Calls for more women in the boardroom(Getty Images)

Britain's biggest businesses must outline plans to increase the number of women filling their top jobs by this month, as pressure grows to improve equality in the nation's boardrooms.

Research shows that just 12.5% of people on the boards at FTSE 100 companies are women. A government-sponsored review, published in February and led by Lord Mervyn Davies, has examined the reasons so few women make it to the top in UK business.

The report requires that, 'by September', all chairmen of FTSE 350 companies must have set out the percentage of women they aim to have on their boards in 2013 and 2015. Though the Department for Business, Innovation and Skills (BIS) told us that there is no fixed deadline date for the announcement, FTSE 100 boards are expected to aim for one-in-four female representation by 2015.

Will quotas be needed?
At present there are no enforced quotas on businesses, but there is a possibility these will be imposed if firms fail to take sufficient voluntary steps to improve equality. Davies has called on UK companies to adopt a "comply or explain" approach, encouraging them to publish their own targets and comply with them or explain to shareholders why they have not done so.

David Cameron today made his views known on the issue, telling the Commons that the current number of women leading Britain's business was "simply not good enough" and that "positive action" may be required to address the imbalance.

And home secretary Theresa May today launched voluntary guidance for reporting on gender equality in the workplace. Speaking alongside the Confederation of British Industry (CBI), May urged businesses to publish pay information in an attempt to move toward earnings parity between men and women.

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Other recommended targets
The issue of gender imbalances in British business is one that has been debated for years now, and the Davies report is not the only one calling for a larger percentage of women at the top.

Chief executives of some of the biggest UK companies, such as Centrica and John Lewis, have signed up to the '30% club', which aims to end the male domination of UK business culture.

Set up by Newton Investment Management CEO Helena Morrissey, the club - whose pledge is "growth through diversity" - aims to see women making up 30% of British boardrooms. To do so, it proposes a series of measures to 'balance your board', such as the introduction of flexible working arrangements.

Percentage of women at the top
According to the Cranfield School of Management, women held just 5.5% of executive directorships in 2010. These are typically the most senior and hands-on roles in companies, such as chief executives.

The institute says that women are more likely to be non-executive directors - external members on a company's board who are not involved in the day-to-day running of the firm. According to Cranfield, women held 15.6% of these non-executive positions last year.

FTSE 250 companies have an even lower proportion of female directors than FTSE 100 companies, at just 7.8%. Around half of the businesses in this group do not have any women in the boardroom at all.

By 26 August, only eight FTSE 100 companies had responded fully to the requirements in the Davies review, according to research from lawyers Pinsent Masons.

Of those that did, Centrica and M&S have said they already have 25% female representation in their boardrooms, while another 12 businesses had already met the recommended percentage. Furthermore, several of those yet to respond were already on course to meet the government's stated targets, the law firm said.

"A further 32 companies have between 15% and 25% women directors, which means that 46 of the FTSE 100 have already got to where Davies wanted them to be by the end of 2011," the report said.

"Of course, a percentage measurement is not always a fair reflection of what is happening as it inevitably depends on the total number of board members: Burberry, for example, has the best ratio in the FTSE 100 with 42.9%, achieved by having three women on a board of seven, while Prudential scores only 18.8% with the same number of women on a board of 16."

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Pressure from the European Union
At present there is no legislation to force companies to adopt a certain quota of women in business, but pressure is mounting - as evidenced by the prime minister's words today.

This is partly because Europe is racing ahead of the UK when it comes to achieving equality in the boardroom. For instance, Norway already has a 40% requirement on corporate boards, and many other countries are also putting regulatory arrangements in place.

As a result, momentum is gathering among UK companies to get more women at the top. But rather than an arbitrary percentage, isn't it about injecting talent into businesses rather than a specific male-female quota?

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The case for a balanced board
There is little doubt that, regardless of their sex, we need the best brains running our businesses - particularly during turbulent times - but research supports the argument for having more women at the top. The Davies review, for example, quoted studies demonstrating that companies with more women on their boards outperform their peers, with a 42% higher return on sales, 66% higher return on invested capital and 53% greater return on equity.

Jane Scott, UK director of the Professional Boards Forum, runs events to bring City chairmen together with professional women who may be potential boardroom candidates.

She says the Davies review and "30% club" targets are "a good way of shedding light on the need for more women in the boardroom, and a tool for companies to benchmark themselves against". But, she adds, "things could change more quickly given the depth of talent available to UK boards, and investors are starting to take the issue seriously as a diverse board makes better decisions than a homogeneous one."

While many in the investment community remain sceptical of specific targets when it comes to the number of women on boards, they feel there is certainly a case for more female-influence in general for Britain's companies.

Sir Roger Carr, chairman of Centrica, president of the CBI, and a supporter of the "30% club", says: "Boards are intellectually and socially enriched by the presence of women and consistently more effective through balanced judgement and opinion in decision-making."

Emma Howard Boyd, head of sustainable investment and governance at Jupiter, adds that women on boards are more likely to challenge on strategy and governance issues.

Women to control 'the bulk of Britain's wealth'
Michel Barnier, Europe's internal markets commissioner, earlier this year urged an end to the "group-think approach" of male-dominated boardrooms. In a draft directive he suggested imposing mandatory quotas to dictate the number of women sitting on bank boards.

Alongside this there's also a clear personal wealth argument. Employment and spending trends mean that women are poised to take control of the bulk of Britain's wealth, according to research from the Centre for Economics and Business Research.

In the UK, women are expected to own 60% of all personal wealth by 2025 - making them a vital part of the decision-making process of Britain's biggest companies. But whether businesses come to that realisation on their own, or whether they'll require a push from the state is something that is likely to cause yet further debate in the coming months and years.

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