Targets, Not Quotas, for UK Businesses - Building Gender Balanced Business

Lord Davies’ long-awaited survey and review of women on UK corporate boards was released January 24th, and, as expected, the review fell short of suggesting the institution of government-enforced quotas in order to bolster the number of women in the nation’s boardrooms. The report instead suggested a business-led approach of annual targets and disclosure initiatives, without going so far as creating a legal mandate. The roughly 40-page report also included numerous statistics and case studies outlining the imperative of advancing women in the workplace, both for the success of business, and the power of equal opportunity. Following are highlights of the review.

• The report began by reporting that women currently make up only 12.5% of the board members in corporations on the FTSE 100. At current rates of change, according to a cited study, it would take over 70 years to achieve gender-equity on these boards.

• Barriers to female success cited in report included the lack of high-level female corporate role models; the lack of a mentoring and support system for women throughout their careers; the devaluation by some businesses of certain female-heavy sectors (such as academia or the arts) as appropriate recruiting grounds for board appointees; and the heavy influence of informal, male-dominated networks in the board-appointment process.

• The review emphasized that gender equity in the boardroom is as important for overall business performance as it is for the ongoing advancement of women. The report cited studies that showed that female representation on boards encourages thoughtful decision-making, enhances the range of the board’s perspective and experience, and solidifies the connection of companies to their (overwhelming female) consumer markets.

• An appendix to the report included two international case studies of two divergent approaches to the “business and gender-equity” problem. The Norway case highlights the rapid increase of women on corporate boards in that country after the institution of quotas, but criticizes the apparent lack of fundamental change made to how women progress through the career pipelines of their own companies. The Australia case, which examines that country’s use of voluntary guidelines, cites the success of their various governmental initiatives, which were issued under threat of quotas if voluntary efforts were not successful.

• A second appendix outlined the results of an online survey taken by over 2,500 people, an overwhelming majority of whom were women. The survey gauged attitudes and beliefs about what limits the advancement of women in the business world. The results found that lack of networks, work/life balance issues, male-centric corporate culture, and lack of female role models were considered major factors by the respondents.

• Authors of the report shied away from the quota system for fear that any mandated female board-appointees would in reality be powerless or “tokenized”; as such, the steering board showed concern that any increased proportion of female involvement in the boardrooms due to quotas would have been in appearance only, without effecting any substantial changes to the culture or direction of the companies in which the women served.

• The board instead set-out a number of incremental guidelines that public companies would be expected to adhere to over the next 2-5 years.

• The review encourages the Chairmen of FTSE 350 companies to establish targets for their boards’ gender diversity, to be announced in September 2011, and to be reviewable in 2013 and 2015. It also set a suggested target for FTSE 100 companies of a 25% representation of women on boards by 2015.

• In addition to the setting of non-binding targets, the review suggested a number of initiatives that act like “sunshine measures,” encouraging the development of public policies and reporting schedules that would hold businesses accountable for their internal progress toward gender-equity

• The transparency initiatives, which would apply to all quoted companies, include: the annual disclosure of proportions of women at successive levels of the organization; the establishment and publication of a corporate gender-diversity policy, along with annual milestone and progress reports; disclosure of the appointment and recruiting processes used by the company in the annual report; and a voluntary “code of conduct” which would govern the board-appointment process in all FTSE 350 companies.

• Finally, the review suggests that the steering board behind the report reconvene every six months—and publish an annual assessment report—in order to monitor the progress of quoted companies toward compliance with the gender-equity suggestions.