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Businesses must review talent management and recruitment with a gender lens

The European Commission has announced it is considering requiring at least 40% of non-executive director (NED) board seats in the EU to be held by women.

I’m glad that the Commission is putting this issue on the agenda, but imposing a quota on business isn’t the best way to achieve change. Instead, along with the likes of fund manager, Helena Morrissey and the 30 Percent Club, I support the Lord Davies approach of “comply or explain”.  This allows businesses to make their own decisions about what their aspirational goals should be and how they meet them. 

This doesn’t let business off the hook – companies have to set goals and report against them through the UK Corporate Governance Code.  But it does mean that business leaders must take responsibility for their own commitments, and then deliver on them.

Diversity on boards is a core business issue, and should be treated as such - but it must be led from the top and delivered through organisational change. Instituting a quota might mask one of the symptoms of gender inequality in the workplace, but it won't address the root causes.

From French quotas to the UK's "comply or explain" approach, different countries across the EU have taken different approaches to increasing the number of women on their boards. In the UK, the approach is rooted in corporate governance, currently an area where national bodies take the lead. Different countries and different industrial sectors are at different stages in their journey towards gender equality in the workplace or otherwise. A blanket quota for 40% women in NED positions does not take these variances into account.

We know that there are clear business benefits to diverse boards, including - and certainly not limited to - tackling group-think, providing the role models that allow businesses to make the most of the talent they have available at every level, and improving customer connection. These all lead to a positive impact on the bottom line.

Unilever is an example of a company publicly setting gender diversity goals in senior teams, acknowledging the business gains of reflecting the gender make-up of its customer base and workforce. In addition, a recent report from the Credit Suisse Research Institute, which analysed the performance of nearly 2,400 companies with and without women board members, found that large-capitalisation companies with at least one woman on the board have better share price performance than those with no women on the board. There is a clear correlation between businesses that have developed and recruited senior women and commercial success. To inverse that - businesses that don't develop and recruit senior women are likely to underperform.

To tackle this, businesses must review their talent management and recruitment processes with a gender lens. If they don't, the chorus of those calling for quotas, including the European Commission and others, will only grow louder.

There has already been a significant shift in the numbers of women on FTSE 100 boards since the publication of the Davies report in 2010. From October this year, listed companies will report on their commitments and actions, through the UK Corporate Governance Code. This change must be sustained.

Rachael Saunders (pictured) is head of policy at Opportunity Now, the gender equality campaign from Business in the Community.

Opportunity Now recently published a paper, Changing Gear, which includes ten steps towards a diverse pipeline that all employers can take to influence the pace of women's progression in the workplace: http://www.bitcdiversity.org.uk/changinggear.

Opportunity Now is the workplace gender campaign from Business in the Community. For information about Opportunity Now's work on diversity and inclusion, please see www.bitcdiversity.org.uk.