As reported in the news last week, from 2014, large financial institutions such as banks, investors and building societies will be legally required to set a target for the number of women who make up part of their board of directors. On top of this, these institutions must also set out how they plan to attain their targets.
The legal change came about as a result of a European Union Directive as opposed to UK Parliamentary legislation. However, as the regulations are part of a Directive, this means that they are binding on European Member States. Earlier this year, a report by the Cranfield School of Management showed that, among companies listed on the FTSE 100, only 17% of board positions were held by women. It is true that there is still a huge disparity between the number of women joining professional firms as graduates and the number of women at the top level of almost all sectors. The Cranfield report also highlighted that the appointment of women to senior management level has dropped significantly over the last six months alone.
So, in the wake of these new regulations, as a young, female, aspiring professional, should I be pleased? When I first read about the legal changes, I first thought of quotas, to which I am vehemently opposed. Telling large institutions that 30% of their boards must be female is not as helpful to women as it might seem to be. A job should always be given to the best candidate, irrespective of their gender. A quota system does nothing more than undermine woman; it leaves them vulnerable to the criticism that their appointment was only due to fulfilling a quota, rather than because they are talented. Helena Morrissey, founder of the Thirty Per Cent Club, which aims to increase the proportion of women at senior management level, was reported to have said in a BBC News article, “Our belief is that, as more women join boards without the imposition of quotas, the more they can demonstrate the value they can add.”
The new rule is not a quota system, but it does impose a regulatory requirement for companies to address gender inequality at board level. I am extremely glad that the under-representation of women at board level is deemed important enough to be debated in the highest echelons of the European Union. However, I am not sure a target system is the correct way to go about it. The reality is, that this Directive is not quite as ground-breaking as it may seem, given that many large firms across all sectors have already set their own targets for female senior management appointments. Instead of placing a numerical value and trying to quantify the impact of female employees, the focus should be on other areas. I would contend that a European Directive or proposal that aimed to make workplaces family friendly would likely help women much more. It is probable that initiatives such as crèches at the workplace or childcare vouchers and a focus on flexible working hours would have a much greater impact. One national law firm is pioneering a women’s mentoring scheme; female Partners are paired with more junior female solicitors to provide advice and support throughout their career. I feel that strategies like this are the ones that will have the biggest impact on women seeking board level jobs, rather than a mandatory target.
It will be interesting to see over the coming years whether targets are attained and if it really does benefit women.