News & Events

Having more women in the boardrooms of Ireland would be fair and of benefit to us all

25 Aug 2017

IoD Opinion by Maura Quinn, Chief Executive 

It comes as no surprise that corporate boards in Ireland are lacking in diversity but what is of real concern is the little action being taken at board level to address this. As EU regulations come into effect this week requiring large listed companies to disclose information relating to board diversity policies, many boards in Ireland remain male-dominated and comprised of directors with similar backgrounds, qualifications and skills.

Private companies, in particular, are now lagging behind the public sector when it comes to board diversity. The ‘who you know’ culture, so prevalent and damaging in the period leading up to the financial crisis, dominates the appointment process with a tendency by boards to appoint directors in their own likeness and from their own contacts. Informal networks and personal connections drive homogeneity, limit the potential for diversity of thought and expose boards to the risky decision-making processes associated with group-think.

The recent controversies regarding executive pay equality at the BBC and RTÉ have brought the gender debate into focus. When it comes to Ireland’s boardrooms, women are losing out to men at a ratio of almost three to one. Unconscious bias, interlocking directorships and lack of access to networks all contribute to preventing women from getting a seat at the board table. The pace of change in achieving gender balance on boards is not good enough with female representation at a far from optimum level.

While business leaders often extol the benefits of a diverse board as being good for business, improving effectiveness and enhancing company performance, we need to see an endorsement of diversity that goes beyond mere recognition of its merits, with boards developing tangible policies to promote diversity and inclusion, with proper targets and measurement against progress.

So many companies are quick to promote their commitment to diversity in the workforce, yet this commitment and leadership is often absent at board level.

In many regulated and State environments, board diversity policies are a governance requirement. However, according to a recent Diversity in the Boardroom report by the Institute of Directors in Ireland (IoD), 70 per cent of the directors surveyed, the largest proportion of whom represented private companies, admitted that they either didn’t know or said that their board has no diversity policy and a further 45 per cent said there is no rotation system in place for board membership.

The report also found an apparent lack of understanding among directors as to who is responsible for board diversity. It is not the chairperson but the board, as a whole, who should take responsibility for delivering on board diversity and take action to address imbalances through the implementation of formal policies which are regularly monitored.

Improving board diversity begins with looking at the profile of people around the boardroom table and reviewing what capabilities, experiences and perspectives are required to provide leadership of the business and challenge to management.

The IoD report found very low levels of female representation on private boards in Ireland with over a quarter of respondents surveyed reporting less than 10 per cent female membership on their board and over two thirds reporting less than 30 per cent female representation.

Gender targets have been successful in the UK in increasing the number of women on boards. Here in Ireland, as a consequence of the new regime for appointments to State boards, progress has clearly been made with the current figure of just under 40 per cent female representation on State boards lending credence to such an approach.

Yet for many, appointment based on merit continues to be the key driver to securing a board position. However, 44 per cent of men believe that there is an insufficient pool of suitably qualified women for board positions and thus in so many instances, women do not even come into consideration as boards either don’t know where to find them or fail to look beyond their own peer group. Women need to take a more active role in this regard and seek to increase their visibility.

Fundamental to improving diversity is a wide criteria for selection which looks beyond the board’s own network of contacts. Two thirds of directors surveyed by the IoD admitted to knowing three or more people on their board before they joined, while men are almost three times more likely than women to be appointed to a board through a direct approach. The value of a balanced board is significant and greater effort is needed to source candidates, through independent appointment practices, who can offer diverse perspectives and bring distinct contributions and challenge to board decision-making.

As well as gender, boards need to constantly consider skills diversity with the IoD report presenting a distinct lack of key skills in areas such as cyber-security and cyber-risk. This is of significant concern in an environment which has seen businesses facing highly sophisticated global cyber-threats. The generally uniform composition of boards means that there is likely to be a lack of the optimal mix of skills, expertise and experience, which is essential to appropriately guide business strategy.

The issue of board diversity is often viewed through the prism of gender alone, however, it is goes far beyond that. Boards should be thinking about diversity in the widest sense including race, ethnicity, education, geography and socio-economic background and striving to create a high-performance environment, which is reflective and representative of the wide-ranging interests of stakeholders.

We have seen the benefits of diversity in Ireland in so many ways in recent times. It has enhanced our society and made all of us more open and questioning.

It is high time that boards recognise these benefits and take action. Boards must show leadership in driving the diversity agenda and putting the policies and practices in place to bring about meaningful change.

Published in the Irish Independent on 25th August 2017.