Is it time for mandatory quotas on women in the boardroom?

6 Jul 2018 By Victoria Middleditch

Victoria Middleditch examines what UK employers can learn from other countries about boosting female representation in leadership roles

Companies are under growing pressure to increase the number of women in leadership roles, and a key concern is the representation of women in the boardroom. Some people argue that compulsory quotas for women on boards is the quickest way to achieve gender equality. Others favour a voluntary, business-led approach.

The UK does not have a mandatory quota for women on boards. However, several organisations have made recommendations on the target number of women that should be on boards, as well as in other managerial roles. The Hampton-Alexander Review, a government-appointed independent body, suggested a target of 33 per cent of women on the boards of FTSE 350 companies by 2020. This is only a target, though, and the review did not propose any sanction if a company fails to meet this target.

Mandatory quotas: benefits and drawbacks

In contrast, other countries in Europe have taken a different approach. The first to adopt mandatory quotas was Norway, which introduced a law in 2003 requiring listed companies to reserve 40 per cent of their director positions for women. If an organisation fails to comply, it faces the possibility of dissolution. Following the Norwegian example, other European countries (including Spain, Belgium and Germany) have also introduced mandatory quotas, although generally with less serious sanctions for a failure to meet the target. 

Countries with mandatory quotas have seen a significant increase in the number of women on boards, although some companies have reportedly reduced the number of board members or delisted to avoid the quotas. However, some critics say the quotas have increased the proportion of female board members but not the proportion of women in other managerial roles. 

Some commentators also argue that businesses generally only select women for board positions from a small, closed group of senior individuals, so women outside that group struggle to progress to board level. There is also an argument that by focusing purely on the proportion of women, companies overlook other features of board diversity, such as age, disability, race and sexuality.

The UK position

Even though the UK has no mandatory quota, the percentage of women on boards has increased over the past few years. A report published by the Hampton-Alexander Review in November 2017 found that the percentage of women on FTSE 100 boards rose from 12.5 per cent in 2011 to 27.7 per cent in 2017. However, supporters of a mandatory quota argue that this rate is still too slow, and not in line with other European countries. They suggest that real progress can only be made if compulsory guidelines are adopted.  

For the time being, there does not appear to be much appetite in the government to introduce quotas for women in the boardroom. However, there are significant external pressures. The European Commission announced in November 2017 that it is pushing for mandatory quotas, and The Investment Association, a trade body for investment managers, has recently written to a number of FTSE 350 companies requesting action to accelerate female representation in leadership positions.  

Lasting change is unlikely to be achieved through quotas, whether mandatory or voluntary. Sustainable progress needs a genuine change in culture, where businesses educate their workforce and support policies that facilitate truly equal opportunities for women in the workplace. This could include normalising flexible working, supporting women returning from maternity leave and encouraging more fathers to take shared parental leave. 

It is only by changing attitudes and practices that women will be supported and encouraged to take up more senior positions within a company.

Victoria Middleditch is an associate at Dentons

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