Business needs more women on boards

Labour Party

Writing in  The Times on 7 January 2013 about the proposed EU Directive to increase the representation of women on company boards, Ruth Lea declares a strong dislike for positive discrimination, describing it as “patronising and demeaning” and discriminating against men.   

In one sense she is right – quotas to increase the number of women on company boards should not be necessary. But the rate of change is too slow.  When women make up over 60% of graduates, and control about 70% of global consumer spending decisions, their under-representation in economic decision-making (just 6.5% of UK executives are women, 18.7% of non-executives) is plainly unfair.   A number of studies suggest that companies with a higher share of women at top levels deliver strong organisational and financial performance, while a gender-balanced board is more likely to pay attention to managing and controlling risk.

Ruth Lea goes on to say that women make different lifestyle and career choices, which doesn’t amount to bias.   But men rarely have to consider breaking their career to rear their children.  With more father-friendly policies  some women would be free to make other choices.

The proposed Directive sets a quota for non-executives of the largest listed companies by 2020, while encouraging progress for executive members.  However, where an EU member state can show it will reach 40% women non-executive directors on the boards of its large companies by 2020, there will be obviously no need to enforce a quota. Given that the UK is currently making strong progress with self-regulatory measures towards ensuring that 40% of non-executive directors are women, it may be that Britain will come into this category.

The proposed Directive, in addition, focuses on transparent recruitment processes and the qualifications of applicants. It should inspire women further down the company hierarchy to break through the glass ceiling. Quotas should not be seen in isolation; they are part of a wider process to ensure fairness at work.