Dated: 30 November 2010

In response to the Department of Business’ consultation Women On Boards: Call For Evidence, which closes today, the Institute of Directors (IoD) argues that the key criteria for appointment onto a board should always be the merit of the individual, and their likely contribution to the achievement of the organisation’s objectives.

Key points in the IoD response:

• The IoD is keen to see higher female participation on the boards of major UK companies. However, we are against gender quotas. They would be demeaning for many aspiring and existing female directors and, far from increasing the legitimacy of boards, would actually undermine the credibility of female directors. Female directors would be tainted with the suspicion that they had been appointed in order to fulfil regulatory requirements, not on the basis of merit or ability.
• The IoD is also against the setting of a voluntary quota for female board participation at national level by the Government – or as a provision within the UK Corporate Governance Code. It would suggest that companies were practising poor governance if they did not achieve the target, which would be a false assumption.
• Instead of searching for ‘quick fix’ solutions, such as quotas, it is essential that the Government focuses on the main cause of the problem, which is the low female presence amongst the ranks of CEOs and senior executives. Low female presence on the board as a whole is a symptom of this deeper issue.
• To tackle this problem, we need to promote more informal mentoring, nurturing and networking of female talent – both within companies and through external industry and official bodies – to better support female executives. Female role models from the business community are helpful in stimulating career aspirations for women at early stages of their careers.
• A more professional framework for directors should be advocated by the Government. Directors tend to be appointed on the basis of an informal assessment of their experience and personal abilities. This works against those women (and men) that lack senior management experience. The wider acceptance of a professional framework for directors, such as the Chartered Director qualification, would make it easier for nomination committees (and headhunting firms) to justify the proposal of appropriately qualified female candidates for board level positions.

Commenting on the consultation, Miles Templeman, Director-General of the IoD, said:

“There are no short cuts to greater gender diversity in the boardroom. As in other areas of corporate governance, the Government should focus on long-term solutions rather than measures – such as board quotas or targets – that merely mask the symptoms of the problem.

“Efforts to improve female participation in boardrooms should be aimed at the source of the problem – a low female presence in executive management – and should not constrain the abilities of boards and shareholders to make director appointments on the basis of merit and the needs of their specific organisation.”

To see the IoD’s full response to the consultation, please go to the contact point below.