The benefits to British industry of having more women directors
One question people may be asking on Budget day is whether the British economy would perform better if there were more women on company boards. The prime minister recently suggested that this is the case and spoke admiringly of the Scandinavian system of having quotas for the number of women on company boards.
Kim Stephenson, Chartered Psychologist and financial adviser, says the evidence that businesses with a greater proportion of women on the board are more successful is compelling. He suggests that this is because it increases the ‘cognitive diversity’ of the board – that is, women bring with them different ways to thinking and different approaches to solving problems.
However, he is sceptical that moves to impose compulsory quotas for women directors will increase cognitive diversity alone:
“They will fail to do that because the system remains the same and therefore the majority of women who are ‘quota’d in’ will leave of their own accord or lose interest and not maintain the highest levels of performance.”
Instead, Stephenson suggests that greater social support for women managers and changes to comapany’s selection procedures for top executives are needed:
“If we change the system (as with the selection of top bankers) we would change the proportion of women who apply for board roles and ultimately the proportion on boards, on an ongoing basis, on merit.
“That would almost certainly produce better business results, and as an added plus, we’d have a more equal society in abstract terms.
But if we want to achieve either better business or more equality, we need to start with the business imperative, not the political idea that looking like you are fair is somehow better than doing your best for the country’s economy.”
Kim Stephenson blogs at Mindful Money.