Why Moya Green is right, and Vince Cable wrong (for once)
Those pantomime villains of the British mid-market tabloids – the Brussels eurocrats – are at it again.
This time they are trying to get a better gender balance in the boardrooms of publicly listed companies across the continent through the use of mandatory quotas. British business minister Vince Cable MP has joined counterparts in nine other countries to argue for voluntary efforts to be given more time. But Royal Mail chief executive Moya Greene has come out in favour of the mandatory route.
Vince Cable is right about many things – the need for a UK industrial strategy, for ‘long-termism’ in the City, for Plan A Plus to boost skills and competitiveness rather than relying solely on austerity, and much more besides. But on gender balance, it just isn’t working.
The overall percentage of women on FTSE100 boards is only inching up, to about 15% in total. This figure includes non-executives; the number of executive directors, those who actually run the firm, is stuck at 6%. Natural justice says this is wrong, but does it really matter to business and governance?
Of course it was always a little simplistic to say the financial crash would have been avoided if more of the testosterone-fuelled big banks had had some diversity at the top, although the hunting-in-pack mentality sure played a role. Nonetheless the business case for diversity is very clear.
Back in August this year, Credit Suisse looked at more than 2,500 companies and found that those with at least one woman on the board have enjoyed faster growth – 26% more since 2005- than all male led companies. They also have 4% higher return on equity.
Now, I do understand the argument that, if quotas are imposed, any woman then appointed risks the (no doubt unstated) accusation that she got the job for reasons other than merit. Frankly, there are plenty of highly talented women who can prove that wrong, the culture will change and pretty soon the quota can be relaxed.
However, if a mandatory quota is too much of a blunt instrument, how about a rule requiring investors to intervene, so that an all-male board has to be specially approved by a vote at the AGM? How about a special levy on the boardroom bonuses of those men, since they are damaging their companies’ growth prospects by keeping the door firmly closed?
And here’s a link to our own ideas on women in business here at Corporate Citizenship.
Whatever the right way forward, it’s clear that waiting isn’t working.