profit for every FTSE 350 company.
MALE-DOMINATED CEO PIPELINE
Women Count 2022 is a major annual report that looks into the number of women on executive committees in the FTSE 350. It has tracked the gender diversity of British Executive Committees for the past seven years, and found that progress towards equality is glacially slow.
According to the report, men dominate the pipeline to CEO in the FTSE 350. On average, three-quarters of the members of executive committees are men, and just a quarter are women. Three out of four executives working their way up to CEO are men, looking upwards to other men for leadership, guidance and promotion. Women executives have far fewer female role models and fewer opportunities for promotion.
KEY FINDINGS
The report also found that:
- 74% of executive committee members are men.
- 10% of companies with Executive Committees have no women on them at all.
- Companies with female CEOs are over four times more likely to appoint women executive directors onto their main board than firms with male CEOs. The proportion of female executives on the main board of a company with a female CEO is 63%. It’s much lower (14%) where the CEO is male.
- The business-critical role of Chief Financial Officer (CFO) is much more likely to be filled by a man than a woman. In the FTSE 350, 82% of CFOs are male.
- Very few women are promoted to key profit and loss roles. In fact, around 84% of FTSE 350 P&L roles are filled by men. In fact, half of FTSE 350 companies have no women in P&L positions.
- Most business main boards have no female executive directors on them at all. In the FTSE 350, nearly 70% of companies have no female executive directors at all on their main boards
ADVANCING WOMEN LEADERS
“Today’s senior business leaders face unprecedented headwinds of economic turmoil, disruption to supply chains, rising commodity prices, and labour shortages. No generation of CEOs has ever confronted such a range of challenges at the same time. And yet we, as an economy, are wilfully missing out on a source of profitability, talent and innovation, which is readily available within the system. To continue to systematically exclude women from senior management in top firms is an act of unbelievable folly,” stated the report authors Lorna Fitzsimons and Margaret McDonagh.
“As we mourn the passing of the Queen, the longest-serving female leader in history, it is shocking to note that, in the 70 years of her reign, there has been so little change at the executive level of our biggest companies.”
THE GLASS CEILING
The tragedy is not just for individual women who are blocked from fulfilling their full potential. “The real tragedy is that businesses are cutting themselves off from a pool of talent and innovation; and forgoing an additional 2.5% growth in GDP. It is now unarguable to state that businesses with diverse voices at the top, across gender, race and class backgrounds, do better,” they added. “Our message is simple: recruit, retain and promote more women. If you want to prosper, take a hammer to the glass ceiling in your firm. Don’t just talk about it, act. The good news is, when companies make the necessary changes towards gender equality, they often see the benefits immediately.”
The report calls on the nation’s business leaders to set out concrete plans to advance women within their ranks. “If they don’t, they will be damaging not only their reputation but their profit line, business prospects and society as a whole. It is in business’ self-interest to act now, and when they do, we will applaud them every step of the way,” concluded Fitzsimons and McDonagh.
Check out the full report here.
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