August 16, 2013
The comment by UKIP treasurer Stuart Wheeler that women are not competitive enough to merit a place in the boardroom grabbed all of the headlines from an important debate on the introduction of gender quotas on City boards. The news broke on the same day that employment body the CIPD issued a warning that businesses will continue to lose talented female workers if they don’t offer them a better work-life balance. With research showing that around half of female managers choose not to return to work following maternity leave, how far should employers be going to retain female talent and encourage workplace diversity, and does gender equality really require a legislative stick?
According to employment law specialists at law firm Pinsent Masons, the Financial Conduct Authority and Prudential Regulation Authority, the two bodies responsible for regulating UK financial services have published proposals which legal experts say would – for the first time – legally require UK businesses to set targets for the number of women on boards. Little-noticed provisions contained in the Capital Requirements Directive IV (CRD IV) introduce a regulatory requirement for large banks, building societies and investment firms with nominations committees to set targets for the number of women on boards.
As Linda Jones, an Employment Partner at Pinsent Masons, explained: “This is the first time that a regulatory requirement to set gender targets for senior management teams has been imposed on UK businesses.”
She added: “While the requirement only applies to financial institutions at the moment, it may be a taste of things to come for other large businesses.”
Mandatory quotas have unsurprisingly been viewed with some suspicion by employers, pressure groups and government, with many voicing concerns that such a process could undermine women’s standing amongst male colleagues.
However, a wider problem for employers, suggests the CIPD is that many talented women are leaving the corporate world to start their own businesses, driven by the urge to work more flexible hours, currently not provided by so many workplaces. This is borne out by recent research by recruitment firm Robert Half which reports that only just over half of female managers return to work after maternity leave and the majority (83%) of female employees move into part-time and/or flexible working roles following maternity leave.
Although almost three-quarters (71%) of HR directors say that they already have arrangements in place to provide flexible working, and a further 13 per cent are planning to put them in place, pressure is growing on businesses to do more to ensure women can reach boardroom level.
According to Jones, while there are no immediate proposals to broaden the gender quota legislation into other areas, this seems to be a “very clear direction of travel.”
She advised: “The reality is that many sophisticated financial services companies will have in place a clear diversity agenda which promotes gender equality.”
“However, the clear message from Government and from the new Governor of the Bank of England is that change should be encouraged, more needs to be done and UK boardrooms have much to gain from greater representation of women at the top table, particularly given that a large proportion of their customer base are of course female.”