The private sector’s reliance on appointing female non-executive board members instead of promoting more women to senior executive positions has been derided as “a bit of a joke” by Lord O’Donnell, the former cabinet secretary.

The intervention by Lord O’Donnell, who retired at the end of December, underlines concern that companies are responding to government pressure to improve the gender balance of their boards by having more female non-executives instead of more women running the business.

While the overall proportion of women on FTSE 350 boards has risen since Lord Davies’s government-commissioned report on the issue nearly a year ago, the number of female executive directors has fallen slightly. Equality campaigners fear some companies are indulging in tokenism.

“I’m really, really worried about the private sector in terms of its failure to pick up on a huge reservoir of talent in terms of women,” Lord O’Donnell told the Financial Times in an interview. “I think this whole non-exec thing is a bit of a joke.”

He said there was a growing contrast between the public and private sectors in terms of gender balance. “I would never think I was conquering the diversity issue in the civil service if I put lots of female non-execs on the board.”

Lord O’Donnell said the civil service had recently reached a point where half the permanent secretaries in the 16 home departments were women, though that has slipped with the departure of Minouche Shafik from the Department for International Development to the International Monetary Fund.

According to figures from the Professional Boards Forum, women represent 14.9 per cent of all directors on FTSE 100 companies, up from 12.5 per cent a year ago. But only 6.5 per cent of FTSE 100 executive directors are female, a figure that drops to 4.6 per cent in the FTSE 250.

The total number of women executive directors in the FTSE 350 fell from 45 in 2010 to 43 in November 2011, despite a concerted government effort to boost female participation in business leadership, according to data from Cranfield School of Management.

Business leaders say raising the proportion of women has been made more difficult by corporate governance requirements that have seen the number of executive directors on many boards drop from six to three, including the chief executive and finance director. Female finance directors are in short supply.

Lord Davies’s review last February urged FTSE 100 companies to aim for a minimum 25 per cent female board representation by 2015 and called for all FTSE 350 chairmen to set targets for raising the proportion of women.

Jane Scott, UK director of the Professional Boards Forum, told “I am quite surprised that, in the report, Lord Davies didn’t draw a distinction between executive and non-executive [positions] and set different targets. In theory, you could have no change in the executive and all the change in NEDs and still meet the targets.”

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