Modern liberals wax lyrical about equality but turn queasy at the mention of quotas for women on boards. In a perfect world regulation would not be needed, but the softly-softly approach delivers inadequate results, too slowly. Reform will be hastened by sensible rules.
Last year, the EU Justice Commissioner Viviane Reding asked businesses across Europe to increase women’s presence on corporate boards. It was an appeal for volunteers, and just 24 companies signed the pledge. A UK report undertaken by Mervyn Davies, former chief executive of Standard Chartered, the bank, generated a more encouraging response but still, in the first six months, only 33 FTSE 100 companies signed up to aspirational targets. According to the Commission, at the current EU-wide rate of change, it would take 40 years to reach anything like gender balance.
Many business leaders – women and men – hesitate over quotas because they fear that regulation might dilute the principle of elevation on merit. That is understandable. But the legitimate concerns of the current cohort of executive and non-executive directors are outweighed by the needs of future generations. And while women stand to benefit from more speedy reform, companies, their investors, and society at large can also expect to benefit. Management practice will improve if board appointments are drawn from the widest possible pool of talent.
And it may be only by dint of quotas that companies dismantle the obstacles that lie in the way of women. Assumptions that boardrooms are intrinsically male need to be broken. Businesses need to address the issue that career acceleration often takes place when many women are taking time out to have children. Corporates need to help men shoulder more parenting responsibilities. They need to find ways to retain and motivate women up to, and past, the usual retirement age.
Quotas won’t solve all the underlying problems instantly. And the Commission’s proposal for a 50/50 male/female split probably sets the bar too high. A one-third “comply-or-explain” rule, made effective five or six years hence, might be preferable. Indeed, quotas may be a necessary evil, only required to force the pace of change. But they are a useful means to a highly desirable end.