This week an article written by U.K. Business Secretary Vince Cable in the London Evening Standard caught my eye. Entitled “City passivity and prejudice is still sidelining women”, the article is curiously interesting as it starts to grapple with some of the real issues regarding female representation on corporate boards rather than being completely propagandist. It won’t change the world, but it might help some people to think a little differently.
In the article the point is made that voluntary female quota measures and public disgracing tactics have had the desired result of moving the U.K. needle with female representation on boards. Indeed, the number of non-compliant FTSE 100 firms has fallen from 21 in 2011 to just eight in 2012. It appears that the firms that are currently struggling to find the right caliber of women to join their boards (or management teams) are all “hard hat” industrial ones — specialty chemicals, engineering consultancy, mining, etc. — not sectors that tend to attract a lot of women generally speaking.
The article also cites recent research by Catalyst which found that companies with more women on their boards outperformed rivals with a 42 percent higher return on sales, 66 percent higher return on capital, and 53 percent higher return on equity. I am sure that there is plenty of research on this subject that shows different results.
So what should these companies do? Hire any female non–executive director because they will quite possibly have to? Or can some sense and sensibility prevail on this issue? If the industry cannot attract the talented ladies, then the industry needs time to grow the talent or find that (hidden) pool of talent that will add value to the company over the longer term. Also, further steps should be taken to actively encourage women into nontraditional female professional roles if they do have the necessary transferable skills.
Our own members believe quite firmly that any board recruiting decision has to be skill-set driven — the best person for the job. To test the strength of that belief, the following question was asked of members on the CFA Institute website:
What is your opinion on creating gender diversity on corporate boards
(a balanced representation of women and men)?
|Companies should be required to have a certain level of balanced representation of men and women on their corporate boards.
|Companies should strive to achieve gender diversity on their corporate boards but it should not be required.
|Board representation should be based on experience/merit/competence; gender should not be a determining factor.
So now I am wondering how this situation will play itself out — will mandatory quotas be introduced in the U.K. (and across the EU) as Vince Cable threatens to do if non-compliance persists? In which case, can someone pass me a hard hat please and I’ll put myself forward for some of these roles?