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News : Irish Last Updated: May 24, 2011 - 9:03 AM

Irish male board directors oppose gender quotas for women; 8% of senior positions in Irish Plcs held by women
By Michael Hennigan, Founder and Editor of Finfacts
May 23, 2011 - 5:04 AM

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Recent independent research conducted for the Irish Institute of Directors in Ireland (IoD) among its members, shows that Irish male board directors overwhelmingly oppose gender quotas for women. Meanwhile, only 8% of senior positions in Irish listed companies (Plcs) are held by women.

The survey did not query the attitude of the males who are beneficiaries of cronyism which has been rampant in both Irish private and state board appointments.

Currently, company law does not prohibit cross-directorships, which are common in Ireland. The general position is that a person may not be a director of more than 25 companies subject to certain specific exceptions.

David Begg, the director general of the Irish Congress of Trade Unions, could spend 15 years as a director of a central bank that was guilty of monumental failures, but see no reason to account for his role.

Siobhán Dowling reported in Der Spiegel last year that when Norway introduced tough new laws at the beginning of 2004 aimed at increasing the number of women on company boards, the naysayers said it would lead to disaster. Companies would be forced to appoint less-qualified people as board members just because of their gender, and there would be widespread resentment among male colleagues and business owners.

A study on the 40% quota system found that it has been successful and has gained broad acceptance. What is more, the calibre of women on company boards is just as high if not higher than their male counterparts. But Dowling says this has only been achieved because, after a period of voluntary compliance that yielded few results, the government introduced tough sanctions for companies that failed to implement the quota.

So what does the attitudes of Irish male directors reveal?

In conservative Ireland, some no doubt would lean towards the traditional view of the role of women; why would we emulate a well-run egalitarian country like Norway? Others who have been beneficiaries of the crony system, like all vested interests, would be guided by self interest.

Matthew Elderfield, the Irish financial regulator, has proposed radical changes to the appointment process and role of bank directors.

It is welcome and overdue.

Lord Boothby, a former Tory MP, said in the early 1960's: "If you have five directorships it is total heaven, like having a permanent hot bath. No effort of any kind is called for. You go to a meeting once a month in a car supplied by the company. You look both grave and sage and, on two occasions, say ‘I agree’; you say ‘I don’t think so’ once and, if all goes well, you get £5,500 a year.”

The survey of directors found that two-thirds (66%) of directors surveyed are not in favour of the introduction of a formal quota system to increase the number of women on boards in Ireland. However, 6 in 10 (60%) female directors are in favour of a formal gender quota system, with 1 in 3 (36%) of them favouring it as a temporary requirement and 1 in 4 (24%) women favouring it as a permanent requirement. Almost 3 in 4 (72%) men are against the introduction of formal gender quotas.

When asked whether the board on which they sit is diverse in terms of skills, 8 in 10 (84%) directors said there is an appropriate mix of skills among board members. This figure is higher in the financial services sector with 9 in 10 (91%) directors in that industry confident that their board is diverse with regard to skills.

Half (50%) of directors surveyed believe that their board is sufficiently diverse in terms of gender, with women more likely to consider the boards on which they sit to be gender diverse (59%). Three in 5 (60%) directors in financial services companies consider their boards to be gender diverse, with this figure slightly higher (63%) among State bodies.

In addition, 7 in 10 (71%) directors surveyed believe their board is diverse in terms of the age profile of its members, yet just 2 in 5 (39%) consider their board to have a sufficient mix of nationalities.

The majority of directors on the boards of multinationals (63%) and Plcs (59%) do not consider their boards to be sufficiently gender diverse. The IoD says with regard to Plcs this is not surprising, given that the recent Grant Thornton Corporate Governance Review, which examined board composition, found that just 8% of senior positions in Irish listed companies are held by women and 43% of companies have no female representation at all.

Grant Thornton’s 2011 Corporate Governance Review of Irish listed companies’ compliance with the Combined Corporate Governance Code comes at a time when numerous new requirements for companies are being introduced. The Irish Stock Exchange has adopted the new UK Corporate Governance Code and added its own supplementary requirements for listed companies, which come into effect in the current financial year. Complying with the Combined Code, or disclosing and explaining non-compliance, is a condition of listing with the Irish Stock Exchange.

The level of Irish companies claiming full compliance remains low at 26% (2010: 36%, 2009: 51%), as companies chose to take a stricter interpretation and disclose more information on what provisions they have not complied with, an option with the current ‘comply or explain’ regime. There were 82 disclosed instances of non-compliance across 26 companies. This compares to the United Kingdom, where 51% of FTSE 350 companies claimed full compliance.

When directors were asked in the IoD survey whether their board uses a skills framework when appointing people to the board, there is an almost even division between the number of companies with (45%) and without (46%) a skills framework which is used in respect of board appointments.

Over half (56%) of directors in the financial services industry claim that their board has a skills framework in place, however 45% of directors in State boards admit that there is no such framework in place for their board.

When asked whether the move towards greater regulation in the area of corporate governance would impact upon their decision to accept non-executive directorships, 2 in 5 (38%) directors surveyed said they would be more reluctant to accept non-executive directorships, however 3 in 5 (62%) claim that increased regulation would not make them any more reluctant.

Commenting on the results, Maura Quinn, chief executive of the Institute of Directors in Ireland said: “The IoD believes that the gender issue should only form part of a wider discussion on board diversity and I am glad to see that the majority of directors recognise that the introduction of a formal quota system is not necessarily the right way to achieve that diversity. Yes, we need more female directors, but we should be looking at gender in the broader context of board diversity which encompasses the skills mix, age profile and nationality of board members.

“The nominations committee has a key role to play in developing a skills matrix which should be used by the board to ensure that any directors appointed bring sufficient balance and diversity to the board. A mix of skills, expertise, nationalities and gender in the boardroom, brings a range of perspectives to the decision-making process and avoids the group-think mentality which has been common in many boards in recent years.”

Research was carried out online by Behaviour & Attitudes with a sample of 303/221 IoD Ireland members. Fieldwork was completed between 23rd March – 1st April 2011.

Base Numbers: Gender Quotas (221 respondents, 19% female), Board Diversity (303 respondents, 18% female), Financial Services Sector (57 respondents), Multinationals (64 respondents), Plcs (27 respondents), Skills Framework (303 respondents), State bodies (40 respondents), Corporate governance regulation (303 respondents).

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© Copyright 2011 by Finfacts.com

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