Non-exec roles offer a launch pad to boardroom gender parity

At first, the idea was simply for more women to be appointed to company boards. Campaigners for greater female participation argued that the result would be an improvement in both business leadership and in women’s own careers.

A great deal of progress has been made. The proportion of women on the boards of FTSE 350 companies reached an all-time high last year, of just over 42 per cent, according to this year’s FTSE Women Leaders Review, which tracks female representation on the boards of leading UK-listed and private companies. Globally, data from intelligence provider Altrata suggests that women make up 32 per cent of all board members.

But an interesting wrinkle in this trend has emerged: a higher proportion of women on boards are non-executive directors, rather than executive directors.

Broadly, non-execs are independent, not involved in the day-to-day, and provide oversight, expertise and outside perspectives to the management. By contrast, exec directors are both on the board and in the executive, working on the everyday concerns of the business.

Across 20 major economies, women occupy 12.2 per cent of executive director positions, compared with 36 per cent of non-executive director roles, according to Altrata’s latest report, Global Gender Diversity 2024.

Why is this important? First, it points to an imbalance in influence: executive directors hold more sway in the daily running of a business.

Second, bringing in female non-executive directors to achieve diversity in the boardroom is relatively easy; it is much harder to develop candidates from junior levels up, to ensure a supply of women for top operational jobs.

The result has been more women adding a non-executive role in another company, rather than waiting for an executive board position as part of their day job. Yet Vivienne Artz, chief executive of the government-backed FTSE Women Leaders Review, argues that “even though there’s a lot of women who may be scooting around the executive to the board [role], we still need this executive pipeline. It’s super, super important for feeding into the board. And those executive director roles are the impactful ones.”

The 2024 FTSE Women Leaders Review report found that, in the UK, the proportion of female non-executive directors has grown at a faster clip than female executive directors. For example, in the FTSE 250 in 2011, some 10 per cent of non-executive directors were female, rising to 49 per cent in 2023. But the proportion of female executive directors for the same period went from just 4.2 per cent in 2011 to 11.9 per cent.

One drawback is that underrepresentation of women in executive director positions means they are absent from roles that influence everyday business issues. Chief executives have the most influence as they make the day-to-day decisions, and run the culture and people, says Penny James, co-chair of the FTSE Women Leaders Review and former chief executive of insurer Direct Line Group.

Even so, women seeking to make progress should not undervalue the power that non-executive directors have in driving strategy and oversight. James, for one, also argues that the role is essential for “creating a balanced set of experiences” that feeds into strategy, performance, culture and talent.

Likewise, “where the board can come in is really asking the tough questions”, says Jennifer Reynolds, chief executive of Women Corporate Directors, a US-based global network. The role includes getting answers about the state of the executive pipeline and pressing for talent development, she adds.

There is, however, some debate about whether a top-down focus on diversity has a practical effect.

Reynolds is certain it does, and says she makes sure to ask questions about the development of senior managers. Susanne Thorning-Lund, partner in executive search company Odgers Berndtson’s chair and board practice, says there is “more emphasis” from UK non-executive directors to press senior managers on gender diversity: “So it really is filtering all the way down,” she suggests.

Others are less convinced, however. “Many UK boardrooms lack sufficient expertise in leadership and culture development,” says Fiona Hathorn, chief executive of WB Directors, a network that promotes boardroom diversity. “Simply adding more women to the board won’t bring about the deep, transformative changes required to strengthen leadership at the middle-management level.” Yet those changes are crucial for addressing the barriers to women in senior leadership roles.

Simply adding more women to the board won’t bring about the deep, transformative changes required to strengthen leadership at the middle-management level

Broadly, in UK and US public companies, it is chief executives or chief financial officers who have an executive director level role. And, to make a difference to the gender balance of these roles, businesses need to improve diversity among senior leaders and below.

Progress towards more women attaining the chief executive role, in particular, is slow. “The pipeline for CEO stats [is] glacial — they’re not changing, you’re not getting enough women,” says Reynolds. And according to Altrata’s report, just 6.5 per cent of chief executives of large public companies are women.

Part of the problem, says James, is that traditionally chief executives are drawn from the ranks of chief financial officers, those who have run part of the business, or held profit and loss roles. Organisations should consider whether women are getting those business roles — rather than HR or marketing, which are typically felt to be “more female” jobs.

But, again, this is where a non-executive director role should not be undervalued. It can, in fact, be good preparation for women to sharpen their skills for an executive director role.

In Thorning-Lund’s view, serving as a non-executive is like “real business school”.

Serving as a non-executive is like ‘real business school’

James believes that the role helps women gain skills that are valuable for anyone aiming to become an executive director. After all, they understand how a board works — and even how to work with non-executive directors, she points out.

Indeed, some argue that having those kinds of skills will be more important than simple accumulated experience when businesses are facing disruption and volatility.

Appointments to senior management and boardrooms will increasingly be “focusing on skills”, Artz argues. “Experience is important, but . . . so much of it is no longer relevant because the pace of change means that we’ve left so much of that behind.”