On 29 August – along with Isobel Rimmer of ‘Women on Board’ http://womenonboard.org.uk – I was interviewed by Martha Kearney for her BBC Radio 4 programme The World at One. It’s no longer available to listen to on iPlayer, so my thanks to Lavinia for both saving the file and transcribing it:
Martha: David Cameron wants to see more women on the boards of the UK’s top companies. In fact he wrote to all the FTSE businesses to say so. The European Commission is about to outline proposals for a mandatory minimum 40% quota on the boards of publicly listed companies by 2020. And the head of the International Monetary Fund, Christine Lagarde, even suggested that the 2008 financial crisis might not have been so serious if there had been more women in senior banking positions – ‘Lehman Sisters’.
But do women actually improve the performance of businesses? Mike Buchanan doesn’t think so. He runs the Campaign for Merit in Business, and he’s the author of The Glass Ceiling Delusion. Isobel Rimmer is the founder of Women on Board, which campaigns for greater female representation. I asked Mike Buchanan first, why he thinks more women aren’t the answer.
Mike: I don’t think there are any good business reasons for more women on boards. It’s been alleged that corporate performance – financial results in particular – improve with more women on boards. Bur the only two studies which show a causal relationship between increasing women on boards and financial performance, show that financial performance declines when there are more women on boards.
Martha: It actually goes down?
Mike: It does. I’m referring to a University of Michigan study on the impact of quotas on Norwegian companies, and a paper put out earlier this year by Deutsche Bundesbank.
Martha: So, Isobel Rimmer, what do you make of that evidence? The idea that it’s not just that women aren’t an asset, they can actually work against the interests of the company.
Isobel: I think the two reports that Mike’s referring to are perhaps ignoring the fact that in some of these areas, particularly in Norway, there was an imposed quota. The view from me and the groups I work with is that imposing a quota for women at director level isn’t necessarily the answer. But given that we have in this country 61 million people of which slightly over 50 per cent are women, it’s rather concerning that we don’t have the representation that we should have at board level.
Martha: But do you want that representation for reasons of equality, Isobel Rimmer, or do you also think it will help businesses?
Isobel: I think it has to help businesses. We should look at how well it impacts on business, but financial performance isn’t the only measure. And I think when we look at how women bring a different approach, for the FTSE100 still to have only 16.7% female representation really is a bit of a shocker.
Mike: It’s certainly true that the majority of the senior people working in this field – such as Helena Morrissey and Lord Davies – are against the imposition of quotas, but they don’t oppose the threat of quotas. In fact the government to this day threatens legislated quotas if FTSE100 companies don’t have 25% female representation on their boards by 2015. That threat in itself is driving up the number of women on boards.
Isobel: Why would that be a bad thing?
Mike: Why would that be a bad thing? Because it’s clear these women aren’t getting onto boards through merit, and…
Isobel: How do we know? I think what you’re saying, Mike, is that women should be appointed to boards on merit?
Isobel: What Helena Morrissey and the 30% club, and Women on Board – my organisation – are saying is that’s absolutely what we’re pushing for. But it’s about making the process more transparent so that woman can have the opportunities to get board positions and represent, as we say, at least 50% of the population.
Mike: In 2010, about 10% of new director appointments to FTSE100 company boards were women. This year so far it’s running at 44%. Now does anyone seriously think this increase is attributable to a quadrupling of the number of women with sufficient merit? It’s clearly not.
Martha: There was an argument that was voiced at the height of the financial crisis, that had there been more women on the boards of banks – people talked about ‘Lehman Sisters’ – there might have been a very different outcome because there wouldn’t have been the same degree of groupthink. Women might have been more willing to challenge the orthodoxy.
Mike: Again, it’s just a self-serving theory. There have been plenty of examples of female CEOs who’ve been total disasters for their companies. If there were any truth in the groupthink argument, we’d find that corporate performance would improve with more women on boards, but the only independent evidence of which I’m aware is that corporate performance declines. My campaign, the Campaign for Merit in Business, has publicly challenged dozens of organisations and hundreds of individuals to provide evidence that having more women on boards improves corporate performance, and nothing has been forthcoming.
Martha: Isobel Rimmer, in the end, aren’t businesses there to make money, to create profits for their shareholders, and to create jobs, not to be vehicles of social engineering?
Isobel: Absolutely right, and I don’t think anyone would want to – I think Mike refers to it as a leftie social engineering campaign – absolutely not, that’s not what we’re saying. But what I do think is that we need to see a more transparent process. And I think people who – people talk about Margaret Thatcher – we haven’t had examples of, perhaps, Freda the Shredder as opposed to Fred the Shred. And I think that when you look at some of the decisions made by companies up to 2008, yes, I think some of those were testosterone-charged, highly risk-taking strategies – particularly in the property sector – but with hindsight, had there been more female representation on boards, things might well have gone the other way.