UK's External CEO Recruitment Process is putting Women at a Disadvantage

New research by 25x25 shows that women now hold 23% of senior roles, including CFOs, COOs, divisional heads, or CEOs, across the FTSE 100, up from 16% in 2021. While female hires are increasing in roles that typically lead to CEO positions, women remain underrepresented at the highest levels of British corporations.

The organization found the increase significant, as 90% of CEOs in the UK's largest companies have risen through similar roles. However, between June 2023 and June 2024, only two out of 17 CEO appointments in the FTSE 100 were women, with female representation at the top declining from 11 to 9.

“The pathways to CEO are unbelievably narrow,” said Tara Cemlyn-Jones, a former investment banker who now leads 25x25. “The great majority have developed their skills and experience in narrow silos.”

Cemlyn-Jones’ organization, including companies like NatWest, BP, Unilever, and BAE Systems, encourages a flexible approach to candidates' experience to help more women reach top positions. Globally, only 6% of CEOs are women, with rates ranging from 3% in emerging markets to 8% in the US and Europe, according to Bloomberg Intelligence.

“Women have made scant progress in the C-Suite,” said Adeline Diab, director of research and chief ESG strategist at Bloomberg Intelligence. “Three in four companies still have no women in C-Suite positions.”

According to this year’s FTSE Women Leaders Review, women hold 35% of leadership positions across the top 350 UK companies. Pavita Cooper, UK chair of the 30 Percent Club, stated that this figure “masks the truth,” as many women aren’t leading significant parts of the business that would lead to CEO roles. Tara Cemlyn-Jones highlighted that board members and headhunters often unintentionally hinder women’s progress to CEO, encouraging boards to appoint candidates similar to the current executive rather than diversifying leadership.

“I think boards in the UK are becoming more and more risk averse,” Chris O’Shea, CEO of the £6.6 billion energy company Centrica, said in the research. “And some of that’s being driven by some of the governance rules that we have got.”

Recruiters play a key role in selecting leaders, with half of FTSE 100 companies hiring external candidates for top roles, compared to just a fifth of large US companies.

The 25x25 research shows that linking headhunters’ fees to a CEO's salary disadvantages women, as they typically earn less. The preference for external CEO recruitment in the UK is particularly problematic for women, suggesting a lack of trust in internal succession planning by boards.

As Donald Trump returns to the White House in January, global efforts to improve diversity in C-suites and boardrooms could face setbacks. He has pledged to dismantle diversity, equity, and inclusion initiatives. However, companies with more women on boards have shown 2-5% higher returns, which may support ongoing diversity efforts.

Diab said “The financial performance linked to diversity reveals the benefits and may represent a strong counter-argument to any anti-woke rhetoric,”