I have never been a fan of mandated targets for the proportion of women on company boards or indeed in any other positions in life such as those proposed by Lord Davies of Abersoch.
My view is that the right person for a role should be chosen on the basis of ability and experience irrespective of sex, race, religion, age or any other characteristic which is frankly irrelevant to their ability to contribute.
Lord Davies and his supporters might like to take a look at a study which was published in Norway in May: “The changing of the boards: the impact on firm valuation of mandated female board representation.”
The study followed the law change in Norway in 2003 which mandated that 40% of board members had to be female compared with 9% at the time the law was passed.
I have attached a copy and if you don’t have time to read it all the Abstract on the first page and the Conclusions on page 32 are sufficient. Here are the key points:
The quota caused:
A significant drop in the stock price at the announcement
A large decline in Tobin’s Q [ a measure of the firm’s market value compared with it’s book cost-the higher Tobin’s Q, the more value the company is adding and vice versa] over the following years
Younger and less experienced boards
Increases in debt or leverage
Deterioration in operating performance, consistent with less capable boards.
I wonder if there will ever come a time when the realisation will dawn that this sort of mandated change is both injurious to business and demeaning to women.