Are corporate governance departments showing more gender equality?
Gender equality hit the headlines again this week after new research from the Institute for Fiscal Studies (IFS) showed women earn an average of 18 per cent less than men in the workplace.
Overall, the wage gap has shortened from 28 per cent in 1993 and 23 per cent in 2003, but the difference between the genders has remained relatively the same for people with A levels and higher education.
According to the IFS, the gap between men and women is smaller when individuals are younger, but the arrival of children often means that mothers take more time out of the workplace than their partners. Those who choose to take on part-time hours upon returning to their jobs are then likelier to be passed over for promotions and wage increases.
There is clearly still work left to do to achieve gender parity in UK workplaces, but what benefits can boards experience by placing more emphasis on diversity? And how well are corporate governance departments performing in this area?
Advantages of boardroom gender diversity
Research from PwC shows that men and women disagree on the importance of gender diversity in the boardroom. Perhaps unsurprisingly, nearly two-thirds of female directors (63 per cent) feel equal representation at a senior level is ‘very important’, while just 35 per cent of their male counterparts said the same.
Similarly, 80 per cent of female respondents believe board diversity – both gender and racial – leads to increased effectiveness, whereas just 40 per cent of men agreed.
Despite these results, McKinsey & Company figures revealed that firms in the top quartile in terms of gender diversity are 15 per cent more likely to financially outperform businesses in the bottom quartile.
An EY study from last year echoed these results, finding that organisations that had at least 30 per cent female leadership could boost their net margins by up to six percentage points.
“Companies that advance women into leadership roles will benefit from more engaged workforces, stronger cultures and improved economic performance,” said Mike McKerr, managing partner of EY Ireland.
Women in corporate governance departments
Here at Barclay Simpson, we’re firm believers in promoting gender equality in the workplace. Earlier this month, we hosted a Women in IT Audit Breakfast Seminar that discussed various issues relating to diversity within these roles.
We also track the number of women working in five corporate governance functions: cybersecurity, risk management, compliance, internal audit and in-house legal. In fact, our latest Compensation and Market Trends Mid-Year reports – published this month – showed a number of trends in these departments.
The reports showed a mixed bag of results for gender diversity. Compliance saw a two percentage points drop in the proportion of women in these roles to 37 per cent, with risk management also reporting a slight decrease from 21 to 20 per cent.
However, legal, internal audit and cybersecurity all experienced a rise in the proportion of women employees. In-house legal already had the highest percentage of females at 40 per cent last year, but this climbed even further to 44 per cent in 2016.
Internal audit and cybersecurity have enjoyed significant increases over the last two years. Women now comprise 27 per cent of auditing departments (up from 22 per cent two years ago) and 11 per cent of security professionals, a rise of seven percentage points since 2014.
Looking to the future
Our figures indicate there remains room for improvement in corporate governance diversity, although there were promising increases in the number of women across most disciplines.
The UK is making progress in driving gender equality across organisations, and the government is especially keen to see more females in senior positions.
Five years ago, Lord Davies performed a review of FTSE 100 companies and found that just 12.5 per cent of board members were women in 2010. This was up from 9.4 per cent in 2004, but he described the progress as “too slow”.
He set a target of 25 per cent by 2016, a milestone that organisations reached late last year – six months ahead of schedule. Lord Davies has since revised this figure and wants to see 33 per cent female board members by 2020.
Meanwhile, HM Treasury recently launched the Women in Finance Charter, which asks companies within the industry to commit to four key pledges that aim to boost gender diversity, particularly in senior positions. More than 70 businesses have already signed up, including some of the biggest names in finance such as Barclays, Lloyds, PwC, Santander, Royal Bank of Scotland and Nationwide.
Overall, while gender parity is still some way off in the UK, many businesses appear to be moving in the right direction, with boards understanding the significant benefits that diversity can bring to their operations.
Our 2016 Compensation and Market Trends Reports combine our review of the prevailing conditions in the corporate governance recruitment market together with the results of our latest employer survey.
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