Analysis: Female board quotas shunned by finance professionals

by Kevin Reed

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10 Oct 2013

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NEARLY A FIFTH (19%) of FTSE 100 board roles are held by females. While the percentage is creeping up towards the ‘one-in-four' target set by Lord Davies, in recent weeks even the most progressive businesses have admitted that bringing through more female senior staff is still problematic.

With the EU looking push financial services firms towards setting female board representation targets, is quota-setting the best way to jump-start a recruitment revolution?

In the latest Financial Director/Accountancy Age online Debate, TUC general secretary Frances O'Grady made the proposal: 'Mandatory targets are essential to place more women into senior roles'.

Opposing O'Grady was KPMG partner Melanie Richards. A partner in corporate finance, debt advisory services, and a UK board member, Richards is also a founder member of The 30% Club Steering Committee.

O'Grady said the corporate world be "a far better place" if their boards looked like the people they represent. She cited Norway as an example of increased representation for women on boards: which required the implementation of quotas to make it happen.

"I don't believe for a minute that all of the middle aged, white men who currently make up the majority of this country's boards were appointed because they were better than all other women in the field."

Use all the tools at hand

She also called for other tools to be utilised, including mentoring schemes and the promotion of best practice examples.

"The idea of a meritocracy rests on a level playing field - quotas are simply a means of levelling that playing field so women are given the same chances as men."

Richards argued that while a quota seemed appealing "as a quick fix", there was no evidence to suggest that it create "meaningful and lasting" changed to corporate culture.

While Richards acknowledges the shift in the right direction towards Lord Davies' target, the test is seeing whether that momentum can be maintained.

Also citing Norway, Richards instead points out that while the quota for non-executives had seen more -non-executives appointed to meet the target, there has been negligible sign of progress in executive appointments.

The second day of the debate saw a guest post from Fiona Hotston Moore. The Reeves tax & business advisory partner is co-founder of Accelerated Board Attainment, an initiative that arose out of the Davies Report to support the development of aspiring board members.

She acknowledged the issues at hand, and the points raised by the two main protagonists in the debate.

'Unconscious bias'

However, Hotston Moore said that neither party had broached the "conscious and unconscious" bias that saw male board members - who may well have their role without the same competencies as potential female peers - look to maintain the status quo.

"Temporary quotas offer a middle way for those discomforted by the idea of state intervention in the workings of business and also to those impatient at the slow rate of progress through cajoling and evolution," said Hotston Moore.

"We need to be confident that our own corporate careers and those of our daughters will peak through ability, not be compromised by chromosomal mix. The key question is: whether without intervention, cultural changes in business will take place."

At the rebuttal stage of the week-long debate, O'Grady accepted that Norway's quota strategy had mainly seen non-exec roles for women, as opposed to executive directorships, but it was a "step in the right direction".

Richards acknowledged the ‘bias' issue flagged up by Hotston Moore, but legislation won't impact upon that.

"If we are to address the lack of progression, carefully targeted sponsorship programmes can offer a better opportunity for sustainable change," said Richards.

At the closing statements' stage of the Debate, O'Grady agreed with Richard that mentoring programmes "aren't the panacea", and nor are quotas. But all the various methods and tools at hand should be used in conjunction.

"We need both carrots and sticks," said O'Grady. "Quotas need not be a permanent feature of corporate boards. Rather quotas should be a temporary measure to jumpstart that cultural change, in conjunction with a whole host of ‘softer' measures."

Richards pointed out that she shared many of the views of both O'Grady and Hotston Moore, but was "prepared to allow more time" for the cultural shift to embed, "and believe this is a price worth paying for lasting and sustainable change".

Legislation looms

With Richards dominating the online voting over the five days of the debate, Financial Director and Accountancy Age editor Kevin Reed said that while the audience was opposed to setting a quota, current initiatives aimed at driving gender diversity at senior level are struggling to make an impact.

"There are differences between the gender debate and that of ethnicity and background, but they share a similar barrier: that those at the top tend to recruit in their own image.

"There is a compelling argument that, while a quota is negative and clumsy for many reasons, it might act as the proverbial sledgehammer.

"However, unless businesses get their act together and take more drastic, interventionist, policies, they may well find statute does it for them."

FINAL VOTING:

In favour of Frances O'Grady's proposal - 24%

In favour of Melanie Richards' opposition - 76%

Click here to view the Debate

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