the boardroom
‘European Commissioner Viviane Reding advised companies to become creative so that regulators do not have to become creative’
signature by all publicly listed companies in Europe. Reding, who is in charge of gender equality in the EU,
advised companies to become creative “so that regula- tors do not have to become creative”. German Chancellor Angela Merkel has offered compa-
nies one last chance to improve or she will bring in a quota of 30pc – she has described the current situation as a ‘scandal’. The 30 companies listed on Frankfurt’s Dax index of leading shares met with German ministers in April and promised to set targets to promote more female managers. In Germany’s 200 largest corporations the figure currently sits at just 3.2pc. Norway has proven that quotas do work. Some 40pc of
its board members are women, after the country passed a law in 2008 requiring publicly listed companies to have boards comprising at least 40pc women.
The Davies report Our nearest neighbour, the UK, was seriously considering a quota, but in February a government-commissioned review by Lord Mervyn Davies stopped short of recom- mending the introduction of quotas, but rather recom- mended that all UK companies should begin efforts to boost female participation on boards. Davies said FTSE 100 companies should aim to have a minimum of 25pc of women on their boards by 2015, adding that radical changes were needed in UK boardrooms. Although he did not recommend enforceable quotas,
Davies said companies should have to explain themselves if certain goals were not reached in the area. He said all companies should announce their targets for female rep- resentation on boards and how they will achieve these. If they are not reached, the company should have to explain why, he said. Currently women make up just 12.5pc of FTSE 100 boards, while 18 FTSE 100 companies have no women on their boards, and about half of the companies in the FTSE 250 have no female directors, according to figures from Cranfield School of Management. “Radical change is needed in the mindset of the busi-
ness community if we are to implement the scale of change that is needed,” said Davies. “This is not about aiming for a specific figure and is not just about pro- moting equal opportunities but it is about improving business performance.” The report urged the Financial Reporting Council to
amend the UK Corporate Governance Code to require listed companies to establish a policy concerning
36 Irish Director Summer 2011
boardroom diversity. Davies said he believed a voluntary target would be successful but that, if these were not achieved, enforceable quotas might have to be considered for the country’s top 350 listed companies.
The Irish view Here in Ireland, the Institute of Directors (IoD) recently carried out research among its members with Behaviour & Attitudes on this very topic, in order to gauge attitudes to formal gender quotas. Two-thirds (66pc) of directors surveyed were not in favour of gender quotas to increase the number of women on boards. Some 22pc would be in favour as a temporary requirement, with just 12pc of directors in favour as a permanent requirement. When the results were analysed by gender, almost
three in four (72pc) males were not in favour of quota systems to increase the number of women on boards, while six in 10 (60pc) female directors would be in favour of quotas. The majority of the latter, however, said they would only be in favour as a temporary requirement. “The gender issue should only form part of a wider dis-
cussion on board diversity and the introduction of formal quota systems is not necessarily the right way to achieve that diversity,” said Maura Quinn, chief executive, IoD in Ireland. “Yeswe needmore female directors, butwe should be looking at gender in the broader context of board diver- sity, which encompasses the skills mix, age profile and nationality of board members. “Diversity on boards is vital to ensure sufficient bal-
ance,” she added. “A mix of skills and expertise, national- ities and gender brings a range of perspectives to the deci- sion-making process and avoids the groupthink mentality that has been common on many boards in recent years.” Whether it is via quotas or not, it’s up to our leaders,
male and female, to ensure that women are receiving the professional development and mentoring to rise up the organisational ladder. Ginka Toegel is professor of organisational behaviour
and leadership at IMD. “Despite the disappointing sta- tistics, I believe that there are many good reasons to be positive,” she says. “I strongly believe that the next five to 10 years will see a dramatic change for the better. “Women managers can contribute to this by under-
standing that there are certain expectations related to organisational leadership, and developing their skills accordingly. Men can both help and benefit by under- standing the specific problems that women business lead- ers face.”
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