ABI Report on Board Effectiveness - board diversity

The ABI pushed out the findings from their research on board effectiveness, predominantly covering diversity, succession planning and board evaluation. The document itself will be available from tomorrow (the ABI press release link is the best I can do), but I had a look through an advance copy.

The purpose of the report is to focus on the three areas above that they believe "can help ensure an effective board and ultimately contribute to the success of the company", and they make a suite of best practice recommendations. Diversity is more on topic for me, as I suspect smaller insurers may struggle to meet any formal or informal quotas by 2015, while simultaneously meeting the Fit & Proper requirements of the management body under Solvency II, without padding out board with token non-exec female representation (and indeed the ABI allude heavily to tokenism in their advice).

The recommendations cover making the achievement of diversity a key objective when making appointments; stating steps taken to achieve it, and expanding on these in AR&A documents; widening the search for NEDs; developing more women throughout the corporate pipeline; and setting and reporting on objectives to promote gender and other diversity in companies.

I found that the advice is a little light and contradictory - while extolling the virtues of diverse boards, the ABI are against quotas for example, citing the likelihood of "two-tier" boards (two-tier, but better surely?). Norway is cited negatively, which is surprising, and the "marked increase" in 2011 female appointments does not appear to have been linked to two-tierism, despite the speed at which it has materialised pointing towards a "quantity not quality" scenario.

There are a couple of good bits covering attrition rates at FTSE 250 firms (smaller boards, lower attrition, and therefore should evidence their plans and objectives, rather than be obliged to artificially meet target level of gender diversity. They also show a good example of the problems on the hiring front, where one company was previously receiving almost exclusively male long lists for NEDs (now rectified by the recruitment firms voluntary code which requires 30% female representation on the lists).

Finally, a couple of amusing best practice examples - the Man Group and Mothercare are both cited for good work in this area. Coincidence, or does someone at the ABI have a sense of humour!