Gender Diversity – the Impact on Senior Leadership Teams

On International Women’s Day, Livingston James’ Sophie Randles looks at the number of women in board level positions in companies in the UK and beyond, and what companies can do to reap the rewards of a diverse leadership team.

There can be no doubt that in recent years, significant progress has been made in the number of women holding board-level positions in the UK.  Earlier this year, the UK Government  revealed that the UK is now second in international rankings for women’s representation on boards at FTSE 100 level, with nearly 40% of positions now held by women, compared with 12.5% 10 years ago.

However, with  women generally having higher levels of education, and  employment levels up 6% in the past 20 years, there is still a way to go until equal representation is reached.

In the UK, only 36% of boards positions are estimated to be filled by women, and in Scotland of the top 20 highest earning board positions, only seven are filled by women. Studies showed that this gender inequality is a global issue with only 4.4% of organisations worldwide having a female majority.

This shows that boards are still heavily dominated by men, not only reducing the opportunities for women but limiting organisational success and progress.

Furthermore, the number of people from minority groups (BAME and LGBTQ+) is even less than female representation; suggesting there is significant requirement for all organisations to review their leadership demographics and hiring policies

Private Equity & Venture Capital Firms

Within private Equity and Venture Capital backed businesses, this gender inequality is even higher. According to a report by Oliver Wyman in conjunction with the IFC,  “Women hold only 10 percent of all senior positions in private equity and venture capital firms globally, and women-led enterprises collected less than 3 percent of global venture capital in 2017”. With 70% of senior leadership teams in the PE and VC sector all male, there is cause for concern.

The Impact of Diversity on Boards

Boards must demonstrate that they recognise the female board members’ expertise, skillset and experience rather than their presence being for achieving diversity requirements.

Although this gender equality is important for building equal opportunities, there are also significant business incentives for creating a diverse board. By appointing board members from a variety of diverse groups and backgrounds, organisations can can ensure a wider variety of views are represented. According to McKinsey & Co, executive teams which have a balanced, diverse board make up are “33% more likely to have industry-leading profitability”, and diverse boards are reported to achieve higher valuation (by approx. 20 – 30%) than less diverse equivalents.

Strategies for Equality

Boards should be implementing targets to achieve diversity. This talent can be acquired through robust acquisition processes or training current employees for future promotion. Nurturing existing internal talent can be conducted through investing in training or enabling access to mentorship from the existing leadership team. Establishing gender equality at all levels of the company will help ensure that this is replicated at senior levels.

Livingston James is hosting an event on Wednesday 30^th March entitled ‘No Diversity No Deal: Breaking the Bias…’  in conjunction with Tilney Smith & Williamson, addressing the gender equality challenges faced by the PE and Deals community. The event is invitation only and Livingston James will be sharing insight into the discussion following the event.

For more information about how Livingston James can help you diversify your board, please contact Sophie Randles at [email protected].