Recruitment firm Ferguson Partners released a report showing that the real estate investment trust (REIT) industry is lagging behind others in improving gender diversity on boards in both the United Kingdom and United States. The report examines data collected from 40 U.S. and the 30 U.K. REITs to find out how the industry measures up regarding female representation in the boardroom. 

The research showed that when the top U.K. and U.S. REITs board of directors were compared to S&P 500 and FTSE 100 companies’ boards, REITs underrepresent women directors and executives. Women comprise 12.6 percent of U.S. REIT boards is 12.6 percent and 13.4 percent of U.K. REIT boards.

Some 80 percent of the U.S. REIT boards have at least one female director, whereas 73 percent of U.K. REITs have a female director. But this compares poorly to S&P 500 companies, where 97 percent have at least one female director and 75 percent have at least two female directors on the board. Even further ahead are FTSE 100 companies, where 100 percent of FTSE 100 companies have at least one female board member and 55 percent of the companies more than a quarter female representation.

“Our hypotheses of why there is a shortage of women on REIT boards is due to the paucity of senior women in the industry. Our sector needs to proactively promote the diversification agenda which has proven commercial benefits to businesses.”
Serena Althaus, Senior Managing Director, Ferguson Partners

“This research is important to the REIT industry as it helps executive management and boards better understand the critical need for a gender-diverse board of directors,” said Serena Althaus, senior managing director at Ferguson Partners. “Our hypotheses of why there is a shortage of women on REIT boards is due to the paucity of senior women in the industry. Our sector needs to proactively promote the diversification agenda which has proven commercial benefits to businesses.”

Other hypotheses from the report include:

Harder to identify and recruit female candidates

Women have limited time flexibility

The first sidebar gives the report’s recommendations on addressing these issues. And the report also gives a series of competitive advantages for a more gender-diverse boardroom:

Strategies for improving female board representation in the REIT industry

Executive Focus: If a company is going to encourage diversity, it has to start at the Board level and drive it through senior management. If a company’s customer base and employee population are diverse, it is counterintuitive not to have diversity on the Board. Since male representation on boards significantly outnumbers female membership, it should be noted that men will need to take an active focus in increasing Board gender diversity.
Expand Search Criteria: Previous Board or Chief Executive Officer experience is a common criterion for a Board search, making it difficult for women to find their first Board assignment. Since there is an insufficient pool of experienced female Board members in the industry, if companies want to achieve gender diversity, they will need to adapt their Board qualifications.
Look Beyond the Real Estate Industry: Real estate is a broad industry, which touches many adjacent fields. Many REITs can benefit from gaining the perspective of individuals in related fields such as consumer goods/services and technology.
Focus on Candidate Quality, Not Quotas: Aggressively hiring unqualified women into Board roles in the name of diversity can have a negative impact on performance and limit future diversity hires. If the first female Board member is well qualified and a good fit with the Board, this better enables increasing gender diversity in the future.
How Top US and UK REITs Can Drive Performance Through Board Diversity


Identify with a larger customer base

Ability to recruit and retain talent

Form non-consensus opinion

Posit more inclusive company culture

Gender diversity across the whole FTSE 350 was also a focus of the latest Grant Thornton Corporate Governance Review 2016. According to the review, the proportion of women on FTSE 100 boards has doubled since 2011, the year of Lord Davies’ Women on Boards report. The FTSE 100 now meets Lord Davies’ target of 25 percent female representation, while 20 percent of FTSE 250 roles are filled by women.

Earlier research from Cranfield University, the Female FTSE Board Report 2016, shows, however, that the proportion of new appointments going to women this year was 24.6 percent, which would indicate that the proportion of women on boards is likely to fall, making the revised goal of 30 percent of women on boards by 2020 a stretch target. The focus, both of the government and industry, has now turned to executive representation, where the numbers are very low indeed. Eighty companies in the FTSE 100 and 224 in the FTSE 250 have no women in executive positions.

In line with its remit, the Grant Thornton report also describes reporting on gender diversity, which “has increased in quality and scope in the past four years.” Overall there has also been an increase in the number of companies providing basic or general gender diversity statements since 2015 to 94 percent from 92 percent, though this includes companies that state that gender diversity is not something they consider when making appointments. Unfortunately, the number of companies with “detailed and best practice disclosures, suggesting true commitment to gender diversity at board level,” has reduced for the second year running, having been at its highest in 2014. The report posits that the “more difficult task of finding executives has curbed enthusiasm. Companies are therefore reverting to saying less, rather than expanding on what they are doing to nurture and develop talent, even if it may take longer.”

Toolkit for nomination committee

Board composition and diversity
Things to consider
The board should establish the appropriate balance of skills, experience, independence and knowledge; the nominations committee should identify how this was evaluated and what conclusions were made Establish and articulate the board’s policy on diversity. It should include gender and acknowledgement of the women on boards targets recently set by the Government It may also include nationality, ethnicity, age, professional background and industry, culture, and personal attitudes.
Reporting tips
The best companies disclose infographics which clearly map the skills, experience and diversity of board members, in line with strategic needs Include reference to the Government’s target for women and ethnic representation and discussion of other kinds of diversity and how they align with your company strategy. It should be specific and relevant to the company Discuss any measurable objectives/targets in relation to the policy on diversity, and progress made.
Grant Thornton Corporate Governance Review 2016

The Cranfield report goes into far more detail, especially on executive directors. It lists, for example, the 26 FTSE 250 companies that have female executive directors. All but three of them have only one women executive, the three are—interestingly—real estate company Grainger, telecom company TalkTalk and business services group Mitie. There are 20 FTSE 100 companies with female executive directors. Again, most only have one, but Kingfisher, Next, Whitbread, Marks & Spencer, Capita, and Severn Trent have two. None has more than two.

On the other hand, 80 companies in the FTSE 100 had sufficient disclosure to measure the proportion of women on a company’s executive committee. Twelve companies had more than 30 percent female representation on their executive committee, and three—Kingfisher, Severn Trent and Easyjet—had half or more. But the average is much lower—19.4 percent. These figures are going to make a 33 percent target very difficult to meet without significant effort.

The Cranfield report also asked 19 of the U.K.’s largest institutional investors about the issue. They felt that the current voluntary approach “was effective; but that more work was required to better utilise female talent.” A majority also said that the focus of increasing gender diversity should be extended to “include the Executive Committee and/or direct reports to the Executive Committee.”