Disrupting ‘the cosy club’: Are gender quotas the solution to achieving diversity in Irish boardrooms?

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The Irish Human Rights and Equality Commission has called on the Government to introduce statutory gender quotas.

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“SIGNIFICANT STATE ACTION is needed to break down barriers to achieving gender equality in Ireland,” according to the Irish Human Rights and Equality Commission (IHREC).

And yet the debate around how best to achieve balance within Irish corporate structures, particularly on company boards, remains a heated one.

In a submission to the Citizen Assembly last year, IHREC recommended that the Government implement a system of statutory gender quotas for company board membership.

The Commission made its recommendation against the backdrop of Central Statistics Office data that revealed that less than one in five board members in Ireland are women.

Although the situation for Irish women in business is improving bit by bit, there is a growing sense of impatience at the slow pace of change.

For Professor Niamh Brennan, the Michael MacCormac Professor of Management at University College Dublin and Founder/Academic Director of the UCD Centre for Corporate Governance, improving diversity generally on boards brings definite benefits from a corporate governance perspective.

Improved diversity means more voices at the table from a variety of backgrounds. It disrupts the groupthink and the “cosy club” atmosphere, she says, which can only be a good thing for decision-making processes.

It can also make the once-cloistered boardroom a “more awkward place”, she explains.

But that’s healthy. It’s no longer the cosy club. It’s no longer the groupthink. It’s not everybody seeing the world in the same way.

“There is strong evidence that decision making is much better,” she says. “I’m absolutely convinced by that evidence… And I’m a terrible Doubting Thomas.”

‘Softly, softly approach’

But are gender quotas the best way to catalyse change? It depends how fast you want to get there.

“I think the evidence does show that the ‘softly, softly’ approach to achieving diversity doesn’t really work,” says Professor Brennan.

“I think experience is that has to be a bit tougher than just leaving it up to people, to make up their own minds.”

If you want to speed the process along, there are a number of options, she says, one of which would be to enshrine quotas in “hard law — making it from a regulatory point of view, an absolute regulatory requirement” for companies.

But in countries like Norway, where strict 40% gender quotas were introduced for the boards of listed companies in 2006, debate still rages about their efficacy.

Does a strict emphasis on achieving gender equality at board level through hard regulation actually improve the situation for women on the ground or does it lead to companies taking the foot off the peddle in other important respects?

The pipeline

For Rachel Hussey, improving the pipeline of women leaders within companies is the key issue. Quotas may not help that along and could even impede progress, she believes.

“For example in Norway, they introduced a 40% quota in 2006 for boards. And as a result, everybody was in a rush to meet this quota,” says Hussey, Chair of the Steering Committee of the’30% Club Ireland’ and Head of Business Development at Arthur Cox.

“But there are fewer women in senior leadership roles in Norway now because they took their eye off making sustainable change.”

A survey of Norwegian companies in 2018 revealed that while quotas improved representation on the boards of public companies, a paltry 15 of the 213 firms surveyed had a woman chief executive.

So critics of the mechanism say that gender quotas are a blunt instrument and they may not improve the situation at senior leadership and management level.

For Hussey and the 30% Club, the solution lies in improving the situation through targets not quotas.

“The 30% Club is a business-led movement whereby chairs and CEOs sign up as members and supporters of the club. They all agree that having 30% of women on boards and in senior management is a good aim,” she explains.

“We don’t agree with quotas. We believe that gender balance should and can be achieved by voluntary means, and we’re a great believer in targets.”

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Targets like those set by the Government’s Balance for Better Business initiative or can also have a harder edge to them, Professor Brennan explains.

It operates on the basis of “having targets, and then calling out those who don’t meet the targets”, she explains, which can be quite effective.

But targets set under the B4BB scheme have been missed, according to its latest annual report, published last year.

While the number of women board members of ISEQ companies has improved since the initiative was launched in 2018, a target for all publicly quoted companies to have at least one woman on their senior leadership team by the end of last year was missed.

Meanwhile, almost two in five publicly-listed Irish companies retained all-male senior leadership teams by the end of 2020.

“The quota approach is a big bang. You have to do it. Whereas the targets are a more subtle approach and, I would say, take longer. So, I suppose, between quotas and targets, the question is, how quickly do you want to get the diversity to the percentage that you want it to be,” Professor Brennan says.

“If you want to get there quickly then quotas are the way to do it.”

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