Margareta Pagano: Take a leaf out of Birgitte's book on quotas, Mr C
More women on UK boards can only boost profits
Margareta Pagano is a former business editor of the Independent on Sunday who now writes columns and business interviews for a range of publications, including the Independent, Independent on Sunday and London Evening Standard.
Sunday 12 February 2012
I don't know whether David Cameron has been watching the thrilling Danish political drama, Borgen, but if he has, there's one episode about quotas for women on boards which should give him the inspiration to deal with them here.
In it, the fictional PM, Birgitte Nyborg, goes head to head with Denmark's grandest industrialist. He threatens to take his million-kroner business out of the country if her government insists on imposing female quotas on Danish industry.
In that beguiling manner that has won over so many Britons, Nyborg suggests that rather than flee in a huff, why doesn't he take the initiative and find the best women for his board ahead of everybody else? Why not be the social innovator? It's a great line, crafty yet diplomatic, but, of course, it's also brilliant business sense – in economics it's called the first-mover advantage.
And then, Nyborg asks him if he really is going to walk out on his mother nation just because of three women – the number his board would need to find to meet her government's proposal for 40 per cent women on boards. It doesn't take more than a blink for the old dinosaur to get it.
And so should Cameron, who, while in Stockholm last week at the Nordic-Baltic summit, reiterated his threat that British business could be "forced" to appoint a fixed target of women non-executive directors.
Sweden, like its neighbour Denmark, does have a 40-per-cent fixed quota for women on the boards of its biggest listed companies. As do Norway, Iceland and Finland.
Cameron gave the same warning last year, when hosting the Nordic Forum in London, when he clearly enjoyed posing for the group picture with the female blondes – many of them prime ministers – and praised their socially egalitarian cultures. Once again, he said how admirable he found the Scandinavian approach in leading Europe by promoting women to senior positions.
There is compelling evidence that having more women in senior business roles improves performance. Recent reports by Goldman Sachs, McKinsey and Deutsche Bank make the same claims that profitability improves markedly once there is more gender balance on boards.
Cameron went further, claiming that the UK economy is losing out big time, probably to the tune of about £40bn a year – or equal to the defence budget. I'm not sure how he arrives at the number, but it's strong stuff.
So, here's the question. If Cameron likes the Scandinavian model so much, why doesn't he approve of their methodology? For the Nordic countries have only got to where they are because they took the leap and decided to go for compulsion; any other method would take decades.
Norway was the first to jump, a decision taken by a Conservative and male economics minister in 2004. I've spoken to him about the issue and his take was so refreshing; for the Norwegians, he said, it was about getting the best human capital available for society. Equity as well as economics.
In two weeks' time it will be a year since Lord Davies published his report recommending that, by 2015, UK-listed firms should have 25 per cent of their non-executive directorships filled by women. His proposal came with a health warning – he said if companies failed to meet the target, he would push for compulsory quotas.
Since the report, there's been a tiny nudge in numbers – from around 12 per cent up to 14 per cent on FTSE 100 boards, but barely a flicker on the FTSE 250 and 350. At this pace, it will take at least 20 years to reach a quarter, let alone the 40 per cent set by the Scandinavians and the French, who are being equally bold.
Everybody – chairmen, chief executives and headhunters – agrees that it's only when there is a critical mass of women at board level that there will be any significant shift in improving the pipeline for women coming through; the real issue.
If the cost to the economy is as great as Cameron claims, then why isn't he moving more swiftly to fixed targets? Is he scared of the dinosaurs that will threaten to leave, or that he'll be viewed as a born-again feminist?
From what I hear, the reverse is true. Many business leaders admit privately that the only way to move forward in any meaningful way is to make quotas compulsory, but fear saying so in case they are seen as too radical. So, come on Cameron; time to be brave and win over the female vote you need so badly. You won't be forgiven – or believed – if you cry wolf another time.
Diamond won't forgo his £3m bonus, but will try to appease with do-good projects
Bob Diamond is in a tricky position. Barclays did well last year, a tough year for all banks, with profits before tax down 3 per cent to £5.88bn. To reflect this, the total bonus pool has been cut by 25 per cent to £2.2bn, with the average payout for employees down 21 per cent to £15,000, and £64,000 for investment banking staff.
The top executives, including Mr Diamond and other star performers, have taken a cut of 48 per cent to their incentives. Bonuses have also been chopped to traders in fixed income and equities, areas which have performed badly, with the overall bonus pool to BarCap staff down32 per cent.
Mr Diamond is due a bonus of at least £3m, on top of a salary of £1.35m. With long-term shares incentives worth as much as £6.75m which will vest in three years, his total pay for the year will still be around £11.7m, which, by American investment banking standards, is enough for a good lunch.
Yet Mr Diamond, when presenting results on Friday, said it was time for bankers "to win back trust".
If he takes this bonus, it will provoke another public outcry that is not going to do him or the industry any good at all, and certainly not even begin to win back that trust.
So what should he do? By all accounts, Mr Diamond and his team have done a decent job in rough times, although Barclays will miss its return on equity target – set for 13 per cent by the end of 2013 – the main reason why the bonuses are down.
One approach could be for Mr Diamond to give up his bonus as a gesture to appease the mob, as Antonio Horta-Osorio has done at Lloyds – or give it to charity, perhaps. But he won't, he's not that sort of man.
Instead, he might consider winning back the public's trust by showing it that Barclays is doing more to invest back into society by launching more projects such as the new apprenticeship scheme for 1,000 youngsters.
As Mr Diamond said, getting growth back into the private sector is what the bank should be concentrating on.
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