The latest quarterly Director Sentiment Monitor research report by IoD Ireland has found that a substantial majority of business leaders are in favour of board targets (71%) rather than board quotas (14%) or other methods (15%) of ensuring a more diverse and inclusive board.
This research comes after the recent decision by the Council of the European Union regarding boards, which notes that at least 40% of non-executive director positions in listed companies should be held by members of the under-represented sex by 2026. This EU decision will have to be transposed into Irish law, though the research shows there is significant work to be done to up acceptance of quotas given the preference for targets.
The new IoD research report, for Q3 2022, has also found that a majority (69%) of business leaders believe the hybrid working model has had a positive impact on ensuring a more diverse and inclusive work environment. However, the IoD’s Chief Executive Officer, Caroline Spillane CDir, has added a note of caution on the issue, calling for closer monitoring of diversity and inclusion in the workplace in the post-pandemic era.
The new findings also see the importance of diversity on board and company performance and effectiveness, with 85% noting it as being relevant for boards, and 78% for a company’s performance. This new research also addresses the key influences for board recruitment, as well as addressing board tenure and composition policies.
Commenting on the results, Caroline Spillane CDir, Chief Executive, Institute of Directors (IoD) in Ireland, said:
“Business leaders are in favour of targets over quotas when it comes to board diversity and inclusion, which is consistent with previous IoD research. We will be highlighting this research to Government and encouraging the Cabinet to work further with businesses to achieve greater diversity. It is important to note that while targets are important, there are many diverse and important criteria to be considered in selecting board candidates in pursuit of a diverse and inclusive board. For example, the research found that meeting targets is not a high priority when influencing how a director is recruited, with filling a skills need highlighted as the key reason. Nevertheless, all boards will need to be aware of the current Government and EU targets and commitments with regard to gender targets in particular in this area. Much work needs to be done on this. To ensure movement in this area, it is essential that boards address and review their board composition policy and have an organisational diversity policy/statement. This research found that only 59% of members have a board composition policy in place, and only 51% have a diversity policy/statement in place. I would encourage all boards who do not currently have one of these policies, to put one in place. This is a key enabler for ensuring a diverse and inclusive board and organisation.”
Caroline Spillane added:
“While our research has found that nearly 7 in 10 (69%) of business leaders believe the hybrid working model has had a positive impact on ensuring a more diverse and inclusive work environment, it is also worth noting that nearly one third (31%) are either undecided or disagree on this issue. For some groups hybrid working has been a positive development, but it is crucial to monitor for its true impact over time. We do not want a scenario whereby on the surface it seems like it allows for more recruitment of a particular group, however, in truth it means then this group cannot progress in their career as they are not visible in the office due to remote working."
The key findings of the IoD’s Director Sentiment Monitor for Q3 2022 include:
Board Diversity: Targets or Quotas or Other: When asked, ‘What do you think is the best way of ensuring a more diverse and inclusive board?’ the business leaders selected as follows:
- Diversity/inclusive board targets 71%
- Diversity/inclusive board quotas 14%
- Other (please specify) 15%
Hybrid Working and Workplace Diversity: When asked, ‘What do you think about the following statement, ‘A hybrid working model helps ensure a more diverse and inclusive work environment’?’ the business leaders selected as follows:
- Strongly agree 28%
- Moderately agree 41%
- Neither agree nor disagree 22%
- Moderately disagree 6%
- Strongly disagree 3%
A Fully Inclusive and Diverse Workplace? When asked, ‘In respect of your primary organisation, what do you think about the following statement, ‘My organisation ensures a fully inclusive and diverse workplace’?’ the respondents selected as follows:
- Strongly agree 36%
- Moderately agree 47%
- Neither agree nor disagree 13%
- Moderately disagree 3%
- Strongly disagree 1%
Board Diversity and the Organisation: When asked, ‘What do you think about the following statement, ‘The composition of the board reflects the diversity of the wider organisation’? the respondents selected as follows:
- Strongly agree 20%
- Moderately agree 43%
- Neither agree nor disagree 20%
- Moderately disagree 13%
- Strongly disagree 4%