Tuesday, November 09, 2010

Women, diversity and board quotas

At the weekend The Guardian reported that the Lord Davies is considering gender quotas as part of his review for the Department of Business, Innovation and Skills into the obstacles that prevent more women from reaching senior positions in business.

The suggestion of quotas will raise howls of protest. In the summer the Institute of Directors’ queried the way that the revised UK Corporate Governance Code highlighted gender as an important factor in making appointments to the board. It said: “By including gender in the Code, there is a risk that the Code will increasingly become seen as a tool of social policy rather than good governance.”

While I do not share the IoD’s concerns over the UK Corporate Governance Code, I do fear that quotas may lead to tokenism.

Business should, of course, work harder at finding suitable female board members. As women thin out in the higher reaches of business, maybe corporate boards should look further afield and outside the corporate sector for candidates for non-executives.

Generally changes in the corporate sector flow through to the public and third sectors. These organisations are generally more diverse at board level: for example, one-third of college governors are women compared with less than one-twelfth of FTSE250 board members.

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