Board diversity research released by Norman Broadbent reveals that the retail sector is strongly embracing change, with women accounting for 26% of non-executives (more than any other sector). The research also found that non-executive directors in the retail sector are aged 57 years old on average and that the board tenure for non-executive directors is four years (both these stats are the lowest of any sector).
Leading board executive search firm, Norman Broadbent, together with BDO and the Quoted Companies Alliance, undertook a comprehensive analysis of board composition of over 1,700 quoted companies including those within the FTSE 100, FTSE 250, Small Cap, Fledgling and AIM indices.
Norman Broadbent’s report identifies clear differences between industry sectors when it comes to boardroom composition. The research places retail with the highest share of female non-executive directors out of all industries surveyed:
• Investment companies and resources companies have the oldest executive board members, with average ages of 54 and 53 respectively;
• The technology sector – comprised of many young, AIM listed companies, plays home to a disproportionate number of young executive directors.
• Construction and real estate companies are falling far behind other sectors in terms of women holding executive positions on boards.
Sue O’Brien, Chief Executive at Norman Broadbent, comments: “The retail sector’s gender diversity record is impressive. It has the highest share of female non-executive directors amongst all industries surveyed – it is double the average at 25.8%. The share of female executive directors is also higher than the average for all industries (8.2% versus 6.2%).”
“Boards should have the appropriate balance of skills, experience, independence and knowledge, and diversity is a key component of, not only good corporate governance, but of successful businesses. Fast moving sectors, such as retail, appear to have embraced this, with non-executives bringing more current experience which provides the fresh thinking that this sector needs. However, there is much more work to be done.”
Kate Latham, Managing Director, Retail, Leisure & Consumer at Norman Broadbent, continues: “Industries that want to benefit from greater diversity should start by looking at the matrix of skills that currently exist on the board and determine how they meet the business’ current needs and future aspirations. They should also broaden their network when looking for non-executive directors. Whilst leading the way, retail and consumer businesses still need to push for greater diversity of gender, age and thought to better reflect their customer base.”
“The key here is to be brave and ambitious. If you aim high in this process and appoint those who are most able to add value to your company, business success will follow.”
Scott Knight, Partner at BDO LLP, says: “There is no more important asset in a company than its management team, with a strong team able to deliver far greater value from an average business than an average team can achieve from a high quality business. The composition of a management team in terms of size, age, gender and tenure is a critical determinant of its performance so it is should be a priority for companies to regularly review their makeup.”
This report provides real food for thought on composition trends and will be invaluable for anyone taking an objective look at their team.
Tim Ward, Chief Executive of the Quoted Companies Alliance, comments: “It goes without saying that boardroom composition is a key driver of not only good corporate governance, but also the growth of a business. Having the right mix of skills and background on boards is paramount to making good business decisions. The findings of the NB: Board Review highlight the key information that boards should consider when recruiting – especially in terms of furthering diversity and competence in the boardroom. As we move from severe recessionary times, this is the perfect time for quoted companies to take stock of their boardroom composition to see if their directors have the right skills to further growth.”