The European Commission has unveiled plans to fine companies that fail to reserve at least 40% of their non-executive board seats for women – but are quotas really the answer to gender diversity in business?
Research has found that across the 27 EU member countries, females account for fewer than 14% of board positions in listed companies. In March it was revealed that the percentage of women on the boards of Britain’s 100 largest listed companies has reached a record high – of just 15.6%. And just four of the 87 executives appointed by FTSE 100 companies in the past two years have been female, despite moves by large organisations to recruit more senior women.
Under the new rules, businesses with more than 250 employees or €50m in revenues will be forced to regularly report on the gender of their boards. Those that miss the mandatory quota would be subject to administrative fines or be barred from state aid and contracts.
The EU’s Justice Commissioner, Viviane Reding has claimed that, “self-regulation so far has not brought about satisfactory results” for women. However there is an argument that quotas undermine the principle of equality and are patronising to female professionals.
The answer is to encourage the growth and development of women as they progress through their careers. We need to move towards targets to address gender inequality, rather than quotas – which serve to disregard the business argument that a mixed workforce is economically superior.
We are not doing enough to nurture females in the early stages of their professional lives, and when they return to work after career breaks. We need to address the problem by introducing flexible working arrangements and better mentoring to help develop future female bosses.
Women represent almost half of the UK workforce, yet only four of Britain’s top 100 companies are run by females. Angela Ahrendts at Burberry and Dame Marjorie Scardino at Pearson – the education and publishing – group are in the minority.
Managers need to be challenged as to why their departments lack diversity at every level – and why innately female qualities such as compassion, empathy, composure and pragmatism are considered less valuable in top-tier positions.
It has been suggested that one way to increase the representation of women at senior level is to push for HR to be more widely accepted as a board position, particularly within large organisations. Research suggests that organisations with balanced boards outperform those without. And boards could benefit from professionals with a background in talent management to advise on issues such as succession planning and restructuring.
It is now over a year since Lord Davies published his landmark report Women on Boards. But much of the focus was on non-executive roles which, due to their flexible nature, are somewhat easier to fill. We need to concentrate on increasing the number of women rising through the ranks without hitting the infamous glass ceiling.
Gender imbalance at board level is a symptom of complex issues surrounding talent pipelines from the bottom up. And setting mandatory quotas will not resolve the underlying causes of an unbalanced senior workforce.
Positions should be awarded to the best person for the job – and that person should be a woman 50 per cent of the time with or without quotas.