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Why we need more women on corporate boards

The “women on boards” EU directive that was agreed last week will dictate a 40% female quota on corporate boards by 2026 and has been hailed as a landmark ruling for gender equality.

The EU also set a 33% target for women in all senior roles, including non-executive directors and directors, such as chief executive and chief operating officer. The proposal was first mooted 10 years ago, but was blocked by big member states including Britain and Germany.

European Commission president Ursula von der Leyen said: “After 10 years since the European Commission proposed this directive, it is high time we break the glass ceiling.

There are plenty of women qualified for top jobs; they should be able to get them.”

Today, 30.6% of board members in the EU’s largest publicly-listed companies are women, with significant differences among member states from over 45% in France to just over 8% in Cyprus.

Irish publicly-listed companies have an average female representation of 32% at the board level, according to figures published by Balance for Better Business (B4BB), a Government-sponsored business-led review group set up in 2018 to ensure that women play a role at board level and in senior leadership.

Since the group’s establishment four years ago, the share of women at the board level has jumped from 18% to 32%, which is striking. This has been achieved under a voluntary rather than mandatory or legislative regime.

bias

MEPs have insisted that under the directive, merit must remain the key criterion in selection procedures — which should be transparent — as part of the agreement, which seems reasonable as, presumably, it is beneficial to nobody if less-qualified female candidates get preferred simply because they are women.

And in any case, it could inadvertently perpetuate bias because of a belief that people were not selected based on their skills and merit. Under the new measures, in cases where candidates are equally qualified for a post, priority should go to the candidate of the under-represented sex, meaning women.

Not everyone will agree with this positive discrimination. Pushing a particular agenda where candidates are equally qualified could be said to be an inverted form of discrimination, but then plenty of women could argue that they got passed over for plum positions because they weren’t in the ‘boys’ club’ and were the victim of bias (conscious or unconscious) in hiring positions.

last week, Financial Times columnist Simon Kuper wrote that “networks lead to the best jobs, including in government, where leaders like to recruit chums, caste-mates, and relatives”.

The selection, he wrote, is “chiefly for clubbability.” The context for his comments about him was political elites, but could be said to apply within corporate circles.

New measures

Companies could be fined for failing to hire enough women on their boards and could see director appointments canceled for non-compliance with the law. This would be done by the national courts of each of the 27 member states.

Member states will also have to publish information on companies that are reaching targets as a form of best-in-class peer pressure to encourage compliance.

The new measures may help with changing top-down structures in the workplace, as leadership inevitably sets the tone of any organisation.

Searches for female board members who may not fit the typical profile might bring more diverse experience and allow organizations to be more inclusive of different ideas, leading to improved and different company culture. That’s the theory, anyway.

Norway, which was the first country in the world to impose gender quotas on boards, scrapped its initial voluntary compliance regime in favor of a mandatory approach due to insufficient progress, threatening liquidation of non-compliant companies.

They achieved the 40% target within three years, and the percentage of female chairpersons on boards went from almost zero to 10%. However, some Norwegian companies deliberately de-listed to avoid the consequences of non-compliance, and the mandatory quotas did not translate into an increase in female executives.

Ireland leads the way

CSO figures released last year show that in 2021, one in eight chief executive officers in Ireland was female. According to research carried out by global headhunting firm Heidrick & Struggles, Ireland leads the global ranking for women in top jobs, with a higher share of top firms run by women than any other of the 24 countries surveyed, including the UK, US, Canada , Australia, and Singapore.

Such top CEOs include Francesa McDonagh at Bank of Ireland (soon to step down), Siobhan Talbot at Glanbia, Anne O’Leary at Vodafone Ireland (soon to join Meta), Lorna Conn at recruitment company Cpl Group, and Margaret Sweeney at Irish Residential Properties.

Nonetheless, it is generally accepted that progress is too slow in increasing the number of female chairpersons (of the board) and CEOs both in Ireland and globally.

A report from European Women on Boards published earlier this year found that out of 668 companies, 50 had a female CEO, and just 9% of chairpersons were women.

cultural shift

The National Women’s Council of Ireland believes that a legislative quota of 40% “is a blunt instrument”, but a necessary tool if meaningful change is to be enacted.

Quotas, whether mandatory or voluntary, are not a panacea. A more general cultural shift may be needed.

Even if female gender quotas are achieved at board level, there are other obstacles to women progressing up the corporate ladder. Broader pervasive stereotypes and sexism existing in companies can be off-putting to women.

In May, Aviva chief executive Amanda Blanc spoke of her shock at being on the receiving end of misogynistic comments at the insurer’s AGM.

Comments from individual shareholders included that she was “not the man for the job” and that she should be “wearing trousers”.

Blanc has warned that sexism in the finance industry is increasing.

She wrote on the networking site LinkedIn: “The more senior the role I have taken, the more overt the unacceptable behaviour.”

‘Bro culture’ has always existed in capitalism. It can loosely be defined as a work culture dominated by arrogant, overconfident, obnoxious men, and can spill over into the sexual harassment of female co-workers. It has become synonymous with the tech industry, where women are in the minority, but it is by no means exclusive to it.

Any woman who has worked at the corporate coalface, unless she is particularly ‘Pollyannaish’, will have met a ‘bro’. In the interests of brevity, suffice to say that the male politicians who are enthusiastic about the prospect of increased women on corporate boards might like to look closer to home at the lousy rates of female political representation in Irish life and at the laddish, sexist, ‘bro’ culture across political parties and in the Dáil.

Of course, the new directive is aimed at highly-paid elite female executives (a tiny group) and doesn’t begin to tackle the problems that ordinary working women experience daily, including the gender pay gap, lack of flexibility, and the perennial problem of childcare.

Neither does it tackle diversity and inclusion on a broader level.

Some might argue that corporate life in its current incarnation, with its savage hours, is unhealthy for anyone, irrespective of gender. And some women may not want “to lean in” to structures that they perceive as inherently patriarchal.

As Michelle Obama, criticizing the brand of “lean-in” feminism famously espoused by Sheryl Sandberg of Facebook fame (also soon to step down), said: “That shit doesn’t work all the time.”

But women should have a choice, and so the directive is to be welcomed.

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