Quotas will fast forward gender diversity and better decision making in the Boardroom

Of course, in an ideal world, no one wants gender quotas as they are artificial. Real gender equality means selecting people on merit, not gender, and without having to resort to gender targets or balance.

The problem is that the world that we all live in is far from ideal, never will be and it is also far from a meritocracy. And as long as that is the case, and with women underrepresented in most boardrooms in Ireland, quotas are the best way of moving towards the meritocratic ideal.

The State has addressed this issue, albeit belatedly.  Under laws introduced in 2014 all State boards are required to have a minimum of 40% of both men and women. However, there is no penalty for boards that don’t have the appropriate gender balance. More than half of the country’s State boards are falling short of the gender quotas set down in law according to the Independent in a survey conducted in 2017.

The UK 2017 Hampton Alexander report looked at how more women could progress to be part of the board and executive committees of Britain’s top companies.

Its recommendations included:

  • Target – FTSE 350 companies should aim for a minimum of 33% women’s representation on their Boards by 2020.
  • More women as Chairs – All stakeholders should work together to ensure increasing numbers of women are appointed to the roles of Chair, Senior Independent Director and Executive Director positions on boards of FTSE 350 companies.
  • Under-representation – All CEOs of FTSE 350 companies should take action to improve the under-representation of women on the Executive Committee and in the direct reports to the Executive Committee.
  • Combined target – FTSE 100 companies should aim for a minimum of 33% women’s representation across their Executive Committees and in the direct reports to the Executive Committee by 2020.
  • Transparency – FTSE 350 companies should voluntarily publish details of the number of women on the Executive Committee and in the direct reports to the Executive Committee on an annual basis.
  • Government reporting requirements – Financial Reporting Council (FRC) should amend the UK Corporate Governance Code, so that all FTSE 350 listed companies disclose in their Annual Report and Accounts the gender balance on the Executive Committee and direct reports to the Executive Committee.

So, lots of good intentions, no real action and no mandatory quotas.

In 2003 the Norwegian government passed a law that required listed companies to have at least 40% of board members to be women. The law was enacted in 2006 and in the event of non-compliance, the company would be delisted. Existing companies were given an initial grace period of two years.

Many decried that mandatory quotas were the wrong way to promote women. But they have caught on. In Belgium, Germany and France women make up 30-40% of board directors in large listed firms, three to five times the share of a decade ago. In the USA, representation has increased to 20% despite having no quotas.

No organisation wants to appoint board members who do not have what it takes to contribute in the boardroom. So, quotas force companies to think more deeply about how to recruit, develop, support, retain and reward female talent at all levels.

Making quota’s mandatory will address this issue in a number of ways:

  1. It provides more women with the opportunity to demonstrate that they have what it takes to make a valued contribution in the Boardroom. Remember, not all men make the cut in the Boardroom.
  2. Helps shift societal attitudes and breaks the psychological barrier of men only being associated with boards rather than women
  3. Ensures that there are more women on Nomination Committees whose job it is to make sure that they recruit strategically for a more diverse world
  4. Provide role models and mentoring to support a future supply of women to boards and to senior management

We have many fine examples of world class female directors and CEOs in this country, but we need more.  Quotas will help.

Email dwduffy@governance-company.com to see how we can help your organisation plan for a more diverse board and organisation.