Why quotas are the wrong answer

 
Allister Heath
QUOTAS are wrong. In a free, liberal society, people should never be given jobs just because they happen to be part of a particular group. Applicants should be judged solely on their merits – for their ability to perform and their motivation – and not on whether they tick an arbitrary box. There should be no discrimination against or in favour of any group and no favouritism.

Those who want strict rules on the proportion of women on quoted company boards are rightly seeking to improve women’s chances and to help them realise their dreams – but their methods will fail. Quotas are tantamount to placing a sticking plaster on an infected wound, and assuming that all is now well.

Quotas devalue the achievements of those who climb to the top without any artificial assistance, punish those who are discriminated against, inevitably promote inferior candidates (and hurt firms) and create resentment. They replace one flawed network by another: instead of the old school tie, whereby a small group of male cronies serve on vast numbers of boards, an even smaller number of women would end up doing the same, in an even more extreme manner. The figures would look better, but there would be no real transfer of power.

Other solutions are needed. For a start, there is a desperate need to better understand the real reasons why there aren’t more women in top jobs and what can be done to sweep away barriers to a truly meritocratic Britain. Clearly, the old-fashioned, in-your-face, despicably sexist discrimination of yore is in dramatic retreat – but that has not been enough. Intriguingly, there has been an explosion of foreign-born male CEOs – the UK boardroom, at least at the top, is no longer a closed shop dominated by a self-perpetuating elite. But this hasn’t translated into a shift of the gender balance: the share of female FTSE 100 directors seems stuck at 12.5 per cent and just 7.8 per cent for the FTSE 250, as Cranfield University’s annual FTSE Board Report points out. In 2009, of the 14 new women hired as FTSE 100 directors for the first time, only one was British. Of the five female FTSE 100 CEOs in 2011, just two are British, three American (and if Santander UK floats, the sixth would be Spanish). UK born-women are falling behind even their foreign-born counterparts, let alone men.

It is not just boardrooms that are male-dominated – this is a much more general issue. Take the Cabinet: out of 23 members, four are women (including a minister without portfolio); another six (male) ministers also attend meetings. So 17.4 per cent of members are women, falling to 13.8 per cent of ministers in attendance. All the powerful positions are held by men, with only minor departments (and non-departments) in the hands of women. The media is no different: out of eleven national daily paid-for papers, ten national Sundays, three free daily commuter papers and the three top-circulating current affairs/political weekly magazines, just two (7.4 per cent) are edited by women.

There is hope. Eighty-two FTSE 100 companies have women on their executive committees. Many of these will eventually graduate to main board directorships. There is also a growing pipeline – 2,551 women on the corporate boards and executive committees of all FTSE listed companies, not counting the women on FTSE 100 corporate boards. Change is coming. I wish I knew how to speed it up – but quotas are clearly not the way forward.

allister.heath@cityam.com
Follow me on Twitter: @allisterheath