Women Count, the third annual report by The Pipeline that tracks and analyses the number of women on Executive Committees of FTSE 350 companies, has concluded that utility companies have made little progress at senior level, but Thames Water and Severn Trent are notable exceptions.

Image:gender representation on Executive Committees in utilities sector

Women Count 2018 found that in the last three years there has been no progress on gender diversity in senior roles in the FTSE 350 – and by some measures, it is going backwards. Women Count is the third annual report by The Pipeline, that tracks and analyses the number of women on Executive Committees of FTSE 350 companies. The report found that:

• The ratio of women on Executive Committees of FTSE 350 companies has stayed the same at only 16% since the first report three years ago.
• 95% of all P&L roles on Executive Committees are held by men and just 5% by women, a decrease on last year – most women instead perform ‘functional’ roles such as HR, marketing, legal or compliance.
• The percentage of women executives on main boards has flatlined at 8% between 2017 and 2018. This means 92% are still held by men.
• Female CEOs have more than twice the number of women on their executive committees than male CEOs
• Female CEOs have four times the number of women executives in P&L roles on their executive committees compared to male-led companies.
• Only 4% of FTSE 350 companies have female CEOs, yet within a year these female CEOs have increased by 10%, the average number of women executive committee members.

Thames Water makes "huge leap" on gender diversity

The report has highlighted significant efforts by Thames Water, saying the water company has achieved a great deal on gender diversity.

Thames Water has 33% representation of women on their Executive Committee and are committed to embedding an inclusive workforce and lowering their gender pay gap. This is “a huge leap” from when they had one woman on the Executive Committee and has happened through a plan of specific interventions. Critically, the CEO and executive team were absolutely committed to the diversity and inclusion agenda and fully supportive of the plan Janet Burr, HR Director, put in place.

Janet Burr, HR Director, said:

‘We focused on three key steps: succession planning all the way through the organisation, setting up talent pools with at least 50% women and creating belief in women with potential that they actually could step into a senior role.’

The report says Thames Water continue to be committed to embedding an inclusive workforce and will keep working with The Pipeline to improve gender diversity in their executive pipeline and to create belief in their female talent that they can succeed in senior roles.

The utility is planning to put more females on their graduate schemes and apprenticeship schemes as well as increasing the number of women in middle manager roles, senior manager roles and ultimately executive committee roles.

The report has also flagged up Severn Trent as a notable exception which has a woman CEO, Liv Garfield and three women on its Executive Committee.

Representation on Executive Committees is best measure of gender equality 

According to The Pipeline, representation on Executive Committees, unlike representation on Boards, is the best measure of gender equality in the FTSE 350 because executives have power in the running of a company.

Commenting on the utilities sector, the Report says:

“Companies which provide utilities to the British public’s homes may be vying for more market share and the top spot in customer service awards but they are lacklustre in terms of gender diversity.”

“They certainly aren’t representative of their customer base with statistics which are close to the FTSE 350 average for the three measures we’ve focused on.”

The Report shows that the utilities have:

• 18% representation of women on their Executive Committees
• 6% representation of women in P&L roles on their Executive Committees
• 13% representation of women as Executive Directors on their boards

According to The Pipeline, one reason utility companies say they struggle to improve their gender diversity is that it is difficult to attract and keep recruit employees with STEM based skills.

However, many of The Pipeline’s clients in the utility sector but not listed on the FTSE 350 including Thames Water, E.ON and O2 Telefonica, have not let the search for STEM based skills act as a barrier to progress on gender diversity.

Demonstrable economic benefits for companies who have women in more senior roles

Analysis from the report also showed the demonstrable economic benefits for companies who have women in more senior roles.

There is a £13bn gender dividend on offer for UK plc, if all FTSE 350 companies performed at the same level as those with women on their executive committees.

Average net profit margins soar by 5%, to 13.9% at FTSE 350 firms with at least 25% women on executive committees 

FTSE 350 companies with no women on their executive committee only achieve an average 8.9% net profit margin. Where there are at least 25% women on executive committees, average net profit margins soar by 5%, to 13.9%.

The report also found that female CEOs are instrumental in recruiting more women to senior positions.

Rt Hon Nicky Morgan MP, Chair of the Treasury Select Committee said:

“Women Count 2018 gives us the proof that having more women on executive committees boosts profitability. It unpacks in forensic detail the status of women in FTSE 350 firms, the number of women on executive committees, and the correlation between female representation and economic performance.

“This lack of progress calls into serious question the possibility of achieving the UK’s target of 33% by 2020 which I set in response to the Davies Report, as Minister for Women and Equalities in 2015. Businesses that don’t understand the need to appoint more senior executive women are failing to meet their full potential. I ask them to read this report and wake up to reality, in their own interests and the country’s interests.”

Philip Hampton, Chair of the Hampton-Alexander Review on FTSE Women Leaders, an independent review on improving gender balance in FTSE leadership, said the research showed again there are still relatively few women in the most senior executive roles across business in the UK.

The next Hampton Alexander report in November 2018 will also measure the gender mix of executive committees and the senior people who report to executive committee members.”

Lorna Fitzsimons, Co-founder of The Pipeline said:

“We are at a critical juncture for gender equality in the workplace and this report has issued a stark warning. This is an alarm bell for everyone who supports the Hampton-Alexander recommendation to Government to achieve 33% representation of women on FTSE 100 executive committees and their direct reports by 2020.

“Government and business leaders must sit up and take notice. If we carry on as we have been doing – we will miss these targets. This doesn’t just fail women but it fails us all and our economy too. The Women Count 2018 report lays bare how the lack of women in senior roles hits companies’ bottom lines – limiting the profitability of leading businesses and in turn, hurting UK plc in the pocket.”