On Wednesday 26 July, the Institute of Directors in Ireland (“IoD”) published a report entitled Diversity in the Boardroom 2017 (“the Report”) outlining the results of the IoD’s recent survey of over 300 directors and senior executives of Irish companies.
The Report identifies a high level of consensus around the importance of diversity in enhancing board effectiveness and company performance, and presents a valuable picture of the current level of diversity in Irish boardrooms. It also summarises recent progress and highlights the amount of work still required to improve diversity.
Key Findings of Report:
- 67% of directors knew up to 3 or more people on the board before joining.
- 42% were recruited via direct approach from an existing board member.
- 50% of men are recruited via direct approach while only 19% of women are.
- >25% of boards have less than 10% female membership.
- 63% of women say unconscious bias is the main barrier to accessing the boardroom.
- 72% of women believe it is more difficult for women than men to be appointed to boards.
- 44% of male respondents said that there is lower female representation on boards due to an insufficient pool of unsuitably qualified women.
- Just 6% of respondents do not have a third-level qualification.
- <7% of board members are from non-Irish ethnic backgrounds, yet 44% of respondents said that race and ethnicity are just slightly or not at all important considerations.
- 70% of board members on Dublin-based boards are from Dublin/Leinster.
- 79% said that the skillset and experience of their board has changed over the past 5 years.
- 51% said that they have been in their current role on the board for 5 or more years.
- 78% agreed to some extent that their board was committed to support a culture of inclusion.
- 69% of directors said that their board lacked cyber-risk expertise.
- Majority of directors agreed that diversity improves board effectiveness and company performance but diversity policies and rotation systems are not in place.
While noting positives such as more awareness of the importance of diversity and increased commitment to supporting a culture of inclusion, the Report highlights that the extent to which formal action has been taken to achieve this to date is limited. As a result, Irish boards remain largely homogenous with female representation still inadequate, an absence of racial and ethnic diversity and a focus on corporate governance and financial expertise at the expense of other increasingly relevant skill-sets such as cyber-security and cyber-risk expertise.
Maura Quinn, Chief Executive of IoD has commented that the “who you know” informal approach, through personal contacts and networks, means that there is little opportunity to achieve meaningful diversity in the boardoom and that “without formal diversity policies in place or a transparent and open appointment process, it will be difficult to move beyond the status quo”.