Marjorie Scardino became known as the first lady of the FTSE when she was appointed CEO of Pearson in 1997, but it was finance director Kathleen O’Donovan who was the first woman to join a FTSE board six years earlier.
Two decades on, finance is still a gateway to board advancement, but women’s progress is painfully slow – prompting EU calls for quotas. In the UK, the Davies Report and the influential 30% Club may have resulted in a flurry of new appointments, but recruitment firm Norman Broadbent has warned that the UK will still miss Lord Davies’ recommended 25% target unless boards step up their searches for senior women.
“We don’t have a supply problem,” says Dr Ruth Sealy, the deputy director at Cranfield’s Centre for Women Leaders. “The figures needed to sort the [30 %] problem out are not a big deal.”
It’s lower down the talent pipeline that cracks appear. In the UK, nearly half of those joining accountancy are women,compared with less than 5% in the 1970s. But at accountancy firms, women make up 23% of all partners, according to Catalyst, although 49% of all accounting employees,
And, while women are better represented on the boards of big accountancy firms than the FTSE, their proportion tends to remain unchanged from one year to the next.
Firms were long ago warned of the dangers of accounting becoming a two-tier system (with women on the lower tier), but some appear unable to address the problem.
The proportion of female ICAEW students has barely changed from 2006 (41%) to 2011 (38%). Female membership numbers, too, remain somewhat static (25% female), indicating the profession has got a serious ‘talent leak’ somewhere.
Yet 57% of the women who break through to the board have experience in finance roles, according to Cranfield’s Women on Boards report, which analyses annually the gender makeup of the FTSE.
A finance background may have a “legitimising” effect, suggests Dr Sealy.
Anne Tutt, a non-executive director and former FD for a number of organisations, agrees, “Accountancy is a great way to get into business, with a qualification that gives you instant credibility and can parachute you in at a higher level.”
Female accountants are growing impatient: 48% of the women polled for recruitment firm The Mergis Group’s Women in Finance survey were dissatisfied with their career progress -- although the vast majority would still recommend accountancy to younger women.
There are “plenty of women in tax”, says Francesca Lagerberg, head of tax at Grant Thornton, but not many are reaching senior positions.
“Some of this is choice, but, as a profession, we haven’t cracked the support. There’s a need for strong, successful role models, so that we have the belief that we can do it,” she says.
What is blocking progress?
Qualified ACAs begin at parity, according to Rhonda Martin, head of ICAEW’s Women in Leadership team, but there is a “falling off” among women aged between 30 and 40, only partly explained by motherhood.
While men and women appear to pursue similar roles (primarily in business, or in practice), women cluster around the lower end of the pay scale and job roles. Most male CFOs earn £100,000 to £250,000, while most of their female peers earn £50,001 to £100,000. Whereas 14%of female CEOs/COOs/MDs earn less than £20,000; that figure drops to just 1% for men.
It’s unclear whether the recession is adversely affecting women outside the public sector; the TUC suggests some may fare better than men. But, something is certainly causing them to disengage.
Sarah Churchman of PwC, (quoted in a paper for the University of Warwick’s Institute for Employment Research), believes women “are using [the recession] as an opportunity to exit the corporate world. Highly qualified women seem disillusioned with their prospects, believing that reductions in development and learning budgets will create long-term career damage.”
Some moves are positive: Linda Cheung used a background in accountancy and banking as a springboard to launch CubeSocial, a social media business.
“There is a wealth of opportunity for women in finance", says Sarah Barber, whose career has taken in Deloitte, shoe brand Jimmy Choo and her current role at Jenson Solutions, a firm for portfolio FDs. “The beauty of working for a smaller organisation is that you are master of your destiny. And flexibility is in the company’s DNA.”
There are other factors that would stem the “hidden brain drain” – and some steps women themselves can take to shape their own careers. Disruptive innovation expert and investor Whitney Johnson advocates sponsorship and angel investing, as well as networking with men as well as women – but the real onus is on businesses.
“Retention and promotion in professional service firms is the bigger challenge – developing a pipeline of female talent,” says Avivah Wittenberg-Cox, founder of 20First consultancy and author of How Women Mean Business.
Strategies that focus on ‘fixing the women’ are of limited use if they fail to address institutionalised bias. What’s needed is systemic change, led by the CEO or chairman.
“It’s not about women’s talent, ambition or aspirations,” says Eleanor Tabi-Haller Jordan, the general manager for Catalyst Europe. “It’s about workplace culture. Companies are facing a set of intractable issues and implicit biases”, while leadership stereotypes are invidious for women – as Facebook’s Sheryl Sandberg notes the traits required to be successful can also make women unpopular.
Tabi-Haller Jordan sees the demographic shift, technology (particularly social media) and the eurozone crisis creating a perfect storm that is galvanising change: mid-career hires are asking questions, articulating needs and expectations around flexibility. "It’s no longer just a nice to have”, she says.
Managers need to be educated, she adds, “It should be seen as a social competency, with managers not just accommodating diversity but eliciting it. Leaders understand that this is what’s needed for 21st century managers and organisational structures.”
A voluntary code of practice among search firms should encourage boards to look beyond the usual suspects for candidates – and will allow women without experience to apply. But “we have to keep the momentum going,” says Katushka Giltsoff, a partner at the Miles Partnership and 30% Club steering committee member.
The next step – persuading lower-profile, less receptive boards and nominations committees actively to promote women, then proving their presence makes a difference to the bottom line -- may be harder.
Says Giltsoff, “There’s an element of carpe diem about the current situation - this is probably the best opportunity ever for women, but they have to work hard and grab it.”
This week economia is focusing on Women in Finance. Related articles include the BBC's CFO Zarin Patel on why long-term investment is needed to gain diversity on boards; the 30% Club on why women on boards should be seen as a business issue not an equality one; and headhunter Mark Freebairn on why targets frustrate female job candidates