The UK government will not support quotas to get more women into the boardroom - as a report says all-male companies will fall behind.
Theresa May has told the European Commission that the UK will not support EU quotas to drive more women into the boardroom, even though a government report said all-male companies would fall behind their rivals.
The report, from the Department of Business, said that considering 70% of consumer purchasing decisions are made by women, companies who fail to represent women fully in their boardrooms will lose touch with their customers:
“Continually recruiting individuals who share the same backgrounds and experiences creates a ‘groupthink’ mentality within the board, which runs the risk of making flawed decisions because there are no fresh or different perspectives.
“Ultimately, of course, such businesses will be unable to stay ahead of the game.””
Regardless of this advice, the home secretary and minister for women and equalities wrote to the commission on Monday, claiming that quotas are “burdensome” and the “voluntary approach is reaping rewards”:
“We abandoned the last government’s approach of simply trying to dictate how people should behave. We are encouraging firms to use women’s talents by helping them see the business benefits. But we must allow them to get on with their job.”
The government’s refusal to support quotas comes only two months after David Cameron said he would not rule out quotas to get women into high-level jobs.
At a summit in Stockholm, the prime minister said:
“The evidence is that there is a positive link between women in leadership and business performance, so if we fail to unlock the potential of women in the labour market, we’re not only failing those individuals, we’re failing our whole economy.
“So I want to get ideas in Stockholm that we can take back to London to explore if they could help us get more women into British boardrooms, boosting profits and contributing to the economic growth we all urgently need.”
• Boris is turning back the clock for women in London 14 Nov 2011
The refusal of support from May comes after the European Union justice commissioner Viviane Reding began a consultation into whether firms should be forced to appoint a percentage of women into senior positions.
Reding told the Guardian:
“It’s no secret that in countries where there are legal quotas [for representation on boards], the figures have grown substantially. In countries without obligatory quotas, progress is slow.“
Norway is at the forefront of equal representation in the boardroom, after a 2003 law was passed requiring 40% of board members to be women. The percentage of women in board positions in Norway is now above target, at 42%. Iceland has also enforced a boardroom quota of 40% to be fulfilled by 2013.
In March, Left Foot Forward reported new data from the OECD showing the UK is severely lagging behind 21 other countries who had a higher representation of women in their boardrooms.
In the introduction to his ‘Women on Boards’ report, Lord Davies also rejected the idea of quotas, even though the report itself highlighted many advantages of having women in the boardroom:
Female directors enhance board independence. Women take their non-executive director roles more seriously, preparing more conscientiously for meetings. Women ask the awkward questions more often, decisions are less likely to be nodded through and so are likely to be better.
Boards are often criticised for having similar board members, with similar backgrounds, education and networks. Such homogeneity among directors is more likely to produce ‘group-think’. Women bring different perspectives and voices to the table, to the debate and to the decisions.
Kate Green, shadow equalities minister, today responded to May’s rejection of support:
“The minister for women Theresa May promised to help more working women and women in business, but warm words are not enough. The reality is that the Tory-led Government’s policies are holding both women and the economy back.”
The Tories are avoiding helping women into the boardroom by using their favourite ‘red tape’ excuse, whereas in reality it appears they just don’t want to enforce regulation upon their good friends, the greedy fat cats.