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EU Mandatory Board Quotas Proposal Scrapped In Favour Of Softer Approach

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The EU Commission has dropped plans to introduce mandatory quotas for the number of women on company boards, following months of criticism from member states.

The original proposal would have made it compulsory for all listed large companies to move to a 40% female representation of non-executive board positions where they are equally qualified as male candidates, but the suggestion was met with strong opposition by a number of member states, including the UK.

The new proposal - which is to be set before the EU member states - will oblige companies to favour what they term 'the underrepresented sex' from 2016 onward, until a share of 40% is reached.

Women currently account for fewer than 15% of non-executive board positions in companies with more than 250 staff across Europe.

Ann Francke, chief executive of the Chartered Management Institute, welcomed the move, saying forced quotas would have been counter productive for female workers.

"Women managers do not want to sneak into the boardroom after forcing the door with a legal crow-bar. The door should be thrown open to welcome them, because the evidence shows that more gender-diverse boards perform better," she said.

In a 2007 study carried out by Catalyst, companies with more women on their boards were found to outperform their rivals with a 42% higher return in sales, 66% higher return on invested capital and 53 % higher return on equity.

The World Bank also finds that eliminating discrimination against female workers and managers could significantly increase productivity per worker by 25% to 40%.

Francke was also in favour of recent British government proposals for companies to report on the number of women in senior management roles, claiming transparency and measurement were key to closing the persistent gender pay gap.

women at work

Discriminating against female workers and managers could significantly increase productivity per worker by 40%

When the delay to the vote was announced, Geraldine Gallacher managing director of the Executive Coaching Consultancy, said she could "almost hear the collective sigh of relief in many UK boardrooms", which came from women as well as men.

Blogging for the Huffington Post UK, she said: "Fellow female non-execs worry that their efforts to get where they have on merit would be undermined if less capable women were drafted in, merely to make up the numbers.

"An additional problem is that not enough women aspire to be on boards. This is not a function of their lack of ambition, it's a reflection of how little being on a board appeals to them.

"The fact that the higher echelons of power are unattractive to women is to the detriment of society as a whole. It's not just corporate life that suffers from a lack of balanced decision making, it's the same in academia, law, health and elsewhere. So maybe we need to re-frame the debate to encompass the broader community rather than restricting it to boards."

Research released in October 2012 by Egon Zehnder showed that while a third of all new board appointments on European boards in 2012 were women, that trend was not matched when it came to executive board levels.

Only one in 20 executive board positions are held by a woman, meaning there has been no progress since 2010. Across all boards, that number increases to one in six.

The top positions are even more out of reach - just seven of 415 chair roles across the companies surveyed were held by a woman, a fact often blamed on the fact that few women have enough board experience to qualify. Of the 74 UK firms questions, just 7.6% of executive roles are currently filled by women.

Equalities minister Maria Miller, told the Huffington Post UK the focus on encouraging women in the workplace should look beyond the board room.

maria miller

Maria Miller believes the issues facing women at work go beyond getting them into the boardroom

"There are still real barriers to women entering and progressing in work. And this is not just about focusing on boardrooms, and encouraging more female faces there. It's just as important to work on how things are in everyday families, and what women are doing to balance their financial needs and career aspirations with family life," she wrote in a blog for Huff Post UK.

"The truth is that women are at the heart of this country's economic growth strategy. And if we're serious about recovery - and we are - we must to do everything possible to maximise their contribution to the workplace."

Poor perceptions of existing women in board positions are also troubling UK businesses - Joanna Montgomery, founder of Little Riot and Women of the Future Awards shortlister, told Huff Post UK that despite two years as boss of her business, she still faces questions such as whether she's going to appoint a new chief executive to run the business for her.

"There aren't many good things that can come out of a conversation after this; the individual in question thinks you're incapable of doing your job and you just resent them for it," she wrote in a blog for Huff Post UK.

"Personally I'm not really interested in acquainting myself with those who doubt me, so it's best to just be grateful you're not that ignorant and move on."
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