Construction Bottomline Hit by No Gender Progress, says Report

THE CONSTRUCTION industry has one of the lowest representations of women in profit and loss roles of just four per cent, losing construction firms a potential average rise of five per cent net profit margin.

This is according to the Women Count 2018, an annual gender diversity monitoring report.

Women Count is the third annual report by The Pipeline, that tracks and analyses the number of women on Executive Committees of FTSE 350 companies, and in particular those in profit and loss (P&L roles). P&L responsibility is seen as a ‘business-critical’ role in which operational power is exercised with a company.

No Gender Progress

On average the construction industry has 13% representation of women on their Executive Committees. The report says that construction companies will struggle to improve the ratios both on Executive Committees and Boards whilst they have one of the lowest representations of women in P&L roles in the UK economy.

The report found that UK construction has:

• 13% representation of women on Executive Committees
• 4% representation of women in P&L roles on Executive Committees
• 7% representation of women as Executive Directors on Boards

Analysis from the report also showed the demonstrable economic benefits for companies who have women in more senior roles.

• There is a £13bn gender dividend on offer for UK plc, if all FTSE 350 companies performed at the same level as those with women on their executive committees.
• FTSE 350 companies with no women on their executive committee achieve an average 8.9% net profit margin. Where there are at least 25% women on executive committees, average net profit margins rise by 5%, to 13.9%.

Rt Hon Nicky Morgan MP, Chair of the Treasury Select Committee said: “Women Count 2018 gives us the proof that having more women on executive committees boosts profitability. It unpacks in forensic detail the status of women in FTSE 350 firms, the number of women on executive committees, and the correlation between female representation and economic performance.”

Benefits of Women CEOs

Virtuous Circle

The report also found that where companies are led by female CEOs, gender diversity is likely to improve across the company, creating a ‘virtuous circle’:

• Female CEOs have more than twice the number of women on their executive committees than male CEOs
• Female CEOs have four times the number of women executives in P&L roles on their executive committees compared to male-led companies.
• Only 4% of FTSE 350 companies have female CEOs, yet within the last year these women CEOs have increased by 10% the average number of women executive committee members.

Whole Economy Data

The report says that across the economy as a whole, in the last three years, there has been no progress on gender diversity in senior roles in the FTSE 350 – and by some measures, it is going backwards.

The report found that:

• The ratio of women on Executive Committees of FTSE 350 companies has stayed the same at 16% since the first report 3 years ago.
• 95% of all P&L roles on Executive Committees are held by men and just 5% by women, a decrease on last year – most women instead perform ‘functional’ roles such as HR, marketing, legal or compliance.
• The percentage of women executives on main boards has flatlined at 8% between 2017 and 2018. This means 92% are still held by men.

An increase in the gender diversity of FTSE350 Executive Committees is demonstrated however, with 36% having a quarter or more female representation (2017 had 6%), although this figure is set against the 25% of company Executive Committees which have no women at all.

Industry Sector Breakdown

Nicky Morgan, MP, added: “This lack of progress calls into serious question the possibility of achieving the UK’s target of 33% by 2020, which I set in response to the Davies Report as Minister for Women and Equalities in 2015. Businesses that don’t understand the need to appoint more senior executive women are failing to meet their full potential. I ask them to read this report and wake up to reality, in their own interests and the country’s interests.”

Philip Hampton, Chair of the Hampton-Alexander Review on FTSE Women Leaders, an independent review on improving gender balance in FTSE leadership comments: “We are continuing to make progress on women becoming non-executives on boards, but the top executive positions are still largely male. I think it’s excellent that The Pipeline’s report is focused on executive committees.

“The next Hampton Alexander report in November 2018 will also measure the gender mix of executive committees and the senior people who report to executive committee members.”

Lorna Fitzsimons, Co-founder of The Pipeline also points to the lack of progress in meeting the government target of achieving 33% representation of women on FTSE 100 executive committees by 2020. She said: “We are at a critical juncture for gender equality in the workplace and this report has issued a stark warning.

“Government and business leaders must sit up and take notice. If we carry on as we have been doing – we will miss these targets. This doesn’t just fail women but it fails us all and our economy too. The Women Count 2018 report lays bare how the lack of women in senior roles hits companies’ bottom lines – limiting the profitability of leading businesses and in turn, hurting UK plc in the pocket.”

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