Women on Boards - Enhanced Voluntary Code is Latest Milestone for Executive Recruiters

By REC Policy Advisor, Amanda Ciske 

The REC took part in this week’s high-profile launch of an Enhanced Voluntary Code of Conduct for executive search firms, which aims to drive gender equality in UK boardrooms. As well as showcasing the positive role of executive recruiters and highlighting specific challenges, the event was an opportunity to engage with the Business Secretary Dr Vince Cable who is spearheading the government activity on this hugely topical issue.

The enhanced code calls on search firms to up their game by building on the standard voluntary code (launched in 2011) and meeting a set of stretching quantitative and qualitative targets. The Business Secretary suggested that the Enhanced Code is ‘business-friendly’ and represents the ‘British way’ by embodying persuasion rather than compulsion. It emphasises transparency and the need for effective measurement in order to accelerate progress. Whilst these aims were welcomed, one priority is to ensure that the set targets are achievable.

To meet the enhanced standard firms must demonstrate that they have helped to appoint at least four women on the boards of FTSE 350 companies and have achieved at least 33% of female appointments overall across both Executive and Non-Executive Director roles. They must also show a record of helping women to achieve their first FTSE appointment. Earlier this year, in our Room at the Top report, we strongly recommended that search firms publish the gender balance in the long and short lists that are presented to clients. Our view is that executive search firms who consistently put forward balanced short lists must be recognised, even when the client may not ultimately choose to hire a female candidate. There is some concern that smaller search firms who don’t place as many FTSE 350 roles may miss out under the set targets of the enhanced code, even if they consistently deliver on diversity.

What’s next? We will continue to engage with the Department for Business on the above issue whilst remaining fully committed to driving progress. Denise Wilson, CEO of the Davies Steering Group confirmed that further criteria will be developed over the summer months for those working below the FTSE 250, non-governmental bodies and charities and that she will be engaging on this with the REC and members of our Association of Executive Recruiters (AER). The Business Secretary also confirmed that guidance on women-only short-lists would be published imminently which is something that REC and AER members have been calling for.

The launch of the Enhanced Voluntary Code is the latest milestone following the recommendations of the Lord Davies review in 2011. However, we need to remain on the front foot in order to meet the 25% target by 2015 and avoid the possibility of a mandatory ‘quota’ system. We will continue to monitor developments at an EU level (especially with new European Commissioners set to be announced) and expect another progress report from the Davies Steering Group this September. Our overriding priority is to ensure that the REC and the AER remain at the forefront of the debate and that we continue to underline the role that executive recruiters can play in making change happen.