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Board quotas could be dangerous but so could ignoring gender inequality, says expert

Out-Law Analysis | 15 Jul 2011 | 12:50 pm | 2 min. read

OPINION: The European Commission may demand that a third of board positions in banks should be filled by women. The aim is laudable but achieving it through quotas would have a destabilising effect on companies.

Any organisation considering implementing quotas should have a serious think about what it will mean: the implications could be far-reaching and extremely damaging. Adherence to quotas could leave senior employees confused, demotivated and looking for opportunities elsewhere.

The Commission is mulling a plan to impose quotas on banks. It wants to increase the representation of women at the top of banks from the currently estimated 15% at the top banks to a target 30%.

While Justice Commissioner Viviane Reding has said that voluntary commitments of reaching 40% by 2020 are a better way of achieving this, even she concedes that direct EU action might be necessary if it fails.

The idea of board quotas seems like a good one because it sends a powerful signal to the whole organisation. But before you implement them, stop and think: what signal, exactly, are you sending?

That someone's gender is the most important thing about them? That someone's characteristics are more important than their abilities? That your company is not, truly, a meritocracy?

This kind of positive discrimination would backfire and should be avoided by companies if possible. Women want to be appointed to boards because of their abilities and experience, not because of their gender. And companies want the best directors, regardless of any of their characteristics.

There is a gender problem in business culture. Nobody could seriously argue that the fact that boards are mostly made up of men means that the best talent is reaching the top. But the problem needs bigger and better solutions than board quotas.

Nobody would dispute that business culture has a way to go before it can be considered truly equal in the way it treats men and women. Many women still feel disadvantaged if they change their working patterns to look after family members, and there is still a social expectation that it will be the women in a family that will take on these duties.

But if there is inequality, tackle the inequality. If your company does not do enough to support people of either sex with family responsibilities, make sure that changes. Encourage a culture where quality of work, not quantity, is important, and where men as well as women feel supported in meeting their personal obligations.

With that will come the appearance of more women at senior levels in your company. And with that will come an increase in the number of female candidates for board positions.

The alternative option is to appoint women to your board purely to meet a quota. The policy aim here is to avoid 'groupthink'. But does your company really think that 'groupthink' is gender-based? That men's and women's views are mostly determined by their genders?

A good business person will hold their views based on their experience, responsibilities and worldview, not their sex. And even if attitudes are divided on gender lines you have to query how much influence to change that a woman who was a quota appointee would have. Her voice might be heard, but would it be acted on?

And what of the people left behind, the men not appointed to the board in order to make space for those women? They will either stay at your company, a resentful and divisive presence, or they will leave for companies where quotas do not bar their way, or where they are filled and there are positions they will be allowed to fill.

Both options are bad for your company. You will either retain disgruntled talent or lose it altogether.

Companies must address gender inequality. And if they are going to oppose quotas they have to do that properly. It is best for their female and their male workers, best for the health of their business and best for society.

Companies should resist crude quotas, but they can only credibly do this if they make real efforts to fix the inequality that still exists in the business world.

By Linda Jones, an employment law expert at Pinsent Masons, the law firm behind OUT-LAW.COM.