Blog : BOARD TALK
|Posted on December 4, 2014 at 7:25 PM|
Gillian Wilmot Founder Board Mentoring, NED & Remuneration Chairman NISA, Elexon, IDAB.
" Most commentators agree on the need to improve the executive pipeline of senior women to develop the next generation of women CEO's. Some commentators have expressed concern about the greater proportion of women appointed to NED roles rather than Executive Director roles. However the subject of power in the Boardroom has been implicit in this debate rather than explicit. Boardrooms are not democracies, so the issue is less Executive v Non Executive but more "Does this role have the power to effect change?".
The Chairman is the individual that sets the tone and culture in the Boardroom and controls the appointments process as both Board Chairman and Chairman of the Nominations committee. Moreover there is a widely recognised failure to do sufficiently robust succession planning and talent management and spend sufficient time on this issue in Boardrooms. Too often what is described as succession planning is really contingency planning. The FRC are amongst the bodies concerned about this governance failure.
Because women who make it on to Boards have been through a ruthless form of "quality control" for the last 30 years, they demonstrate extremely high levels of competence at business and Board disciplines. More women as Chairmen should lead to better succession planning and this will lead to a more diverse senior executive team and a more meritocratic executive pipeline. The CBI has now advocated that British companies set targets to boost the number of women in senior roles so let’s set targets for women in the leadership roles of Board chairman as well. 50% would be a great target.
The Cranfield 2014 female FTSE report identified 82 male NED's over 9 years tenure on FTSE 100 boards and there are 88 Chairmen with two to five Chairmanships of Quoted companies. All men. Compare this with three female Chairmen in the FTSE 100.
The culture of the Boardroom filters down through the organisation and a diverse and balanced Board, which spends proper time and focus on good succession planning and talent management acts both as a role model and sets the business agenda. The Chairman has a key role in working with the CEO and the Executive team as well as NED colleagues on strategy, succession planning and key decisions that directly impact the executive pipeline.
There has been a noticeable improvement in holding the Executive to account and the proportionality of Executive pay where women Chair the Board or the Remuneration Committee. There is considerable evidence that women Chairmen are doing a highly effective job on strategy, holding the executive to account, managing performance and controlling executive pay as well focusing on good succession planning. This is reinforced by the Credit Suisse research.
The reality is also that we currently have more women NEDs who could progress to SID and Chairman roles than we have women executives likely to progress to CFO and CEO in the next five years.
So more women Chairmen would further improve the quality of Boards, business performance, succession planning and accountability which is great news for shareholders and stakeholders."