Most people agree that there are not enough women in corporate boardrooms, but there is little consensus on the best way to increase numbers and improve director diversity. Some countries use voluntary targets, while others employ tougher (often controversial) legislative measures such as binding quotas to tackle the problem.
The final report from Lord Mervyn Davies, who has championed gender equality in the boardroom, will show that FTSE 100 companies have met the target of having 25% women on their boards – double the number in 2011 when the target was set. Then, just 135 of 1,076 (12.5%) FTSE 100 directorships were held by women.
Davies, a former trade minister and chairman of Standard Chartered bank, will set a new target of 33% female board members by 2020 and widen the scope to all FTSE 350 firms. But he says the introduction of legally enforced quotas is unwarranted as the progress so far proves that the voluntary approach is working.
In Europe, binding gender quotas are increasingly prevalent. In March 2015, Germany became the latest European country to make quotas mandatory. Starting in 2016, major German companies will need to fill 30 percent of non-executive board seats with women. Germany follows in the footsteps of other European countries such as Norway, Italy, France, and Spain in instituting such a policy.
As corporate governance rises up the agenda, gender inequality in global boardrooms and a lack of diversity in senior decision-making is getting more scrutiny from the public and stakeholders.
Facts show that the glittering prizes are falling to women. General Motors, IBM, PepsiCo, Lockheed Martin and DuPont are among a couple of dozen giant American companies with female bosses. Oxford University is about to follow the footsteps of Harvard and appoint its first female leader; and next year the United States may elect its first woman president. Women still have an enormous way to go: the New York Times points out that more big American firms are run by men called John than by women. But the trend is clear: women now make up more than 50% of university graduates and of new hires by big employers.
Will this growing cadre of female bosses manage any differently from men? Forty years ago feminists would have found the very question demeaning. Pioneers such as Margaret Thatcher argued that women could and would do the same job as men, if given a chance. But today some management scholars argue that women excel in the leadership qualities most valued in modern firms.
McKinsey produced a 2007 and 2008 study, the consulting firm found that five “leadership behaviours” are seen in women more frequently than in men: people-development; setting expectations and rewards; providing role models; giving inspiration; and participative decision-making. It argued that such behaviours are particularly valuable in today’s less-hierarchical companies. By contrast, the two that men were found to adopt more often than women sound rather old-fashioned: control and corrective action; and individualistic decision-making.
Those who say women are better suited to taking charge of today’s companies also lean on two other arguments. The first is that women are better at “androgynous” management—that is, combining supposedly “male” and “female” characteristics into a powerful mixture.
This is particularly valuable in businesses undergoing great upheaval, which need a combination of command-and-control and caring-and-sharing. The second is that women differ from men not so much in their leadership styles as in the values that they bring to the job. They are much more influenced by compassion and fairness than men.
Campaigners are quick to point out that only 8pc of FTSE 100 directors are women. This statistic is the crux of their argument for quotas to lift the number of female board members. But their campaign misses a particularly pertinent point: 92pc of directors are men. In 2015, despite all the lobbying and proposed quotas, it is men rather than women who will decide the future of equality in the boardroom.
So, if men still have the balance of power, why will women win the argument?
Future leaders will realise that a perfect process doesn’t guarantee success. The best companies employ the best people, then give them the freedom to follow their initiative. Once it becomes clear that the only way to create a great company is to employ great people, the smart top men will realise that lots of “the best men for the job” are women.
The idea of hiring only the very best (people who rate nine or 10 out of 10) doesn’t just apply to the boardroom – having great people throughout the organisation, from shop floor to the top tier is a magic formula for success. Putting high-achieving women into the heart of middle management is much more powerful than board quotas. Promoting proven talent will ensure that women occupy more places round their board table.
Another big factor is flexible working. Within the next century I am sure we will be bemused by the concept of a five-day week. With broadband, email, Skype, tablets and another half-century of technological change, most office workers will seldom need to go near the office. They will be able to do their job where, how and whenever they want. A world full of flexible workers will be a big boost for women who want to fit work around their family. After a time, men will also see how they can fit work into their life instead of having to fit their life around work.
The prospect of a flexible working world makes it so much easier to employ the best people and, as a consequence, the best people will realise that work-life balance isn’t just management speak, it can become a reality.
So what is the answer, should we have a more balanced male/female gender board? Will it make any difference whether the board is balanced? Can a mixed board be the driver of better performance and a higher return to shareholders? I feel candidature should be measured on the best person with the credentials and qualifications for the role.