Andy jalil - With the issue of equality of sexes on the increase, companies all over are under pressure to increase the number of senior female staff on their boards. It comes as no surprise that corporate boards in Ireland — as indeed elsewhere — are lacking in diversity. But what is of real concern is that little action is being taken at board level to address this.
As European Union regulations came into effect last month, requiring large listed companies to disclose information relating to board diversity policies, many boards in Ireland remain male-dominated comprising directors who have similar backgrounds, qualifications and skills.
Private companies, in particular, are now lagging behind the public sector when it comes to board diversity.
The ‘who you know’ culture which was so prevalent and damaging in the period leading up to the financial crisis, dominates the appointment process, with a tendency by boards to appoint directors who are in their own contacts.
Informal networks and personal connections drive homogeneity, limit the potential for diversity of thought and expose boards to the risky decision-making processes associated with group-think.
The recent controversies regarding executive pay equality at the BBC and RTE (Irish station) have brought the gender debate into focus.
When it comes to Ireland’s boardrooms, women are losing out to men at a ratio of almost three to one.
Unconscious bias, interlocking directorships and lack of access to networks all contribute to preventing women from getting a seat at the board table.
The pace of change in achieving gender balance on boards is not good enough, with female representation at a far from optimum level.
While business leaders often extol the benefits of a diverse board as being good for business, improving effectiveness and enhancing company performance, one needs to see an endorsement of diversity that goes beyond mere recognition of its merits, with boards developing policies to promote diversity and inclusion, with proper targets.
So many companies are quick to promote their commitments to diversity in the workforce, yet this commitment and leadership are often absent at board level. In many regulated and State environments, board diversity policies are a governance requirement.
However, according to a recent Diversity in the Boardroom report by the Institute of Directors in Ireland (IoD), 70 per cent of the directors surveyed, the largest proportion of whom represented private companies, said their board had no diversity or admitted that they didn’t know whether it did or not.
A further 45 per cent said there was no rotation system in place for board membership.
The report also found an apparent lack of understanding among directors as to who is responsible for board diversity.
It is not the chairperson but the board as a whole that should take responsibility for delivering on board diversity and take action to address imbalances through the implementation of formal policies which are regularly monitored.
The IoD report found very low levels of female representation on private boards in Ireland, with more than a quarter of respondents surveyed reporting less than 10 per cent female membership on their board and more than two-thirds reporting less than 30 per cent female representation.
Gender targets have been more successful in the UK increasing the number of women on boards.
In Ireland, as a consequence of the new regime for appointments to State boards, progress has clearly been made, with the current figure of just under 40 per cent female representation on State boards lending credence to such an approach.
Yet for many, appointment based on merit continues to be the key driver to securing a board position.
However, 44 per cent of men believe there is an insufficient pool of suitably qualified women for board positions.
Thus in so many instances, women do not even come into consideration, as boards either don’t know where to find them or fail to look beyond their own peer group.
Women need to take a more active role in this regard and seek to increase their visibility.
The value of a balanced board is significant and greater effort is needed to source candidates, through independent appointment practices, who can offer diverse perspectives and bring distinct contributions and challenge to board decision-making.
It is time that boards recognise these benefits and take action.
They must show leadership in driving the diversity agenda and putting the policies and practices in place to bring about meaningful change.
(The author is our foreign correspondent based in the UK. He can be reached at andyjalil@aol.com)
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