Why are there so few women on the boards of start-ups?

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We all know that at this point in time we are fighting gender gaps in many areas, from pay to those employed in management positions to women entering STEM industries. However, it has not been all bad news, there are some battles we are winning, slowly and steadily, gaining equality inch by inch. For instance we’ve seen huge positive change within FTSE companies and their female representation on the board in recent years. It was on this note that Approved Index launched its research into how start-ups are faring in comparison to big corporations.

Our research examined the Sunday Times Fast Track 100 winners from the last 5 years to see how these fast-growth, high achieving start-ups wFemale-Startups-Infographicere measuring up when it came to diversity. Perhaps naively so, the initial feeling was that those leading the way in innovation, with advanced strategies and pioneering mentalities would have less of a diversity problem than those at the top. Unfortunately, it turns out we were very wrong. The research revealed that start-ups across the UK have worryingly low female representation on the board and it’s only getting worse.

While FTSE companies, powered by government and societal support, have seen the number of women on the board double over the last 5 years, start-ups have seen female representation slide down to a measly 8% in 2014, thus quadrupling the gap between big business and start-ups. And if you look a little closer at the results, they expose an even stranger truth. London, arguably the diversity capital of the world, is doing significantly worse than the rest of the UK with only 6.7% representation!

This may be a good time to establish why these findings are so important. It’s not just because as a society we should be striving for equality, nor just that it’s a cause that’s close to our hearts – both of which are true. But for those non-believers out there this is vital because it has real and severe implications for our economy. Research continues to show that the economy performs better when the gender gap is closed; businesses with women on the board outdo those without, diversity has been found to drive creativity and innovation and of course, when women are earning better wages there is more spare cash floating around.

Currently we are acting like a stuck record, our mistakes from the past perpetually on repeat. By encouraging diversity within big business (no matter how great or noble an idea), we are overlooking from where the issue stems. Correcting female representation in big business does not fix the problem for the majority of companies contributing to the British economy. I am certainly not saying that large corporations should be exempt from accountability, but perhaps the net should be cast wider, holding all businesses accountable, from small to large. Otherwise we will only see a temporary repair, and when these tenacious start-ups rise to the top (and they will), we will, yet again, face another generation of boards which need some diversity patching.

If directorships are filled by females, across the country, across all business structures, the impenetrable boys club begins to dissipate. The mere presence of women on the board encourages female staff to reach for higher positions and to apply for and achieve better promotions. The effects of increasing female representation on the board has a spectacular triple-down effect until one day we can achieve that perfect balance where someone’s gender becomes an old fashioned and out dated debate.

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Trilby Rajna
Trilby Rajna is an editor for Approved Index, writer, digital marketer and passionate believer in equality