New data from the OECD reveals just how far the UK lags behind other leading nations when it comes to equal gender representation in the boardroom.
New data from the OECD reveals just how far the UK lags behind both the OECD average and countries like Norway, Sweden and Finland when it comes to equal gender representation in the boardroom, as Chart 1 shows.
The data shows women occupied only one in ten board seats in listed companies in OECD countries in 2009 – the most recent year for which comparable data are available – with the figure for the UK 8.1 per cent, below the average, and much less than the leading country for gender equality in the boardoom, Norway, in which 38% of board seats are held by women.
The high figure for Norway is a result of mandatory quotas introduced in 2006 – a policy set to be emulated by the European Union, as Associated Press report today:
The EU’s Justice Commissioner, Viviane Reding, said Monday that at the current rate it would take more than 40 years for women to hold 40 percent of board positions in Europe’s publicly traded companies.
“One year ago, I asked companies to voluntarily increase women’s presence on corporate boards,” Reding said. “However, I regret to see that despite our calls, self-regulation so far has not brought about satisfactory results.”
The European Commission, the EU’s executive arm, said that over the past 12 months, only 24 companies had signed a pledge to ensure that 30 percent of their board positions are held by women by 2015. By 2020, that figure should increase to 40 percent.
At the moment, only one in seven – or less than 14 percent of – board members at Europe’s biggest companies are women, the Commission said. That’s up only slightly from just under 12 percent in 2010 and despite the fact that 60 percent of university graduates are now women.
The percentage of women chairing major European companies even fell slightly over the past two years, to 3.2 percent from 3.4 percent in January 2010.
The Commission says that the low presence of women in decision-making positions in big companies is not only a sign of gender inequality, but also hurts companies’ results.
“Women do not mean cost for companies, women mean a benefit, women mean business,” Reding said, citing studies that firms with equal representation of women on their boards had 56 percent higher operating profit compared with companies with all-male boards.
Women ask more questions, are less likely to take decisions with high short-term risks and, since they take the majority of spending decisions in households, have better feelers for changes in consumer demand, Reding said.
As the Young Fabians have previously noted, gender balance in the boardroom makes business sense and is socially just:
Women only represent 5% of executive directors from the 600 companies quoted on the London Stock Exchange, according to recent research by recruitment firm Egon Zehnder… Female participation at the top of the financial services sector in the UK is too low, both in comparison to other sectors in the UK and in comparison to the rest of Europe.
There are important benefits for business and the economy from having more female talent on corporate boards; research carried out by Egon Zehnder International indicates corporate boards that are more diverse make better decisions.
So, if female talent offered so many advantages to business, why are these companies in the financial services sector missing out on the competitive advantage of having women on the board? A principal problem is that a lot of recruitment is driven by the fact that people “recruit in their own image” and British business and the financial services sector is dominated by men – and men of a particular social ilk at that…
Parental leave is also an important part of the picture. Businesses see maternity leave as a financial risk. The Icelandic model, where parental leave is divided between men and women and the business risk is equal, was seen as an example for the UK.
On aspiration, the City should do more to raise awareness of job opportunities in the city and seeking to influence the careers advice or family advice that is so influential to people’s career decisions. There should also be better case studies of positive examples of women at the top of business.
Looking at the Norwegian experience of legislation requiring corporate boards to meet minimum gender quotas of 40%, the justification for positive discrimination was based on the need for a wider distribution of power, but also on an economic argument, that companies need to use the entire wealth of talent available in society to be competitive and that diversity has a positive impact of the board and the bottom line of company performance.
There has to be a change in the culture at the very top for there to be real substantive change in the long-term over the sector and in society.
Precisely. It is to be hoped that, with direction from Europe, Britain finally climbs up of the gender equality in the boardroom league table.
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• Where are all the women? – Ronit Wolfson, May 24th 2011
• Fawcett Society: We need positive action to break through the glass ceiling – Anna Bird, February 24th 2011
• No place for women in Cam-Clegg’s “new politics” – Claire French, May 16th 2010
• 2010 intake: More exclusive yet more representative – Shamik Das, May 11th 2010
• Tories won’t implement “mistaken” Equalities provisions – Sophia Parker, April 7th 2010