Andrew Brown, associate in Anderson Strathern’s Employment and Pensions Unit
The EU commissioners have been considering proposals to address the continuing gender imbalance on company boards, by making it mandatory for companies to keep 40 per cent of board positions for women.
However, amid concerns about the EU’s ability to force member states to meet the quota, the debate on the matter has been postponed. “I will not give up” the EU Justice Commissioner Viviane Reding has been reported as saying and she promised that the Commission President “will put this on the Commission agenda again before the end of November”.
Spain, France, Belgium and Italy already have laws setting quotas. The UK legislation (the Equality Act 2010) makes it unlawful for individuals to be treated less favourably simply because of their sex.
While the Act has provision to allow “positive action” by an organisation selecting an individual from an under-represented group, this only applies when they are “as qualified as” the other candidate.
The “as qualified as” proviso poses various risks and, thus far, has not been relied upon by many organisations.
The permissive approach of the Equality Act is, in any event very different from a requirement to positively discriminate. The UK and a number of other member tates are opposed to the proposals for change.
In the UK, around 16 per cent of board members in FTSE 100 companies are female.
The UK government aspires for growth by 2015 to at least 25 per cent female board representation in the biggest companies.
In February 2011 Lord Davies published a Government-commissioned report, “Women on Boards”.
The report focussed not purely on equality issues but on how business performance might be improved if there was an improved gender balance on boards.
He identified a number of advantages from increasing the number of female board members.
It is reported that companies with more gender balance outperform their competitors. This may be on account of a greater ability to fully understand its market (which is unlikely to be exclusively or predominantly male).
In addition, there is a view that a perception of a glass ceiling can encourage the best female talent to seek out better opportunities elsewhere. Nonetheless, the EU proposals which include significant penalties for businesses which fail to achieve the quota, present a number of concerns.
While the number of applications by females might well outstrip the percentage ultimately appointed, often less than 40 per cent of applicants for board positions will be women. The application of a strict quota will inevitably result, on occasion, in a woman less qualified or able than her male competitor getting the job.
Some will argue that at a time of economic uncertainty it is important that the country’s businesses are run by those most able to do so, regardless of their sex.
While the imposition of quotas is likely to encourage an increase in the number of applications from women, there are reasons other than simply a perception of sex discrimination why some women may not feel inclined to apply.
It is also worth considering that the disparity may be partly attributable to the fact that women are simply not being given the opportunity to apply. Lord Davies’ report stated that only around 4 per cent of board positions are filled following formal interview.
Perhaps the first step is to encourage more applications from females. Making advertisement of board positions mandatory would assist. Of course, care would have to be taken in the way that a company can choose to advertise.
An advertisement in a golf club where 80 per cent of members are male would achieve little. The law in the UK allows organisations to take positive action in encouraging applications from under-represented groups.
This could, for example, involve advertising vacancies in publications or websites more likely to be viewed by women.
Perhaps requiring them to take such action might be a better way forward. This should not, of course, be the only advertisement but might ensure that it reaches a broader pool of potential candidates.
Ultimately, after all applications are submitted, a company ought to be allowed to appoint the best person for the job regardless of their sex.
In the event of quotas being imposed, how would female board members be perceived? How would successful women candidates feel about being appointed in a quota environment where there will be whispering about who was appointed on merit and who to meet the quota? Who would want to be “the token female” on a board?
Andrew Brown is an Associate in Anderson Strathern’s Employment and Pensions Unit