Inside the Boardroom: Business and Gender Equality

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The research carried out by Lord Davies in 2011 was conclusive; there are not enough women on boards the United Kingdom. [1] Yet in the past six months, not a single woman has been elected as an executive director in a FTSE 100 company. Furthermore, the resignation of Cynthia Carroll as CEO of mining company, Anglo American, leaves only two female Chief Executive Officers in the FTSE 100 (Angela Ahrendts at Burberry and Alison Cooper at Imperial Tobacco Group). Therefore an important question needs to be addressed: are mandatory boardroom quotas necessary for the struggling British economy? Educational opportunities are more equal than ever before, and at school level girls constantly outperform boys. Although this is carrying through in women’s early careers, there is a drastic drop off higher up in businesses with regards to female participation.

Research headed by Viviane Reading for the European Union suggests that a quota of 2 women for every 5 board members is necessary to speed up the sluggish pace of change in British business. However, the enforcement of this target was recently dismissed by the European Commission as being too harsh. Hence, an official decision was made to encourage, but not enforce. This statement was met with support in the EU’s two biggest economies, Britain and Germany, where governments have spoken out against mandatory quotas set by Brussels in favour of national and local targeting. [2] Similarly, many big firms supported the research done by the Department for Business, Innovation and Skills, but struggle to practice what they preach. For example, Goldman Sachs promotes itself as a company that supports gender equality, yet only has two women on its twelve-person board of directors. [3]

Britain is a forward thinking nation in terms of business and gender equality. Defenders of gender equality in business quote the statistic that, since March this year, 48% of non-executive appointments in the FTSE 100 have been women. But at the same time, there is a widespread dislike for Reading and her proposals amongst female politicians and business leaders. Women and Equalities Minister, Maria Miller, has accused the research of ‘patronising women’ and Burberry chief executive, Ahrendts, has also publicly spoken out against boardroom quotas. [4]

Norway provides an interesting case study in the boardroom debate, as it has imposed a mandatory quota of 40% women in the boardrooms of limited companies since 2002. [5] Currently the level of females on boards in Norway stands at 35.9% and politicians claim Norwegian business has not suffered as a result of this. [6] There is a suggestion that society in Norway is “fiercely egalitarian” and takes price in its cultural principles of equality. This is a stark contrast to Britain, where the outlook remains bleak for women in business. [7] Other Scandinavian countries also outstrip Britain in the boardroom. For example, in Finland females make up 27% of boardrooms. Norway is not without its issues in this area: only 2% of CEO’s are female amongst its top companies but it has overcome a cultural stopper that Britain cannot.

The main frustration for women is the lack of progress. Reading’s proposals and even research is seen as too radical, investigating which objectives should be defined for quotas rather than whether quotas should be implemented at all. [8] Critics say quotas would mean women are put on boards simply because of their gender rather than because of their merits, but currently, the Old Boys Club that dominates British business seems impenetrable. The attitude towards quotas is so hostile, even amongst female business leaders that it seems impossible that it would ever succeed. There is a belief amongst businesses that those setting the quotas are doing it from a EU-centric, top-down perspective, rather than tackling the real cultural issues. In Britain, arguments calling for a change in attitudes towards women in business have grown stronger. The 30 Per Cent Club aims to inspire company leaders to appoint more women to boards and directorships and has a target of 30% female representation in UK business. [9] However, the question now arises as to why even such obviously empowered women are only seeking 30% representation.

Many businesses suggest that their initial intakes are nearly balanced between males and females but this is not flowing through in later years. This demonstrates a clear cultural restriction. Women are feeling empowered enough at the early stages of their careers, but when it comes to taking on leadership roles, the empowerment drastically stops. The idea that once a woman comes to childbearing age she is incapable of progressing in her career is so prevalent that British business, which is seen as some of the most innovative in the world, is falling behind when it comes to gender equality.

Results definitively show that companies with strong female representation and gender balance at the highest level perform better. [10] There is not a suggestion that promoting gender balance on boards is going to be the miracle economic solution Britain is looking for, but a new perspective on priorities for the largest businesses in the UK is needed. If mandatory quotas are not the solution there must be a voluntary, proactive movement by FTSE100 companies to lead the way and appoint more female directors in order to recognise the contribution women make to British business. If not, British business faces falling behind even further in comparison with emerging nations as it struggles to keep up with the challenges of the changing world economy. The change has to come from all levels: businesses need to not just promote gender equality at all levels but act on it too, the government must set realistic targets, and most importantly women already in business and those entering the workforce must feel empowered to put themselves forward to lead.

Article by Eleanor Parker. Edited by Joe Austin.

 

[1] ‘Women on Boards’, the Department for Business, Innovation and Skills, February 2011, http://www.bis.gov.uk/assets/biscore/business-law/docs/w/11-745-women-on-boards

[2] ‘EU Proposes Plans to Get More Women into Boardrooms’, Claire Davenport, 14th November 2012. http://uk.reuters.com/article/2012/11/13/us-eu-gender-idUKBRE8AC0PE20121113

[3] http://www.goldmansachs.com/

[4] ‘Brussels leaves 40% quota for women at mercy of member states’, Ian Taylor and Simon Goodley in The Guardian, 14th November 2012.  http://www.guardian.co.uk/business/2012/nov/14/eu-gender-quotas-upto-member-states?intcmp=239

[5] ‘Norway’s Businesswomen and the Boardroon-bias Debate’, Harriet Alexander, 18th March 2012. http://www.telegraph.co.uk/news/worldnews/europe/norway/9150165/Norways-businesswomen-and-the-boardroom-bias-debate.html#

[6] Ibid.

[7] Ibid.

[8] Ibid.

[9] http://www.30percentclub.org.uk/

[10] ‘Women on Boards’.