Some progress on the PLC board gender gap

At present, women occupy 14.2% of boardroom seats at FTSE 100 companies. There’s a clear consensus opinion among influential bodies that this percentage should increase. The CBI agrees, for example, and so does David Cameron. But both also cleave to the opinion that the imposition of mandatory quotas is not the best way to achieve this. Lord Davies’ report into the issue concurred with both opinions. In February, he proposed that FTSE 100 companies should aim for a target of 25% by 2015, that FTSE 350 companies should set their own goals, that all companies should set out how they intend to achieve their targets, and that shareholders should encourage companies in their endeavours.

There’s often good reason to be sceptical that large companies will make much effort to address such issues without at least the threat of legislative coercion. Such scepticism may have been encouraged when it emerged that only 33% of FTSE 100 companies had complied with Davies’ suggested August deadline for the formulation of policies designed to close their boardroom gender gaps.

However, the Davies report collated a significant amount of research suggesting that companies that narrow this gender gap improve their performance in a number of ways: they access a wider talent pool, their responsiveness to markets is better, their corporate governance improves, and most importantly, their stock market and sales performances improve. Accordingly, major investors have started to take notice, and to pressure companies to take seriously the issue of their boards’ gender balance. In a significant development, Legal and General, an enormous investor in major British companies, has started consistently raising the issue in meetings with the companies in which it has large stakes. It seems that the 250 companies have in the main responded positively, and undertaken to address the matter (as you probably should if one of your most important shareholders tells you to).

It remains to be seen whether this approach will actually deliver much change, and how quickly. Norway introduced a mandatory(and some argue 40% quota in 2003, when representation was 7%, and by the 2008 transition deadline 36% of PLC board seats were filled by women. Such rapid progress seems unlikely to be replicated in the UK without legislation.  Nevertheless, it’s somewhat heartening to see that some progress is being made through shareholder pressure, particularly since it’s most unlikely that legislative pressure will be forthcoming.

Here’s a link to a pdf of the Davies report; the section collating the research mentioned is on pp. 7-10.

The European Professional Women’s Network has a useful stock of reports, research, and articles on boardroom gender gaps here.

2 thoughts on “Some progress on the PLC board gender gap

  1. Actually, mixing men and women in prisons would probably make them less violent. Research on bullying suggests that mixed workplaces have less bullying than those that are predominantly male or those that are predominantly female. But I guess this suggestion wasn’t really serious.

    It’s not the case that women want quotas in the boardroom. Rather, everyone should want quotas in the boardroom. Changes at the top lead to changes elsewhere, and the McKinsey reports make it clear that companies with gender balanced management teams perform better.

    In Norway, the laws were controversial at the beginning, but now they’re hardly discussed, except for the question of whether or not to extend them to other domains. Political committees must have 40% of each sex, too. All of this work leads to an improvement for everyone, not just women.

    Quotas are of course controversial. But they shouldn’t be, as I discuss in Equality targets as a leadership tool

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