That sound you hear is the glass ceiling starting to crack

Currently, 85 per cent of non-executive board members and 91 per cent of executives are men

Danuta Gray’s retirement last week from the board of Aer Lingus has probably knocked Ireland’s average down a notch. Photograph: David Sleator

Danuta Gray’s retirement last week from the board of Aer Lingus has probably knocked Ireland’s average down a notch. Photograph: David Sleator

Wed, Nov 20, 2013, 01:00

That cracking noise you hear is the glass ceiling blocking women from top positions in Europe’s biggest companies beginning to break.

Negotiations on forming a new government in Germany are in full swing between Angela Merkel’s Christian Democratic Union and the Social Democrats.

One of the key items they are reported to have agreed on is a binding 30 per cent quota for women on boards of listed companies from 2016.

It’s hard to imagine such an issue featuring in any talks on a programme for government in Ireland between potential coalition partners. Maybe this has something to do with the fact that there so few women in the Dáil.

Today, the European Parliament will vote on legislation from the European Commission aimed at ensuring that women would comprise 40 per cent of non-executive directors at listed companies, with the exception of SMEs, by 2020.

Currently, 85 per cent of non-executive board members and 91 per cent of executives are men.

It’s an amazing statistic when you consider that women make up 60 per cent of university graduates in Europe. The commission reckons it would take 40 years for the quota level to be reached at the current rate of progress, hence its intervention.


Quotas
The long lead time to the deadline will be helpful to Irish companies who are some way behind the European average when it comes to female representation on boards – 10.7 per cent versus the EU average of 16.6 per cent.

Finland and Latvia (where no quota regulations exist) lead the way with an impressive 29 per cent figure based on a survey conducted between October 2012 and April.

Encouragingly, Ireland was one of 20 member states were the representation of women increased. Still, an average of roughly one in nine is pretty dismal.

Danuta Gray’s retirement last week from the board of Aer Lingus has probably knocked our average down a notch. She and Thomas Moran stepped down and were replaced by three men – John Hartnett, Nigel Northridge and Nicolas Villen.

On the plus side, the sisters could rejoice at Siobhán Talbot taking over as managing director of food group Glanbia on November 12th, having been a board member since 2009.

Ironically, the Irish Stock Exchange, which provides the platform for listed companies to trade their shares, is led by a woman, Deirdre Somers.

She is against quotas, telling me this week that they were a “blunt instrument” used by politicians to simply get a monkey off their backs.

Somers also wonders why we should stop at women. Why not have ethnic quotas? Or quotas requiring certain sectoral or non-sectoral experience?


Consensus
Somers argues that companies should explain their strategy for board diversity each year and account to shareholders as to whether they have complied with this. In her view, such transparency would, over time, lead to significant changes in the make up of Irish boards.

It might also deal with the view that many board appointments in Ireland are as much about the old boys network as a person’s experience, skills or knowledge.

Somers also questions why this is being limited to listed companies. If implemented, the EU’s directive would apply to about 5,000 listed companies. In Ireland, the number will be about 40, depending on how you define the universe.

Some reform.

It will be interesting to see how the vote today plays out. As with many issues, there is no consensus among member states. Just 11 have already legislated for this matter and many at a lower level than the proposed 40 per cent.

In Britain, it is recommended that women comprise 25 per cent of all board members at FTSE 100 companies by 2015. Forcing a 40 per cent quota on the UK might just give them another reason to feel that they don’t need to be part of the EU.

Maybe we shouldn’t beat ourselves up. The commission’s analysis shows that in Japan, just 1 per cent of board members were women. The figure was 5 per cent in Russia, 10 per cent in Canada, and 16 per cent in the US (bang in line with the European average).

The commission’s argues that implementing the quota in Europe will lead to more diversity on boards, better decision making and performance, stronger ethics, and a better understanding of the economic forces at play, given that women are estimated to control 70 per cent of consumer decisions.

On that basis, what’s everyone waiting for?

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