I was delighted to see Shadow Business Secretary Chuka Umunna make the case for diversity quotas this week. Chuka spoke out against the “continued existence of a glass ceiling for women and ethnic minorities,” and said that if elected Labour would consider “more prescriptive measures.”
For too long the default position in the UK has been to oppose quotas. This is justified on the flawed grounds that quotas would “damage competitiveness”, with fanciful figures about the “business cost” thrown around. The implication – that getting women into the boardroom too quickly would be a liability to companies – is as unfounded as it’s offensive. But it’s an idea that seems to have stuck. As a result the debate is often framed as a case of ‘Competitiveness Vs Fairness’ – with only the most hand-wringing lefties advocating the latter.
At last this seems to be changing. On top of former Equality and Human Rights Commission chairman Trevor Phillips, who this week said Britain was moving too slowly, Christine Lagarde, head of the IMF, admitted last month that quotas for women may be necessary as a catalyst for change. And with Lloyds Bank implementing a 40 per cent target for women in senior management – on the grounds that diversity and prosperity go together – there’s a growing consensus that in future companies’ top brass will need to be robustly pluralist.
The body of supporting evidence is beyond question. Boardroom equality for women, for example, improves decision-making, risk reduction and the striking of deals – and, indeed, has been shown to boost share price. Quite simply, companies do best when their boards reflect their customer base. There is, therefore, a huge business imperative to promote women and other minorities. Firms that do reap the rewards.
So, if we accept the core premise that diversity at the top is not only fair but is also likely to improve economic performance – as most businesses and politicians claim to – then why not start making changes sooner rather than later? Why not be more open to quotas? I appreciate that, so to speak, there is more than one way to skin a cat. But in my view most cultural shifts do not happen in splendid isolation.
Other countries recognise this better than we do. The European Parliament recently voted in favour of a 40 per cent target for women on boards by 2020, and last year quotas were adopted in Germany. They have already accelerated the pace of change in Holland, France and Italy, and would help UK businesses bring about a virtuous circle more quickly. Even Japanese premier Shinzu Abe – an economic liberal governing a country with a very patriarchal tradition – acknowledged at the start of the year the need to take affirmative action. He’s set the target of 30 per cent by 2020.
By falling back on the false ideological assumption that all interference in the market is bad, those who oppose quotas actually weaken the competitiveness of the UK economy. Most people now accept the economic benefits of making our boards more representative, and most evidence suggests countries with more diverse business cultures will in the long term be more successful. Why drag our heels and let the rest of Europe get there first?