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Why we need quotas for women on boards

November 23, 2015
Diversity & Inclusion

When I sat on the board of the Department of Trade and Industry, then then the Department for Trade, Business and Skills, I noticed something that had been missing from the private sector boards I had sat on previously.

The number of women on the board almost outnumbered the men( even before considering the non-executive directors) and this completely changed the dynamics. I noticed that when there is more than one woman on board, not only do women speak out more but their influence increases.

It was a great experience, especially after a long period in the private sector, where it was often a case of “who shouts loudest (usually a man), wins”. Whether more women on boards led to better decision making is difficult to prove, but the chances are it did. It seems obvious to me that choosing senior candidates from a bigger, more diverse pool can only improve the overall quality of the appointed collective.

This is the positive argument for quotas that I will be putting at the Whitehall and Industry Group’s Diversity and Inclusion conference next month. Instead of preventing meritocracy, as some people fear, I believe that quotas help promote it by gradually widening the choice of candidates.

Although there has been some welcome progress recently, it has been achieved to a large extent by appointing part time female non-executive directors. These directors don’t work for the organisation on whose board they sit and often have little influence over its culture. The greatest difference can be made by encouraging diversity in the pipeline of company executives from which promotions to the board are made.

According to the latest analysis by Cranfield School of Management, 91% of executive directors in FTSE 100 companies and 95% in FTSE 250 companies are men – and this is replicated across many sectors of society. While Whitehall has embraced diversity with gusto, much of the rest of the public sector has lagged behind. Some 71% of Parliament is male. In medicine, hardly any heads of hospital trusts are women, and a very small number of women are top consultants or chief executives.

Similarly, in academia which women enter in large numbers, the Times Educational Supplement reported last year that some 81% of vice-chancellors, 78% of professors and 72% of senior managers in UK universities were male.

The private sector has a lot to learn from the way the civil service manages its talent pipeline below board level, which is where the biggest gains can be made. Even here things are by no means perfect. It would be good for example to see a female head of the civil service.

The alternative is a reduction in productivity as skilled people leave the labour force to have children because work and childcare appear incompatible. Some women see no way ahead, and then are either lost to the organisation that has trained them or return to a role, often part time, below their skill level.

Equality across the highest levels of business won’t happen in our lifetime unless organisations are forced to retain and develop their talent, by quotas if necessary. It is only by keeping these women and ensuring they climb up the ladder with proper training that they can then assume the leadership skills needed.

Today, women have to work much harder than men to get to leadership positions. Why should that be the case? As someone once famously said: “I will know that we have reached equality when a mediocre woman is put in charge of a company”. That would be sad. To compete as a nation we need firms and organisations to appoint top talent for top jobs. And this is much more likely to happen if the talent pool of senior people is enlarged to include many more talented women than has been the case so far.

Yet progress has been remarkably slow and the economy suffers as a result. The gender pay gap remains, even in well paid jobs and particularly in the City. There are now still just six women CEOs of FTSE 100 companies. Representation on boards is only a limited indication of progress as long as the numbers of women at executive levels remains so low.

By Vicky Pryce, Chief economic adviser at CEBR and co-author of ‘Why Women need Quotas’

Source: The Guardian

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