Views on the integrity of global capital markets
19 July 2012

Pass Me a Hard Hat Please? Some Firms Struggle to Answer Call for Gender Diversity

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.
 
 (9%)
Companies should strive to achieve gender diversity on their corporate boards but it should not be required.
 
 (29%) 
Board representation should be based on experience/merit/competence; gender should not be a determining factor.
  (62%) 
 
 No opinion

   (1%)

 
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?

About the Author(s)
Claire Fargeot

Claire Fargeot is a former head of Standards and Financial Market Integrity at CFA Institute for the Europe, Middle East, and Africa (EMEA) region. She was responsible for leading CFA Institute efforts in advocacy, policy development, and regulatory outreach in EMEA.

6 thoughts on “Pass Me a Hard Hat Please? Some Firms Struggle to Answer Call for Gender Diversity”

  1. Rob Ivanoff says:

    Please, do not ever repeat this term – gender diversity. Let people decide who they want to work with, and for. A job is not a right, it is someone elses property. Let people in power decide who they want to hire. Anything else is communism and anti-free markets. Thanks. Please delete this term, gender diversity, from the history of media. It does not make sense on its own, or in context of business. Hope this helps.

  2. Claire Fargeot says:

    Thank you for your comment

  3. sharyanka says:

    I totally agree with Rob Ivanoff , but according to my experience some jobs are better done my women than men ,which includes skills such as persuasiveness which is needed in sales and some better done my men. Its more easy to convince people of opposite sex , sounds a bit unprofessional but this what happens in the real world .

  4. Stan Broen says:

    I am totally fine with women. They are, in fact, my favorite gender. I have always striven to find the most qualified person when trying to hiring, without regard to gender, color, nationality, etc. That attitude has blessed me with male, female, black, Chinese, Taiwanese, and Spanish coworkers. However, I think if someone were to pass a law or otherwise require a quota of women on a Board, I would find the most non-qualified female(s) I could, and put them in a position of total non-importance, thus following the letter of the law.

  5. Paul Dare says:

    There is nothing wrong with women on boards, or men on boards if it comes to that.
    On the subject of this EU consultation on board constitution it seems, thankfully, that our members recognise that the folks at EU headquarters have little interest in board and company performance and instead are bent on pursuing their own, different, interests. These selfish interests have everything to do with attracting votes for themselves and general self-promotion. They have nothing to do with the sort of corporate activity that pleases investment professionals.
    My view is that investment professionals should encourage companies to pick the best boards for the job and encourage them as well to resist publicly the demands of these political shoppers, who must be thinking that they have found an easy target to visit.
    Claire, is there a Europa website link that will enable us to read all the responses to the consultation?

  6. Claire Fargeot says:

    Paul

    Please see the link requested below:

    http://www.ec.europa.eu/justice/newsroom/gender-equality/opinion/120528_en.html

    Best
    Claire

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