A new study by Hay Group, the management consultancy, reports that male non-executive directors in Europe’s largest companies are paid an average of 7 per cent more than female non-execs.
The pay gap reflects the fact that women are less likely to sit on board committees – roles that attract higher additional fees. Almost two thirds of companies have no woman on their remuneration committee and the percentage for audit committees is not much better. Indeed, a paltry 2 per cent of European company boards are chaired by women.
Carl Sjostrom, European head of executive reward at Hay Group, says:
“It is not enough to get a number of heads in. You have to change the culture and you have to understand that diversity is beneficial to everybody. Having a diverse and multi-disciplined leadership is a healthy thing for all organisations. If you’re going to do it… you have to back it up by giving women responsibilities in equal numbers as well.”
The study analyses 431 companies from the Financial Times Europe 500 index across 12 countries. In half of those countries companies have 10 per cent – or less – of women on boards. In a further four countries, this number is only marginally better at 15 per cent.
In board diversity, as in so much else, Europe cannot be said to be a homogenous group. Leading the diversity table is Norway, where a legally-imposed quota system may have helped boost board diversity to 32 per cent. But with no legislation, Sweden comes a close second with company boards comprising 29 per cent of women.
Italy is at the bottom of the table as companies there only appoint 3 per cent of women to the board. This is closely followed by Portugal with 6 per cent and Austria with 7 per cent.
“In more egalitarian nations like Norway and Sweden, you can see the higher proportions of women on the board. I think this reflects cultural differences,” Sjostrom says.
The study shows that board diversity statistics are generally improving but not enough, and companies are still failing to make the deeper cultural changes happen.
Sjostrom advises companies to do the following:
“Address the selection process and ask yourselves why do you pick who you pick. Picking aggressive, young, white men is easy. They storm at you and you pick the one that arrives first. But if you want differences in the team, you have to appreciate how to find the best from different groups. It is not just about gender. It is about diverse experience, nationality and perspective. In the end, it is about giving your company the edge.”