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Cameron: More women on boards will ‘boost the economy’

  • 22 February 2012

Fine rhetoric, but he seems to be saying that Scandinavia is ahead of the UK on the basis that they have more women on Boards.

If he wishes to be seen as no longer sexist, because he's been accused of being condescending and dismissive of women in the past, that's a motive.  But it is a political motive and not based on business or evidence.

If he's saying that the Scandinavian economies are doing better than the UK, and a potential reason for that is the greater number of women on boards, that could be a good, evidence based, business reason.

The evidence for businesses with a greater proportion of women on the board doing better is compelling, in my view.  But as far as I know the evidence comes from businesses that have women who have reached the board on merit, not by quota.

Without a quota system, as the motivation system in most companies provides rewards attractive to a majority of men and only a minority of women then women on the board are going to be the rare ones who want those "male" rewards as much as men.  Because of prejudice, they have to get to the top with the handicap of being a woman and therefore have to be perhaps 20% better than the men, compared on an equal basis.  So those companies have "better" board members, because all the women are exceptionally good, and probably the companies have greater performance as a result.

If it is a rare company that actually has flexible benefits, so the top jobs can appeal equally to men and women, then they will attract a bigger pool of women to apply for board roles. That in turn means that, since women's intelligence is equal to men's (they tend to think in different ways, not to different levels of ability) we'd get more women on boards in a way that would produce more cognitive diversity and hence more insight into business and societal conditions, more policy options and (from the few studies that exist) better business results.

But basing the decisions on "better results" doesn't seem to be the point. The PM seems to think the Scandinavian countries are ahead not because they produce better results (which I'm not sure they do), but because they are "fairer".

Fairness, like equality, is an abstract concept – the definition tends to depend on where you stand, and it isn't really objectively measurable. Improved performance is practical, and you can measure it.

Putting more women onto boards probably would help (because it would probably increase cognitive diversity), but if he wants to impose a quota system, it won't help because it won't maintain cognitive diversity.

It will fail to do that because the system remains the same and therefore the majority of women who are "quota'd in" will soon go, because the "toys for the boys" mentality will bore them, they want grown-up incentives. Having no reward or incentive that appeals to them greatly, they will either leave of their own accord, or lose interest and not maintain the highest levels of performance.

There's also the problem that the women themselves don't want quotas, which is the outcome of every survey or report I've seen for the last 25 years, including a recent one by Aviva reported on the BBC.

It's also true that if you want to have flexible rewards, you have to have flexible systems.

Either the company does that, which is what I think should happen – everybody benefits, the company get more performance from a more cognitively diverse board, women don't get shifted out because their priorities or motivations aren't identical to those of the CEO, and the men know that they can't resort to the "old boys' club" mentality and are kept up to the mark – if they stay on the Board, they owe it to being good, not to playing golf with the Chairman.

The alternative is that we have a more flexible social system. So if Mr. Cameron is going to force quotas through, and ignore the wishes of the women themselves, he's going to have to rethink the whole benefit system.

Those of Scandinavian countries are totally different (more benefits, higher tax, more flexibility) and what works there wouldn't necessarily work here.  If the company doesn't have "family friendly" policies, is the taxpayer going to pick up the bill for crèche facilities, compensate the participants for arranging a job-share and increased remote working etc.?

Unless you change the selection and rewards systems, you have to change the social support network or, even if you appoint women, they won't stay in place.

The sexists (the PM?) will then say that it proves that women can't cope at the top.

Continue reading…

 

More from Mindful Money:

The fairer sex? When it comes to business men and women are created equal

Women on top: Does having more females in the boardroom make a difference?

Is the media backlash over fat-cat pay fair?

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