Putting a price on gender inequality

Helen Molyneux says companies should be penalised for not having women on their boards.

In the news today we’ve seen calls from the Director of BT in Wales, Ann Beynon, for quotas to be considered to ensure that there are more women on boards and in management positions. Here IWA Chair Helen Molyneux argues against quotas, but says companies should should be penalised for inequality…

I recently floated an idea to the audience at the Business Breakfast club in Cardiff about how we could increase female representation on boards. I have a natural hesitancy about quotas – borne entirely from the fact that having achieved board status myself, I believe that anything which could label women on boards as ‘tokens’ or quota fillers will make us all second class board members. Instead, how about charging an extra 0.01% corporation tax to those PLCs that don’t have women making up 30% of their board members?

The problem, as I see it, is the way in which the debate is framed.  It’s very difficult to prove that having women on boards – either as executives or non-execs – makes any difference to the performance of the companies concerned, but this is often the argument that is advanced.  There have been numerous studies over the years, and the statistics can be made to say pretty much whatever you want.  There are plenty of reports that support the view that more diverse boards perform better – but even when the statistics are supportive, the findings are often caveated in a way which casts doubt on the true contribution of the women involved.  There’s the study that confirmed that companies with more women on the board do better but questioned whether that was simply because those companies are just generally more enlightened, creative etc – a compliment to the ‘good men’ running the business who allowed the women to take part, not to the impact the women had.

Then there’s the research (by Credit Suisse Research Institute) that says companies with women on the board do better during recessions –  well obviously, because women are so good at housekeeping and keeping to a budget – but they’re not creative and risk taking like the men.

I think we should take issue with the assumption that to justify their position on a board, women have to enhance performance. It sets the bar for women’s entry to the board room too high. We have to add demonstrable value, over and above that contributed by the men.  But why should women have to persuade the markets that they will boost the share price before they are considered worthy?  Isn’t it enough that they are as good as – or even just no worse than – the male board members? Companies do well when they have a broad range of skills and expertise available to them.  Good board level talent is hard to come by at the best of times – so why limit your business to half the available talent pool.

So, is a penalty better than a quota?  In my view it would simply shift the burden of proof.  Women wouldn’t have to prove they are better; instead, the businesses would have to persuade their shareholders that having mostly men was so much better for business that it actually covered the cost of the tax penalty.  It puts a price on gender inequality – something which all good business people understand the true value of.

Helen Molyneux is the Chair of the Institute of Welsh Affairs and Chief Executive of NewLaw Solictors. This article was first published in the 53rd issue of the Welsh agenda.

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