Gender imbalance in the boardroom
By Jahad Rahman, partner at Rahman Lowe Solicitors
A proposal, drawn up by the European Commission could require listed companies in Europe to allocate at least 40 per cent of their non-executive director seats to women to avoid sanctions.
According to media reports, the proposal could be introduced as early as 2020 in an attempt to correct the gender imbalance on company boards.
The EU Justice Commissioner, Viviane Reding, is expected to formally announce the final proposals in October. She said: "Women mean business, women do not mean costs. It is good for companies to have more women on board."
Whilst some European Countries have already introduced national quotas, the UK Government has been strongly opposed to mandatory quotas, preferring less coercive measures.
Earlier this year, in response to the commission's consultation on gender inequality the Business Secretary Vince Cable said: "The UK's voluntary, business-led approach, backed up by commitment from Government, is achieving a culture change in a way that burdensome regulations never can, and where women take a board position based on merit rather than making up the numbers."
Despite opposition, the UK would not be able to veto the proposal if the majority of the EU's 27 member states support it, because of the complex voting process.
So is there really an imbalance? Yes, according to recent research carried out by the Professional Boards Forum BoardWatch which tracks the appointments of women to UK boards following the publication of Lord Davies' report in February 2011.
The figures reveal that the number of female non-executive directors in the FTSE 100 companies has increased from 15.6 per cent in 2011 to 21.5 per cent in 2012 and female director appointments are up from 12.5% to 17.3 per cent for the same period.
Whilst there has been a slight increase in the number of women holding key positions, which is good news, there is still an imbalance at board level.
The imposition of quotas might bring about results that look good on paper, but they are unlikely to tackle the underlying cause of gender imbalance.
Real change can only occur if there is a cultural shift towards flexible working in the workplace, a commitment to equality and diversity and measures to educate businesses on the benefits of diversity.
It is widely accepted that corporate boards perform better when they include the best people who come from a diverse range of backgrounds.
However, simply recruiting board members based on gender rather than skills and experience may be counterproductive for businesses and could potentially give rise to claims of sex discrimination by men.
Jahad Rahman is a Partner at Rahman Lowe Solicitors, a niche employment and discrimination law firm based in One Canada Square, Canary Wharf. Go to rllaw.co.uk for further information.