Evidence shows that FTSE100 boardrooms are becoming more diverse and meritocratic, a study published today has claimed, with less reliance on familiar backgrounds and educational institutions.
The study, by New Street Consulting Group, found that 79% of directors of FTSE100 businesses came from educational backgrounds outside of the global top 30 universities such as Oxford and Cambridge. It also revealed that gender diversity had significantly improved in boardrooms over the past decade.
Only 10% of current FTSE100 CEOs attended either Oxford or Cambridge, a significant decline from the 23% of CEOs of FTSE100 businesses a decade ago who were Oxbridge graduates.
There is now a wide understanding that the best talent available might be the atypical individual on the slate” – Colin Mercer, New Street
New Street’s study found that most (56%) FTSE100 directors now had neither an MBA nor an accountancy qualification, both of which were once seen by many businesses in the index as important factors in reaching board level.
Just 25% of directors of FTSE100 companies had an accountancy qualification while 22% had an MBA.
The report said the proportion of women was increasing steadily across FTSE100 firm’s senior echelons, with female directors now accounting for 33% of board personnel, up from just 13% in 2010.
Gender diversity was improving most quickly among the youngest members of FTSE100 boards, New Street found, with women now representing 43% of under-50 board members.
Universities outside the global top 30 that were most frequently attended by FTSE100 board members included the universities of Manchester (23 directors), Sheffield (11) and Bristol (11), the study revealed. Tameside College, Preston Polytechnic and Belfast Metropolitan College were also represented.
While FTSE100 companies accepted they had to go much further to go to improve diversity at board level, it was the case that businesses now looked at a wider range of criteria when recruiting at board level, New Street concluded. There was now less emphasis placed on simple metrics such as following traditional blue chip educational and career patterns and years of experience.
New Street director Colin Mercer said: “A focus on hiring from a restricted group of universities for graduate programmes or for transferral onto executive fast track programmes has depressed diversity on FTSE100 boards over the years.
“Businesses can very easily limit the diversity in their hiring pool in an ‘indirect’ way. Prioritising factors like university background and experience can easily result in businesses missing out on excellent candidates who don’t fit a narrow profile.”
“There is now a wide understanding that the best talent available might be the atypical individual on the slate.”
Mercer added that even focusing too much on years of experience during candidate sifting could “easily mean inadvertently hiring a man by default”. He added that the talent pool of executives with 15 years’ management experience was dominated by men because relatively few women had built up 15 years of management experience.
Hiring younger candidates in recent years had naturally resulted in a better gender balance among those individuals, he said.
“Getting to 33% women on boards in the FTSE 100 was a key target for the index to achieve, but if the pace of improvement is maintained, it could get much closer to gender equality in the coming years.”
The study also found that male board members were significantly more likely to have accountancy qualifications (30%) than female board members (16%); that women directors (23%) were slightly more likely to have an MBA than male board members (22%); and technology was the sector of the FTSE100 with the youngest board members, at an average age of 55.
Oil and gas companies had the oldest board members at 62 on average.