Publication - Research and analysis

Overcoming Barriers to Equality and Diversity Representation on Public, Private and Third Sector Boards in Scotland

Published: 23 Dec 2014
ISBN:
9781785440380

The Employment Research Institute was commissioned by the Scottish Government to identify how barriers to equality and diversity representation at board level in public, private and third sector organisations could be overcome, particularly for women. The report outlines the findings.

Overcoming Barriers to Equality and Diversity Representation on Public, Private and Third Sector Boards in Scotland
7 Overcoming Barriers to Equality and Diversity on Third Sector Boards

7 Overcoming Barriers to Equality and Diversity on Third Sector Boards

Chapter Summary

  • There is limited data and evidence on overcoming barriers to female boardroom participation in the third sector. Such information on boardroom equality and diversity of Scottish registered charities is not routinely collected.
  • From the available evidence, third sector boards appear to be more gender diverse than private sector boards.
  • The third sector has not been subject to the same level of scrutiny on board diversity as the private sector.
  • The National Council for Voluntary Organisations has supported a voluntary approach to gender equality in the boardroom.
  • Social enterprises appear to demonstrate good examples of women's involvement in governance compared to the private sector.

Diversity on Third Sector Boards

7.1 Data on the proportion of women on the boards of third sector organisations is not widely available. Chapter 6 showed that the private sector has been subject to considerable scrutiny on the gender composition of their boards. The private sector has seen the introduction of benchmarking, target setting and the measurement of results on gender equality in the boardroom. A series of high profile and influential reports including the Lord Davies (2011) report "Women on Boards" and Cranfield University's International Centre for Women Leaders, have benchmarked progress towards greater gender equality in the private sector. The Boardwatch website provides an up to date record of the appointment of women to FTSE 100 and FTSE 250 companies. Similar data sources are largely absent for the third sector in Scotland.

7.2 The Women Count: Charity leader 2012 report[100] seeks to benchmark leading charities by the percentage of women on their Boards, the number of women directors and the names of the Chairs and most senior executives. The report draws from data supplied by the Charity Commission and so does not include Scottish based charities. The report is based on data from 162 separate charities based in England and Wales. Similar information is not collated by OSCR.

7.3 Data from the study shows that although charities have a higher proportion of female directors than their private sector counterparts, the proportion of women directors' remains below targets proposed by the Scottish Government but above the 25% threshold considered acceptable by Lord Davies' (2011) report into Women on Boards (see Table 3).

Table 3: Women board members in the private and charity sectors.

Index

% Women directors

% Women chairs

% Women most senior executives

FTSE 100

15

1

4

FTSE 250

9.4

2.4

4

Charity 100 (by funds)

27

9

17

Charity 100 (by income)

32

17

25

Source: Women Count. Charity leaders 2012. Benchmarking the participation of women in the UK's largest charities.

7.4 The report notes that men continue to hold the majority of board seats with 68% of the top charities (by income) having male dominated boards[101].

7.5 Research conducted with English and Welsh charities has sought to demonstrate the value of ensuring that charity trustees and chairs, both male and female, are encouraged to act as mentors to develop the potential of leaders in the third sector[102]. It is stressed that private sector board members also participate in schemes to encourage access to third sector boards for female leaders in the third sector.

7.6 Cass Business School in partnership with the National Council for Voluntary Organisations (NCVO), run a seminar series designed to give access for female chief executives from the UK voluntary sector to the opportunity to serve on private sector boards. In his report on Women on Boards, Lord Davies states that: 'there is a perception that the many women in leadership positions in academia, the arts, the media, the civil service or professional services are often overlooked because they do not have specific corporate experience and Chairmen fear that they will not understand corporate issues or corporate board governance'[103]. The Cass Business School seminar series highlights how women leaders from the third sector bring a wide range of talents and abilities that are relevant in a corporate context: Women bring a wide breadth of knowledge to the table - charities are leaders in accountability, demonstrating impact, building public trust, motivating staff, stakeholder engagement, and the need to produce high quality results to a strict bottom line'[104]. By structuring the seminars around working dinners attended by invited guests from the third and private sectors, Cass Business School and NCVO are seeking to build social networks and social capital across representatives from different sectors. The dinners are sponsored by executive search firms, 'who will be represented, giving the seminar participants opportunities to network with the people who fill private sector board vacancies'[105].

Reporting and Transparency of Gender Equality Goals

7.7 A central principal of the voluntary approach adopted by the UK Government to the improvement of female representation on public, private and third sector boards has been the idea of goal setting and self-reporting as a way of ensuring compliance with diversity targets. In the private sector, the UK Corporate Governance Code has built on the concept of 'comply or explain', an approach described as a 'pragmatic tool that can improve corporate governance without the need for inflexible, burdensome and misguided rules, laws or regulation'[106]. In line with this voluntary approach, the UK Government Equalities Office published a paper on addressing gender equality, supported by the National Council of Voluntary Organisations (NCVO) and targeted at the voluntary and private sectors that supports the continued use of voluntary approaches to gender equality[107]. The report sets out a 'Transparency Framework' to be used by organisations to analyse and report on gender equality issues.

7.8 The Transparency Framework includes measures of the relative seniority of men and women in the organisation. It seeks to identify: 'The proportion of men and women at different levels within the organisation e.g. board level, senior management, middle management etc.'[108]. In addition to contextualising gender pay gaps within the organisation, this information would allow for the identification of potential 'pipeline issues for getting women onto boards'[109].

7.9 In the third sector, Lyon and Humbert believe that social enterprises have the potential to encourage greater representation of women in the governance of local economies, but at present there continues to be an imbalance. Lyon and Humbert demonstrate that 41% of board members of social enterprises were women with an average board size of 7.5 people. However 10% of the social enterprises in their study had no female board members and that 19% have only one woman on their board. 71% had two or more women at board level. Of UK based social enterprises with majority female boards, 73% of the workforce is female, compared to 47% female workforce in social enterprises with male dominated boards, with women making up 57% of the workforce. In sectors that have traditionally had a female gender imbalance such as youth work, childcare, counselling and health and social care, there is a higher proportion of women on boards than in occupational sectors that are seen to be more male dominated[110]. There are also higher proportions of women on boards in 'arts, culture and sports' social enterprises. In contrast, the areas of 'environmental and recycling services' have a smaller proportion of women involved in boards.

7.10 Social enterprises appear to provide a more egalitarian environment for women's involvement in governance compared to the private sector. They can therefore be considered an important potential arena within local economies providing a stepping stone for governance that challenges inequality.


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Email: Jacqueline Rae