Gender diversity in board rooms

Posted 24/10/2012

In February 2011 Lord Davies observed that at the current rate of change it would take over 70 years to achieve gender balanced boardrooms in the UK. A decade earlier, the Higgs review had made calls for greater diversity among board directors, but movement in this direction has been minimal.

In light of the slow pace of change, a real prospect of change being enforced is looming. These measures are most likely to be imposed initially on the larger UK companies, with listed companies being most likely in the first instance. However, it is clear that the long term ambition is to see the results filter through at all levels.  

In May of this year, a public consultation process was launched to redress the continuing gender imbalance on corporate boards in Europe. At the time of its launch, the Vice-President of the European Commission observed that self regulation has “not brought about satisfactory results”.

There are a whole range of options the Commission could consider to achieve the gender balance sought. Recommendations such as 25% female representation for FTSE 100 companies by 2015 are unlikely to be achieved without proactive intervention. Included in the options being considered would be:a) gender quotas (these have already been introduced in Belgium, France, Italy, Spain and the Netherlands); or

b) the introduction of age limits to stimulate turnover of board members and to allow the introduction of female directors.

Whatever the outcome of the Commission’s review, it is likely that there will be some uncomfortable times ahead. Neither of the above options is without difficulty in regard to sex discrimination or age discrimination. Furthermore, whilst immediate proposals are not likely to impact on private companies, there must be some concern that in due course, legislative changes may be imposed on them too.