Representation of women on private sector boards: research findings

Recommendations

1. Many companies felt that improving the gender balance or broader diversity of their board was not an important issue for them. More work is needed to raise awareness of the importance and benefits of a diverse board. Scottish Government can play a key role here - both directly and indirectly through its economic and business development agencies and by encouraging other partners to raise the issue.

• Whilst the equalities argument is important in principle, the challenge is that many companies feel they 'treat everyone equally' and therefore that no action is needed. As such, arguments around the impact gender balance and broader diversity has on board effectiveness and business performance are likely to be more compelling.
• The target audience for these messages should be board members and Chief Executives - as the research found that a commitment by these groups was critical to making progress on this issue. Scottish Government should work with those organisations and agencies that have strong links to these groups - such as Confederation of British Industry ( CBI), Institute of Directors ( IoD), Scottish Chambers of Commerce and Scottish Council for Development Industry ( SCDI). In addition, consideration should be given to how these messages can be incorporated in the Scottish Business Pledge.
• These messages are likely to be most effective if they are built into mainstream business development supports (such as Business Gateway, Scottish Enterprise, Highlands and Islands Enterprise and Investors in People) - as this helps reinforce the key message that this is a key part of ensuring the business has the resources available to achieve its goals and aspirations. Scottish Government should work with these agencies to identify how to embed these messages into their approach.
• Scottish Government and their agencies also have the potential to use public sector procurement to prompt companies to think about their board composition - although any approach must comply with legislation. Research ^[3] has found that this has been an effective approach to getting companies to change their practices in relation to other policy areas (such as recruiting disadvantaged young people). Scottish Government should issue guidance to public agencies on how the issue of board diversity could be incorporated into procurement, including giving examples of good practice.

2. However, it will not be sufficient to increase awareness of the issue amongst companies. Companies must also be able to get practical information, advice and support to understand the changes that are needed to their policies, practices and culture and how best to implement these.

• A number of initiatives and programmes are already in place to support companies to improve the gender balance and broader diversity of their boards. There is a need for:
• • Greater promotion of this provision. As an initial step, Scottish Government could include linkages to relevant provision through their webpages on Partnership for Change and the Scottish Business Pledge.
  • Scottish Government should undertake an assessment of whether there are any gaps or overlaps in provision and develop a plan about how these can be addressed.
• Scottish Government should work with its partners (including business representative organisations and business support services) to ensure that a range of information and tools - such as checklists and good practice guides - are available for companies.
• Scottish Government should also explore how it could help facilitate learning and knowledge exchange between and within the public, private and third sectors on their experiences of how to improve board diversity.

3. Two key barriers to improving the gender balance of boards are the lack of female candidates and the perception that those female candidates that do come forward lack the skills and expertise required. This is likely to also be the case for other protected characteristics (such as race or sexual orientation). As outlined earlier in the report, the factors underpinning these are complex meaning action is needed across a number of areas:

• Ensuring sponsorship, mentoring, peer support and training is available to women and those in other under-represented groups (including those with disabilities, from ethnic minority and LGBT communities) in senior management roles. This should be targeted specifically at helping develop the skills, experience and credibility to move into board positions. There is also a need for provision of this type for those earlier in their careers to help ensure they reach senior management roles and develop aspirations for board membership. This will require action from across industry, business representative organisations and the public sector.
• Ensuring that policies in other areas support women and other under-represented groups reach senior management roles. This includes policies in relation to childcare and flexible working and ensuring that schools, colleges, universities and careers advisors are encouraging young people to consider the widest range of career choices and aspirations .
• Many case study companies felt that the most important factor in selecting board members was to get the 'right person for the job'. However, there is a risk here that there is unconscious bias in what companies consider to be 'right' - and that this is excluding women and individuals from other under-represented groups from being considered. Action is needed to challenge unconscious bias . Whilst unconscious bias training is a key element of this, this is likely to only be taken up by companies that are aware of its presence - and therefore consideration should be given to how tackling assumptions and practices can be built into other provision. Scottish Government should consider how they could best support this to happen.

4. Another key barrier to increasing gender balance and broader diversity of boards is the low turnover of board members - especially in SMEs and family-owned companies. As a result, the actions outlined above should be focused on those firms with a regular turnover of board membership - at least in the early stages - as these are the companies where there is the greatest potential to deliver change. Success amongst these companies can then be used to encourage other companies to consider tackling this issue. However, it should be noted here that identifying companies with regular board turnover is, in itself, a challenging task.

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