Strategy & Operations » Leadership & Management » Davies report avoids female board member quotas – for now

Davies report avoids female board member quotas - for now

Even if quotas were introduced today, it would still take 16 years for parity to be reached

Chief executives and chairmen might be breathing a sigh of relief today, but they cannot relax completely.

The clear message from Lord Davies’s much anticipated review of gender diversity in the boardroom is simple: businesses will not have to meet female representation quotas just yet, but if they fail to address the lack of women in board roles of their own volition, they might have to soon.

The review was initiated to look at how female boardroom representation should forcibly be championed, after reports showed just 12.5 percent of FTSE 100 board directors are women.

There are currently four FTSE 100 group FDs: Cairn Energy’s Jann Brown, 3i’s Julia Wilson, Burberry’s Stacey Cartwright and Friends Provident’s Evelyn Bourke (Friends is not a listed company itself but is part of Resolution, which is a FTSE 100 business. Judith McKenna is among the list of the most prominent CFOs in the UK in her role at Asda, but the company is not listed).

Today’s report falls short of the general trend in Europe to introduce quotas. In 2003 Norway passed legislation requiring 40 percent of boards be female by 2008. The same policy has been set by Iceland for 2013, and Spain and the Netherlands by 2015. Instead, Davies “recommends” that FTSE 350 firms should “aspire” to have 20 percent boardroom positions filled by women by 2013, rising to 25 percent by 2015.

It is also clear that this is likely to be a stay of execution only. Davies suggests revisiting quotas if progress has not been made by the 2015 deadline – something that is incredibly likely as movement towards more balanced boards in the UK has been woefully slow.

Cranfield School of Management finds the current 12.5 percent figure has risen by just 0.5 percent since 2008, and among the FTSE 250 companies female board directors are even fewer, at 7.8 percent. Even if quotas were introduced today, it would still take 16 years for parity to be reached.

This means all the disciplines, including finance, will have to substantially improve their pipeline of female talent, starting from recruitment. And do it soon. Bodies such as the Financial Skills Partnership, aiming to increase professionalism in the finance sector, already admit female representation is low in what is generally perceived as a male-dominated profession.

Changing recruitment strategies is fine, but it takes time to change organisational composition. So as companies chase meeting these “aspirations” before the law comes crashing down on them, the next hot potato is likely to be the thorny issue of positive discrimination.

Historically, female members of forums such as the Daily Mail-run Financial Mail Women’s Forum – a network promoting women in business – have been against any measures that give even the slightest suspicion that women have won a role because of their gender rather than their skills.

But a report by the Institute of Leadership and Management published yesterday shows that frustration over progress means positive discrimination is now backed by 62 percent of women over the age of 45, and by 47 percent of women for filling executive-level roles.

While more women might now be in favour of positive discrimination, equality does not sound equal if it favours one sex or another. Maybe men will face suffering the sort of discrimination women have had to put up with for years. But if this is the case, one might wonder why Davies didn’t support introducing quotas now, if that is what aspirations will ultimately become in practice – and quotas seem likely in five years’ time.

Only one thing it seems is clear. The Davies report will provoke just as many questions going forward as it provided answers. 

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