By Arlene McCarthy - 24th January 2013
Setting objectives with sanctions and penalties for companies is one way to increase female representation, writes Arlene McCarthy.
Commissioner Viviane Reding's revised proposals to get more women on company boards are welcome. Self regulation has not worked. Companies are not making the necessary changes fast enough. At the current rate of change it would take more than 40 years before women are anywhere near equal in terms of representation on boards.
These proposals are not about putting more red tape onto businesses they are about the need to use all the talent and skills we have available to us. Studies show us that those companies that have a more equal balance of genders on their boards perform better. Evidence collated by business consulting firms including McKinsey and Co Catalyst, a non-profit research group, demonstrates that companies with gender-diverse management teams experience higher growth in share prices, better than average operating profits, and outperform their rivals in terms of sales, return on investment capital and return on equity.
Research shows that women asked more questions and made fewer "reckless" decisions because we know that in companies where more females are in management and on boards there is less risk-taking and chasing bonuses. This is good for business, good for the financial sector and good for the health of the economy which is still suffering from bailing out the banks. Setting objectives with sanctions and penalties if companies fail to meet the 40 per cent target is one way to help increase the number of women on boards. But equally we also need training, support networks and mentoring schemes to help women get board ready.
Arlene McCarthy is a vice-chair of parliament’s economic and monetary affairs committee