Proposals for an EU wide quota for women on boards of companies have sparked widespread debate over the past weeks. Critics of the proposal, both male and female, describe the idea of mandatory quotas as demeaning, discriminatory and a blatant attack on companies' right to self-determination. After weeks of speculation, the European Commission finally released EU legislation aimed at improving gender balance on company boards in Europe. Whist this version seems slightly more watered down with no specific mention of mandatory quotas, it still obliges Ireland to ensure that listed companies have 40% female board members by 2020.
Critics of quotas, both male and female, describe them as demeaning and discriminatory whilst supporters argue that quotas are an effective and quick way to ensure equal numbers of men and women on boards and that the existing voluntary mechanisms are either too slow or not working at all. One thing both sides agree upon however is that women are spectacularly underrepresented in high level positions across companies in Europe.
Women are barely visible amongst the top level of companies in Europe. Despite women accounting for 60% of university graduates and workforce across Europe, only 13% of company boards are made up by women. 86.5% of board members are men and 97% of the chairpersons are men. In Ireland, women account for only 8.7% of the members of boards of the largest publicly listed companies, this is well below the EU average of 13.7%. The rate of improvement is painfully slow with statistics showing an increase of a mere 2% since 2003 and 2012. At this rate of change, it would take around 150 years to achieve boardroom equality of at least 40%.
These are the facts and it is based on them that EU Member States have decided to act. Gender imbalance on corporate boards isn't just a feminist issue; it's a business issue too. Barriers to women entering high level positions are a waste of highly qualified and skilled human resources needed for financial and economic efficiency. Gender quotas are not just based on ideology - there are numerous studies carried out by companies like Ernst and Young, McKinsey, Deutsche Bank and others which show that companies perform better with women on their boards.
Since 2011, the issue of the underrepresentation of women on boards of business across Europe has been on the European Commission's agenda. European Commissioner Viviane Reding has concentrated her efforts on achieving equality on boards noting that progress has been painfully slow and that patience is wearing thin. In an attempt to speed up progress, she set up a pledge system to allow companies to take a voluntary approach to increasing women's presence on the board. With this pledge initiative she invited companies to sign up and commit themselves to raise female participation on their boards to 30% by 2015 and 40% by 2020.
The results? Even the most sceptic commentators would be surprised by the lack of attention this voluntary approach received. A grand total of 24 companies EU wide signed up to the pledge, the rest preferring to bury their heads in the sand hoping that the threats of further action would fizzle out. Unfortunately for them this was one issue that was not to be pushed to the back of the EU agenda. The message was clear; self-regulation alone does not work.
Gender quotas are not free passes for women to coast into top executive jobs replacing and discriminating against qualified male candidates. Any proposed legislation on quotas should be based on a merit led approach to gender diversity. Female candidates are appointed by qualification and merit. Should there be no qualified candidate then there will be a "flexibility clause" ensuring the best, available candidate is selected.
The fact is that these qualified female candidates exist but are not being given the opportunity to rise to the top. In March this year, leading European Business Schools published a list of more than 3500 women with top level studies and long management experience ready to sit in the governing bodies of companies. The fact that any females appointed through legislation would be based on qualification and merit counters any arguments made that such quotas are demeaning to women who would be treated as a token candidate. These are not sympathy appointments; they are based on merit giving women the same opportunities as men.
At the heart of the debate surrounding women on the boards is the choice between legislating for gender quotas and using a voluntary approach led by companies themselves. Undeniably, voluntary approaches including training, mentoring and networking programmes have led to improvements. However, the major drawback is the length of time that these measures take to introduce real improvements. Are we prepared to wait another 40 years for equal representation especially given the economic climate we are in at the moment? Waiting and relying on the spontaneity of companies is no longer a sufficient option. This leads us to the option of introducing quotas as a supplementary approach to voluntary measures to achieving a balanced board.
Just as quotas have been introduced in political representation across Europe, so too should temporary, mandatory quotas for females on boards. Emphasis needs to be put on any quotas being temporary. It should be a short term solution aimed at changing attitudes and breaking up elite circles engrained in company culture. Quotas are not about introducing positive discrimination or giving women an easier time then men. It is about levelling the playing field so that equal opportunity is given to both men and women.
- Ciara Burbridge Parliamentary Advisor, European Parliament
We welcome submissions to the blog, subject to editorial review, please contact us if you're interested. The opinions expressed here do not necessarily reflect the opinion of the IFN.