A paradigm shift in the Board Room

One of my favourite films is an old black and white movie from 1946; ‘It’s a Wonderful Life’. A great film, however, it was made when there was a required practice of having a ‘token’ black person in the movie to satisfy the requirements of a quota system. This position went to Annie played by Lillian Randolph; the maid to the family. She had an important role and that was to be seen to satisfy the requirements of the quota but not show off her talents.

There is an increasing pressure to introduce quotas to improve the number of women at senior level, particularly Board Room level, by introducing a quota system.

What do we believe that the quota will achieve?
Throughout time, quotas have been used to increase representation of a number of under-represented groups. These quotas have succeeded in improving representation and therefore by introducing a quota system women will have an opportunity to be at the decision making table.

Is that sufficient? What role will they have or be perceived to have? There is a real risk that they are seen not contribute in a value adding or equal way. If this proves to be the outcome it would, in my view, undermine the great work done by the inspirational women who have worked so hard to get appointed to senior roles based upon merit, contribution and commitment; the 12.5 per cent of women already successfully contributing to the Boards of FTSE 100 companies.
Gender equality is absolutely important. The opportunity to create equality is to understand the requirements of a Board in post-recession UK and respond to them. The global economy has been thrown into chaos largely because of Boards failing to discharge their obligations.

As a consequence a number of reviews have been commissioned to understand what has happened, what lessons haven learned and what we can do differently in the future. These reviews, in my opinion, set out a new recipe with the same ingredients. At best the reviews recommend better sameness. For example, the revised version of the UK Corporate Governance Code (2010) was published by the Financial Reporting Council on 28 May 2010. This sets out standards of good practice for listed companies on board composition and development, remuneration, shareholder relations, accountability and audit. The Code does not set out a guarantee of effective board behaviour. This is down to each organisation to embrace the spirit of the Code. Within an outline framework Boards can decide for themselves how they should act.
Across industry we all wear many hats; employee, shareholder, consumer, etc. We have the opportunity to create a shift in the effective governance and operations of businesses.

This is the opportunity for women (and men) to act as change agents to make UK businesses more successful and by raising their voices in a way that contributes to a sustainable economy. We should not accept better sameness but pro-actively look for opportunities to contribute and improve business.

In his recent review of the representation of women Lord Davies recommends that UK listed companies in the FTSE 100 should be aiming for a minimum of 25% female board member representation by 2015. Achievable? Yes. Sustainable? Yes, but only if those women appointed are appointed upon their performance and potential and not as part of a quota system.

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Kim Walker has extensive experience of working with organisations and their leaders to navigate change. Throughout her career Kim has built her expertise by combining forward thinking theory with practical application to develop sustainable solutions. Her work has resulted in tangible bottom line results. She previously held senior roles and has been at the forefront of change in fast paced and dynamic organisations in the financial services, utilities and media industries. In addition she has extensive consulting experience working across all sectors of industry. Kim has an MBA, is a Fellow of the Chartered Institute of Bankers in Scotland and a Member of the Chartered Institute of Personnel and Development. She is also an appointed Lay Member of the Employment Tribunal in Scotland. Kim is MD at The Advance Consultancy (UK) Ltd, (www.advanceconsultancy.co.uk)

3 Comments on A paradigm shift in the Board Room

  1. I agree Kim. A more balanced representation is required but this can only be on quality and attributes and not by way of quotas for quotas sake. Positive discrimination does not lend itself to sustainability unless the qualities and value of the individuals is developed to create genuinely balanced Boards. Creating opportunity and development is a far better option but whether “the spirit of the Code” is enough, time will tell.

  2. Thank you for a thought-provoking article Kim.

    Hmmm. How often do recommendations to counter discrimination actually work? You say that ‘The Code does not set out a guarantee of effective board behaviour. This is down to each organisation to embrace the spirit of the Code. Within an outline framework Boards can decide for themselves how they should act.’ Will they actually do anything without a quota system?

    I’m interested that you use the example of a quota system for blacks in American films. (I wasn’t aware of this quota system operating as early as the film you cite.) What I vividly remember was being on the Women’s Committee of British Equity, back in the late 70s and early 80s, when a member who was also a member of the Afro-Asian Committee argued forcefully for quotas. The reason was the huge turnaround in awareness brought about by the TV quota sysem for black people in the USA. Black Amercian actors were completely convinced about the merit of quotas and it certainly led to a vastly greater number of black actors coming through and gaining their rightful place on tv screens, which also led to a huge change in attitudes. Black people portrayed in all sorts of roles became normal, so also became so in life.

    I’m a bit fed up with recommendations being ingnored. The thought of more women on boards is enormously cheering so I say go for quotas and see what happens. The arguments against are pretty much the same as for the black American actors… and the US now has a black president. Sheer co-incidence??

  3. karen birch // June 9, 2011 at 7:34 pm // Reply

    I was a “no quota” woman but I’ve changed my mind.

    I just don’t really have faith that recommendations and encoragement and persuasion are going to work. There is so much empirical evidence which shows that increased diversity in the boardroom improves company performance and yet companies are still not responding by appointing more women. So if the possibility of improved profitability, for example, is not causing corporations to appoint more women words are unlikely to do so.

    So what’s the worse that can happen? A few women who may not be quite up to the job are promoted to the board solely to fill the quota. I’ve seen lots of men on boards who shouldn’t be there either!

    Let’s see if quotas work … because nothing else has.

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