Closing the Gender Gap: The Role of the Board

April 2018 Overture

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Introduction

UK headlines have been dominated by news of the gender pay gap, placing the topic firmly on the Board agenda.

Tuesday 4th April was the deadline for UK companies with over 250 employees to submit their gender pay gap reporting data. Over 10,000 organisations in the UK have now publicly shared their data, with the final figure showing a 9.7% median pay gap. 78% of companies paid men more, many revealing a significant gap which is often attributed to too few women in the upper levels of the organisation.

The fact of the gender pay gap has been established. It is incumbent on Boards to respond and to ensure steps are underway to close that gap and to create greater gender balance in particular at senior levels.

Ambitious targets are being set: the FT has committed to gender pay parity by 2022, and the BBC has committed to contributor gender balance by 2019.

Fidelio has been ahead of the curve in supporting clients to report and narrow the gender pay gap.  In 2017 shortly before the reporting requirements were introduced Fidelio hosted a Board breakfast with Ann Francke, CEO of CMI, on the implication of the gender pay gap for Boards. Ann has also contributed to Fidelio’s “A Seat at the Table” Programme for senior female directors emphasising the responsibility of the Board and leadership team to address what UK Prime Minister Theresa May calls a “burning injustice“.

Fidelio is committed to building Boards fit for the future and has an exceptional track record in increasing gender balance and diversity at senior levels. We are working with Boards internationally to achieve these goals. In this Overture we provide practical steps for Boards to ensure progress towards ambitious diversity targets and closing the gender pay gap through:

1. Evaluation at the Board and Executive Committee level

2. Development, including “A Seat at the Table” and Strengthening the Pipeline

3. Succession Planning, Search and Remuneration

 

1. Board and Executive Committee Evaluation: Board Evaluation has become a commonly used tool favoured by Chairmen, shareholders and regulators for increasing Board effectiveness. Evaluation also has a role to play in increasing diversity:

2. Development: Development of talented senior women is critical to building a healthy pipeline, as well as closing the gender pay gap:

3. Search and Succession Planning – and last but clearly not least the Board, typically through the work of the Nominations Committee, should have a good handle on the quality of Succession Planning for Board Members and senior leadership roles. In a UK context, recent FRC recommendations for the UK corporate governance code advocate much greater engagement by the Nominations Committee on this issue which Fidelio endorses:

The gender pay gap is a political and business challenge that sits firmly on the Board agenda. In most organisations there are a number of obstacles to be overcome if the gap is to be closed. But these are not insurmountable and smart Boards will be seeing increased diversity as an answer to disruption and lack of trust. As we have set out in this Overture, Boards can adopt a number of tools and steps that are commonly used to promote greater Board effectiveness to close the gender pay gap.

Evaluation, Development, Search and Succession Planning can all be rigorously applied to ensure that the Board is thinking openly about opportunities to increase diversity including at senior level. Where the Board hits obstacles in its own thinking or within the organisation it is right to look externally for fresh perspective and insight. The Board too may benefit from focused and bespoke development. Closing the gender pay gap is a goal that Boards cannot afford to ignore. Smart Chairmen will have already concluded that failure to achieve greater diversity is in itself a source of disruption; and closing the gender pay gap denotes an effective Board that is fit for the future.

For further details on how Fidelio supports Chairmen to build highly effective Boards, please get in touch.

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