Employment Law Birmingham News

The Equality and Human Rights Commission has published a report revealing that the appointment of women to FTSE 350-listed non-executive director roles is being held back by selection processes which ultimately favour candidates with similar characteristics to existing male-dominated board members.

The report reveals a recognition by many chairmen and executive search firms (ESFs) that gender diversity should be increased at board level. Search firms have introduced a voluntary code of conduct and had some success at getting more women on long lists. But when it comes to shortlisting and appointing, the candidates who are selected tend to be those who are perceived as “fitting in" with the values, norms and behaviours of existing board members, who are largely men.

Interviews with senior consultants at ten leading ESFs in London, all signatories to the voluntary search code, reveal that search firms are beginning to challenge chairmen and nomination committees when defining briefs. In particular, this includes giving more importance to underlying competencies than “fit” with existing board members.

The research shows how selection of candidates based on “fit” and previous board experience rather than competencies is self-perpetuating as it works against women who have had fewer opportunities to gain previous board level experience. It also limits the ability of chairmen to broaden the range of skills and experience of their boards.

As well as identifying examples of good practice at ESFs, the report concludes that a more transparent, professional and rigorous approach to the selection process would allow chairmen and search agencies to appoint more female candidate and encourage more women to consider applying for roles as non-execs.

The European Commission's latest annual report on gender equality has found that improving equality between women and men is essential to the EU's response to the current economic crisis.

"The economic case for getting more women into the workforce and more women into top jobs in the EU is overwhelming," said Viviane Reding, Vice-President of the European Commission in charge of Justice, Fundamental Rights and Citizenship. "We can only reach our economic and employment goals by making full use of all our human resources – both in the labour market as a whole and at the top. This is an essential part of our economic recovery plans."

In the labour market, the employment rate for women is 62.1%, compared to 75.1% for men, meaning the EU can only reach the overall Europe 2020 target rate of 75% employment with a strong commitment to gender equality.

Under the Europe 2020 strategy, the Commission has highlighted the need to promote a better work-life balance, in particular through adequate childcare, more access to flexible working arrangements, and by making sure tax and benefit systems do not penalise second earners. These can all help to make sure more women enter and remain in the labour market.

The gender pay gap has narrowed slightly across the EU. On average, women earn 16.4% less than men for every hour worked. The gender pay gap is caused by multiple factors such as labour market segregation and differences in educational choices. Slow progress in narrowing the gender gap in company boardrooms led the Commission to launch a public consultation on possible measures at EU level to address the problem, which risks holding back innovation and growth in Europe.

A recent report has revealed the extent to which women are under-represented in senior executive and management positions across Europe.

According to the data published by Mercer, the ratio of senior executives and managers that were female averages 29% in countries across Europe compared to 71% of men. Mercer has also revealed that despite organisations’ efforts to achieve a diverse workforce, the majority (71%) do not have a clearly defined strategy or philosophy for the development of women into leadership roles.
 
Sophie Black, Principal in Mercer’s Executive Remuneration team, said “Women’s representation on company boards is a big issue and there is substantial noise in the EU about board diversity. It’s not just an issue of gender, of course, although discrimination in any form is undesirable. It’s also an issue of talent as it this sort of bias in a company limits the candidate pool and skill set. A more diverse workforce reduces turnover and absenteeism and increase innovation and creativity,”

The EU is committed to addressing gender inequality and the Gender Pay Gap as part of its EU Gender Action Plan. While there is opposition to the imposition of politics into the workplace, Mercer’s data underscores the role that political intervention can play in balancing the inequalities created by market forces. According to the data, former Soviet-bloc countries have the highest levels of female participation and equality in Europe. In fact, the nine countries showing the best representation of women in senior positions are ex-communist states.
 
In Western Europe, the countries with the greatest proportion of women in the executive suite amongst the sample group were Greece and Ireland (33%), followed by Sweden (30%) and Belgium (29%). Spain, UK and France all had 28% female representation.

Quota systems to increase women’s representation in business have been in existence for several years in countries like Spain, Norway, France, Belgium and Italy. In the UK, the government is taking steps to improve women’s representation in the boardroom following Lord Davis report Women on Boards which recommends increasing the proportion of women executives on boards of the FTSE 350 group of companies to 25% by 2012.