Reasons as to why workforce gender diversity is key to more women on boards?

Quotas or percentages alone may just be corporate tokenism

Professional services firm KPMG recently announced that it had appointed a female global chairman and CEO in the US, and a few months earlier Deloitte became the first of the ‘Big Four’ accountancy firms to install a woman at its helm. These appointments highlight the progress being made towards female representation in the boardroom. But this is not the whole picture.

In 2011 Lord Davies tasked FTSE 100 companies with achieving a 25 per cent female presence at board level by the end of 2015, with the threat that failure could result in an EU directive introducing mandatory quotas. Lord Davies’ March 2015 review found that female presence on FTSE 100 boards had almost doubled since 2011 to 23.5 per cent.

These statistics may be deceptive - they do not reflect the dropping off in the number of women being appointed in recent months reported in Cranfield University’s Female FTSE Board Report 2015. According to online board appointment tracking forum BoardsWatch many of the roles being filled are part-time non-executive roles - only 8.6 per cent were executive directors, and only seven women were appointed as CEOs or chairmen. So it seems a minority of progressive companies are carrying the rest of Britain, leaving most of its largest listed companies still failing to meet the target.

Quota legislation

While mandatory quota legislation has been successfully introduced in some European countries, such as France and Germany, the UK’s Equality Act 2010 expressly prohibits selection for a role on the grounds of gender (this is unlawful positive discrimination). The nearest the Act comes to redressing gender inequality is in the rare occurrence where two candidates are equally qualified for a given role, permitting the employer to choose the gender that is under-represented within its workforce (this is lawful and is known as positive action). And although introducing mandatory quotas would heighten awareness of workplace gender inequality among employers and achieve the desired result in the short term – more women at the ‘top table’ - there may be drawbacks.

For example, there would be two conflicting laws – positive discrimination and mandatory quotas - for employers to reconcile, potentially providing disgruntled employees with scope for complaints. There would be the danger of worsening already discriminatory business cultures, with existing board members (male and female) perceiving any woman joining their board as not there based on merit. The “new joiners” may themselves feel uncomfortable about being fast-tracked to the top.

A recent study from the Judge Business School in Cambridge, The rise of women in society: enablers and inhibitors, concluded that there is no significant relationship between quotas and the longevity of tenure at board level. The study concluded that “opportunity enhancement” measures, such as maternity policies and having a requirement for gender diversity embedded in a company’s corporate governance code, were more effective measures of achieving gender parity. If the wider aim of gender diversity is not present, corporate responses to quotas are mere acts of tokenism. There should be no glass ceiling for talent, whether male or female, and there are practical steps businesses can take to promote such diversity.

Checklist

Organisations should:

• grow and maintain an executive pipeline of female talent for core board posts by having aspirational and measurable targets for women at all levels, removing any barriers to their promotion and making real efforts to bridge any gender pay gap
• review equality and diversity policies and ensure awareness is raised on all levels (although the Davies report has focused on board diversity, gender equality should filter throughout the workforce)
• review family-friendly policies to ensure it is as easy as possible for women to remain in the workforce (hopefully the introduction of shared parental leave will encourage more men to share the responsibility of raising children, thereby enabling women to remain in the labour market and naturally progress up the career ladder)
• provide mentors for women before and after taking time off for childcare, accommodate flexible working arrangements where possible, and allow more remote working
• raise the external profile of the company as an employer that embraces diversity at all levels, including board level, increasing the likelihood of women gravitating towards the organisation
• review recruitment practices to ensure any discriminatory criteria are removed and consider guaranteed interviews for under-represented groups.