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Boardroom reform

  

© Thinkstock - Boardroom reform
© Thinkstock
The time has come for us to get into gear: As the Financial Reporting Council (FRC) published its changes to the boardroom code -  the self-binding set of rules for good corporate governance - the battle for boardroom seats begins...

The new code which sets out standards for companies whose shares are listed on the stock market, makes it explicit for the first time that companies should offer more seats to women, and that gender equality, and diversity generally, should be taken into account in hiring decisions.

“Half of all consumers are female but only 12 per cent of FTSE 100 directors are, so I’m pleased to see the FRC recognizing the need to get more women into the boardroom.", Equalities Minister Lynne Featherstone commented.  

"A more equal workplace is a more successful workplace and the stronger provision on gender diversity in the new Code is an important step towards building a fair and equal society by tackling discrimination at work.”

Critics say that the new rules have yet to show if the will have any effect: The new diversity element is a "principle" rather than a requirement, so firms will not formally have to explain their failings under the code’s "Comply or Explain” policy. Thus, dangers are, nobody will ever feel obliged to take more women on board (in the real sense of the word) if not pressed to.

But do companies really need to be convinced? 

There are already a number of studies showing a link between gender distribution in a company's management and its profitability. Companies with the highest number of women on their top positions delivered 35.1% higher return on equity, and 34% higher total return to shareholders than companies with lowest number of women in their top management.  




 
  

Shila Meyer Behjat
06/23/2010
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