COMPANIES can no longer skirt the issue of women in the boardroom. Vince Cable recently wrote to FTSE 100 companies with no female representation at board level to ask them to explain what they are doing to make their boardrooms more diverse. At the same time, EU legislation just around the corner is expected to introduce a system of prescriptive quotas requiring large businesses to have two out of five non-executives as females.
A desire to get the best people in the most senior roles is nothing new and the business case for addressing gender imbalance is well understood in the UK. Diverse boardrooms make better decisions and this is better for the business in the long term. While positive action is probably required in order to make anything like the significant change required, will this aim be achieved by the proposed EU legislation? Is there a risk that this could be counterproductive and result in the complete opposite?
In the UK, we are used to a corporate governance framework that allows companies to explain non-compliance with any specific rules. Cable is requiring those companies with no representation of females at board level to explain both their commitment to gender diversity and how they plan to get the top talent into the top roles. But with a rigid set of rules as proposed by the EU, I believe there is a danger that companies recruit females into the senior roles simply to meet a quota and not because they possess the right skills for the job.
For large corporates, statistics can be more easily changed by hiring more female non-executives who are able to hold several positions across various firms. This would neither necessarily result in encouraging junior females to aim for the top positions, nor lead to any change in the pipeline of, or opportunities for, females in earlier stages in their careers. There must be change at this junior to middle level in order for any fundamental and long-lasting changes to occur in the short- to medium-term.
And what of the well-qualified females already in boardroom roles or who are recruited following legislation? Any such legislation would surely lead to a sense of tokenism and thereby detract from any positive impact desired.
If EU legislation were to include a recommended boardroom gender split based on “comply or explain”, this would sit comfortably with the current set of rules and behaviours already expected of the top companies. If this were to include a requirement for companies to demonstrate their commitment to have the most talented people in the top jobs, and for the pool of people they recruit from to have a fair representation from both genders, there would be a more powerful impact on the eventual female representation at board level. Action today will be critical in determining the boardroom of tomorrow.
Anna Draper is a partner at BDO
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