Are quotas the best way to improve gender diversity in positions of power?
Consensus can be tougher than conflict. We present a complicated issue to two thought leaders and ask them to respond to each other’s views.
Fair gender representation at the top levels of society is increasingly recognised as a good thing, both for equity and the economy. Both sides of the political spectrum have promised to increase the number of women in parliament and a growing number of businesses are championing the case for change. But meanwhile, there are just 192 female MPs compared with 459 men, and nearly three quarters of British FTSE 100 companies have no female executive directors. We ask if mandatory quotas are the best way to reset the gender balance.
Gender quotas will ensure real change
Chief executive of the Fawcett Society, a UK charity campaigning for gender equality and women’s rights
Sometimes it is hard to face facts. We have the ability to refuse to see the truth even when it hits us squarely between the eyes. The representation of women in decision-making positions is one of those issues.
Persuaded by the strength of the business case – that more gender balanced and diverse boards are also higher performing boards – the government’s commitment to progress in this area is genuine. The Davies review set and met a target of 25 per cent of positions on FTSE 350 boards held by women by 2015, setting a new target of 33 per cent by 2020.
But, as a recent Equality and Human Rights Commission report found, progress is not quite what it seems. Some companies have far exceeded the target, but they are carrying the rest: 60 per cent failed to meet the target and less than half increased female representation on their boards.
A recent study on the number of women in board positions in European companies found the biggest gains had been made in countries where gender quotas are in place. In Italy, Belgium and France, representation has grown by 20.4, 16.2 and 16.2 per cent respectively.
However, legislation has not been the only factor in driving change. Norway has a 40 per cent board gender quota in place, but Sweden and Finland, which both have more than 30 per cent of director roles held by women, do not.
The biggest gains have been made in countries where gender quotas are in place
And there lies the rub: quotas are only needed when they are needed. The Fawcett Society argues for a time-limited use of them. The ability of some countries to get there without quotas doesn’t negate the need for them in countries such as Britain, where significant cultural and practice barriers get in the way of change.
When it comes to the public sector there is an even stronger argument for balanced representation, not least for reasons of accountability. How can we allow our public bodies to recruit their top talent from only half the population? To get more women into politics and business, we need positive action and in particular, women-only shortlists, which has been demonstrated to be the most effective way to achieve this.
Commercial sense, not quotas will lead to equality
Advocate of gender diversity in British boardrooms and co-founder and CEO of Astus Group, a UK media barter company
Recent figures on gender diversity in UK boardrooms do make for pretty dismal reading. Maybe they should change my mind about introducing quotas for gender diversity. But I remain passionately committed to the cause of business-led change for three reasons.
Firstly, quotas may well (artificially) promote gender diversity but they do nothing to advance gender equality. This is because they undermine the concept of hiring the best person for the job, which should be the guiding principle of recruitment at every level.
Norway is often held up as an example of how mandatory quotas can work. Yet many roles held by women on Norwegian boards are non-executive positions. Individual women also often sit on multiple boards and are charmingly known as the ‘golden skirts’. Hardly a victory for gender equality, is it?
The second reason is simple: the commercial case for boardroom diversity is a no-brainer. A 2015 report by Credit Suisse showed that even one woman in the boardroom increases profit margins, with companies experiencing an average comparable return on equity of an additional 2.9 per cent compared with all-male boards. And according to a report by Grant Thornton, the cost of having male-only boards for the UK alone is estimated at £51 billion.
The bottom line is a great motivator when it comes to effecting change, and it’s a drum those of us championing boardroom gender diversity need to keep banging.
But perhaps my biggest opposition to mandatory quotas is: where do you stop? As well as being unacceptably male, the UK’s biggest boards aren’t ethnically diverse enough either. Then there’s LGBT representation and ensuring people with disabilities have a presence on the board. And while we’re at it, how about mandatory diversity quotas for other levels of management?
My biggest opposition to mandatory quotas is where do you stop?
Nor do I agree with quotas in the public sector, where we recently heard how those who don’t meet diversity targets risk missing out on a bonus. But, in senior civil service, women make up 38.7 per cent of staff, which suggests there is a lot that the private sector can learn here.
Frances’ response to Sam
I agree with Sam that there are significant cultural and practical barriers we need to break through to achieve gender diversity at the top levels, but I don’t agree that we need an intervention to do this. What we need is an open and honest conversation about what these barriers are and the best way to overcome them. This is why I am such a big fan of organisations like the 30% Club, which brings business leaders together to support gender diversity initiatives.
I also think each of us can do a lot personally to tackle cultural and practical barriers, by mentoring people from a wide range of backgrounds and by making our own personal networks as diverse as possible – the complete opposite of the ‘old boys’ network revealed by the recent Equality and Human Rights Commission inquiry.
Sam’s response to Frances
I can understand Frances’ desire to get the best person for the job. I want that too. But the truth is we don’t have merit-based recruitment in place now. The idea that a system weighted to the advantage of one section of society is one that is based on merit seems nonsensical to me. In practice, talented qualified women are being overlooked in favour of men – who qualify because they are just like those who have gone before them and not because they are necessarily the best person for the job. Unconscious and sometimes conscious bias means boards repeatedly recruit in their own image.
Let’s all focus on the outcome we want to achieve and how we get there. A time-limited use of quotas would enable us to leapfrog over the barriers that remain.