Last week’s Financial Director revelation that after a decade of rising numbers the quota of female FTSE 100 CFOs has fallen has provoked a strong reaction from Sir Vince Cable, leader of the Liberal Democrats.
“This decline illustrates that promoting diversity cannot be simply ticked off after a couple of strong initiatives. Governments need to consistently keep on top of this issue and this is a sign that the Conservatives have failed to do so in the past couple of years,” said Cable.
Joe Dabrowski, head of governance and investment at the Pensions and Lifetime Savings Association (PLSA), said: “The composition, stability, skills and engagement of a company’s workforce can have a large impact on performance, and research has found that companies with greater diversity are more likely to have higher financial returns.
“Therefore, as long-term investors with £2.2 trillion assets under management, UK pension schemes are acutely interested in how the companies they invest in perform on these issues. As a matter of simple corporate governance, pension funds would expect the companies they invest in to comply with their basic legal requirements, and will look sceptically on those that fail to do so.
“As well taking an interest in the diversity of corporate boards through our corporate governance work, the PLSA has also been campaigning to improve diversity specifically on pension trustee boards to ensure these are truly representative across gender, race, age, disability, sexual orientation, and social class.”
Don Webber, Professor of Applied Economics at the University of West of England, who has researched the progress of female financial professionals to become FTSE 100 CFOs, said there had been limited progress: “Although the accounting profession has been training high numbers of women for many years, a large majority of CFOs remains male.
“Given there are on average 3.2 executive seats on a board, one of those is for the chief financial officer (CFO) (according to the review into boardroom diversity by Sir Mervyn Davies 2011) and 35 percent of the membership of the accountancy profession is female, the accountancy profession is in a unique position to increase the number of women in senior executive roles,” he said.
He said the Hampton- Alexander review, that replaced the Davies review, suggested that directors should look deeply inside their organisations to truly understand what is happening in their recruitment process, retention strategies, performance and pay initiatives, and promotions in order to instigate policies to remove barriers and enhance the number of women in senior leadership positions.
“Our work fills part of this knowledge gap by revealing issues that female accountant middle managers encounter during their careers when they become mothers and which should be the focus policies in order to reduce the propensity of women falling out of this CFO pipeline,” he said.
“We conducted semi-structured interviews with mothers who were middle management accountants before motherhood and identified reasons why they no longer work in management roles. We found that parenthood temporarily changed their preferences for work-hours in order to balance career aspirations with their desire to care for their children.
“We found that women who were able to continue to work for the same organisation in a flexible, part-time capacity while their children were young were able to continue to have a successful full-time career once their children were older. However, women who worked for organisations that did not allow them to work in such a capacity when they entered parenthood faced long-term adverse implications for their careers in terms of status, pay and prospects.
“Similar impacts were felt when mothers did have flexible work arrangements but experienced manager and colleague discrimination due to the perception that flexible working is synonymous with lower prioritisation of and lower commitment to the organisation. Hence, many women left the potential CFO pipeline due to a lack of job satisfaction, status and prospects,” said Prof Webber.