The recent Lord Davies report revealed that women account for a mere 12.5% of board members of UK FTSE 100 boards, gloomily concluding that it would take 70 years for these boards to achieve gender parity at this ‘glacially slow’ rate of change. 1 On the back of these findings, Boardmatch Ireland was keen to see how the Irish not-for-profit sector fared in terms of gender equality. Our findings are a definite boost for the sector.
This gender imbalance in corporate boardrooms is not just an Irish phenomenon
Using a straw poll of 80 organisations, our research uncovered that women’s representation at board level stands at an impressive 52%. With the average board size being eight, we found that on average four were women. These numbers really stand out when compared to the corporate sector where women’s representation on boards stands at a meagre 7.1%. Our poll is of course not fully representational but it does identify a strong trend… the not-for-profit sector seems to be leading the way in the gender equality stakes.
A similar phenomenon is occurring in the UK. Research carried out by Governance Magazine of the charity 100 index found that female representation on boards in the not-for-profit sector was 31%. Again the numbers pop when compared to the UK corporate sector. Whilst jumping 2% since Lord Davies’ findings, women’s representation is still an underwhelming 14.2%. The question is…why is it that women seem to be gravitating towards the not-for-profit sector?
Boardmatch Ireland spoke to Eoin Murray of the National Women’s Council of Ireland in order to shed some light on this issue. He recalled a recent event in which the speaker succinctly summed up what she believes is the difference between a man and a woman’s work ethic. Her observation is worth repeating. ‘Men operate with elbows out, whilst women operate with arms around’.
The two sectors have very different end goals in sight, he continued. ‘One the one hand the corporate sector is all about competition, control of resources and one-up-mans-ship. In the not-for-profit sector, the process is as important as the result.’
Why does all this matter? Research has consistently shown that board diversity has a positive impact on a board’s performance. A board which enjoys a broader range of voices, experiences and backgrounds will be better equipped to tackle issues and problems more holistically. Whilst gender is not the only determinant of board diversity, it is certainly an important component. The corporate sector therefore, with its low levels of female representation at board level is at an immediate disadvantage as there is an increased likelihood of ‘group-think’ taking hold.
Nessa Childers MEP, a vociferous proponent for increased women’s representation at board level in fact we so far as to argue that the crippling financial crisis which drove Ireland into the arms of the IMF could have been mitigated had here been more women on boards.
This gender imbalance in corporate boardrooms is not just an Irish phenomenon but is rather a global issue. Some countries have been seeking solutions to this imbalance and have introduced initiatives and even legislation to tackle the problem. For example, Norway, Spain and Iceland have all set mandatory targets of 40% female representation on corporate boards. In addition, France has passed a bill applying a 40% quota for female directors by 2016.
This may lead one to conclude that Ireland should follow this trend if it is to see an increase in women’s representation on corporate boards.
Kara McGann of IBEC is however undecided on the issue of quotas. For her, the plus side is that mandatory quotas work to bring the issue into the public domain thus generating debate, “how will anything ever change if it is not brought to people’s attention”. Whilst this is a strong selling point, the negative repercussions of mandatory quotas also carry significant weight. Ms. McGann warns that the threat of ‘tokenism’ undermines the value of the initiative. The individual’s expertise is overshadowed by virtue of the fact that they have been recruited to fulfil a quota. “It brings extra baggage on the individual who may be looked down on. They are seen as a token rather than for their talent.”
Speaking in Dublin last month, Lord Davies also voiced his disdain for quotas describing them as an admittance of failure, “if you bring quotas in, then the reality of it is you’ve failed. You’ve failed to self-govern.” 7
The ‘glacially slow’ pace of change in the corporate world means that the threat of imposing quotas is looming larger and larger. Even Lord Davies warned the UK corporate sector that if companies didn’t take action themselves to increase gender diversity, that he would advocate quotas as a last resort. 8
Whilst quotas are becoming an ever-increasing reality for corporate boardrooms, the not-for-profit sector can breathe a sigh of relief as it is already reaping the benefits of gender diverse boards. With ‘old boys networks’ being held responsible for some of the most publicised financial scandals to hit Ireland in recent times, perhaps the corporate sector should pay more attention to its not-for-profit counterpart.