Josef Ackermann is something of a rarity in big business these days. Speculating last month on the possibility of a woman one day joining his board, the Deutsche Bank chief executive remarked that she might make it ‘more colourful and prettier’. Despite howls of outrage from the sisterhood — or the Schwesternschaft, as they are somewhat scarily called in Germany — what was interesting about the banker’s casual sexism was how odd it sounded rather than how ordinary. Most CEOs these days would rather boast about how their factories pumped millions of tonnes of CO2 into the atmosphere than make any remark that could be construed as disparaging to women.
What until recently seemed the last bastion of male power, the boardroom, has in the last few years started to fall to feminism. Across Europe, laws and quotas are demanding that female directors are appointed as often as male ones. The French have just passed a law that will set minimum quotas for listed companies: the 2,500 largest businesses will be forced to have 20 per cent women on their boards by 2012, and 40 per cent by 2016. The Spanish already have a quota law, and so do the Norwegians. The Germans — still reeling from Ackermann’s Don Draper moment — are considering one. And now it looks as if we might join them.
This week, Lord Davies delivered his report to the government on increasing women’s role in the boardroom. Although he will stop short of mandatory quotas, he is likely to set a target of 20 per cent female directors for FTSE 350 companies by 2013 and 25 per cent by 2015. If it isn’t met, don’t be surprised if we follow much of the rest of Europe in imposing a legal requirement for companies to have a set number of women on their board.
The idea that we need quotas and government programmes to get more women on to company boards is accepted without much question. It shouldn’t be. In reality, women are doing fine anyway, they are already making huge strides in business, and to describe quotas for women as a distraction from the real challenges facing the British economy would be to give a whole new meaning to the word understatement.
True, women are not well represented at board level. Only one in eight FTSE 100 directors are female, which is of course is many fewer than their fair share. But it is a mistake to focus obsessively on a few top jobs. In truth, very few of us, whether we are men or women, are ever likely to be asked to join the board of Vodafone or Tesco. What really counts is how women are doing in the broader labour market, which is where 99.9 per cent of them will make their careers.
As it happens, they are doing great. Women are better educated than men. This year, for example, 331,773 women applied to go to university, compared with 251,728 men, even though the numbers of both sexes are roughly equal. The jobs that are being created are increasingly more suited to women than men. And, perhaps most significantly, they are increasingly better paid. The latest Office for National Statistics figures show that the pay gap between men and women in full-time employment is now down to 10 per cent, the lowest since records began. Within that total, there are some interesting wrinkles. In professional jobs, the pay gap has now almost disappeared. Among younger professional workers, it is a mere 1.2 per cent, which is just about statistically insignificant, and even among older staff it is only 4.2 per cent and closing fast. Among 22- to 29-year-old workers across the whole economy, female staff now earn on average more than their male counterparts. It’s reasonable to speculate, then, that soon the average woman will earn more than the average man.
A post-industrial economy, with its emphasis on education, social skills and flexibility, suits women more than bring-home-the-bacon blokes. The real challenge facing society is what to do with a lot of fairly useless, poorly educated and low-skilled men rather than how to make sure a few clever women make the final step from marketing chief to director.
Much is made of statistics showing how few women directors there are. But it’s also important to look at how much progress they are making. According to the Paris-based European Professional Women’s Network, the proportion of females on the boards of top European companies rose to 12 per cent last year from 8 per cent. That’s a big advance. Indeed, at that rate, the Network predicts we will hit parity in 16 years. In other words, we’re not getting there.
Quotas, however, won’t help. Norway introduced its system in 2003 and created what are now disparagingly referred to as ‘golden skirts’. What happens is this: once the law is passed, and the target set, a small group of very clever and articulate women emerge who keep getting appointed to all the same boards. Headhunters keep calling them. They make a lot of money for turning up at a few board meetings. The diversity consultants make a packet, too. It’s all very nice for the few people within that charmed circle. But it is very hard to see what good it does for anyone else.
It certainly isn’t going to help the British economy. No one would suggest that women can’t run companies as well as men. Where they’ve been appointed, many have done brilliantly. But does anybody believe that putting a couple of female non-executives on the board is going to win that export order to China? When Amy Dittmar, an associate professor of finance at the University of Michigan, studied the Norwegian experiment, she found that corporate performance declined after the law was passed. She attributed that dip, correctly, to the sudden influx of relatively inexperienced directors, rather than to any innate differences in the abilities of either gender.
The Made in Dagenham days of women being systematically discriminated against and underpaid belong to the past. Women in work are actually thriving. The upper-middle-class professional sisters — the kind of people who might get appointed to the board of Tesco, that is — are doing best of all. We don’t need more laws and quotas to help them do even better.