Female quotas on boards

\”And this is despite the fact that there is plenty of evidence that putting women on boards correlates with better business performance.\”

Therefore quotas are unnecessary. If having women on the board increases profits then profit maximising companies will put women on the board.

That said greedy, manipulative, capitalist pig dog profit maximising companies do not put women on the board would seem to be evidence that having women on the board does not improve performance.

After all, we\’re hardly trying to argue, in The Guardian, that those who run companies are insufficiently greedy, are we?

24 comments on “Female quotas on boards

  1. No, because of agent-principal problems.

    “Putting more women on the board would make companies more profitable for shareholders, but the City is currently a cosy boys’ club of people appointing their mates and expecting to be appointed by their mates further down the line, so that takes priority over improving shareholder returns” is completely possible.

    Whether it’s *the case* is another question, obviously.

  2. The market fails from time to time. Otherwise how would British Gas continue to exist? Economists need to explain the failure – except for British Gas, since there is no rational explanation.

  3. What happens in Sweden is that there are a few “superskirts” (as they call them) who sit on a dozen boards each. Makes the quota numbers.

    It’s sordid, discriminatory and is probably illegal. It’s certainly immoral. But what else do you expect from social engineers?

  4. Centrica’s continued existence isn’t exactly hard to explain:

    1) it inherited everyone’s gas supply contracts;
    2) many people don’t even know that you can buy gas from people other than British Gas, and it’s cheaper;
    3) many people who do know that in theory can’t be bothered with the hassle of actually switching.

    Imperfect information and transactional costs. Both well-covered in mainstream economics.

  5. ….because of agent-principal problems….

    I wouldn’t be surprised if a part of the reason was that, though I am sure there are other important reasons.

  6. The, questionable, fact that a woman on the board increases performance now, is because she has to be bloody good to get there.

    Can these stupid “quota” bastards not see, that the advantage is lost if, just to fill quotas, the boss offers a board position to “tea trolly Mabel”?

  7. Hmm. Good boards keep companies honest, remove despotic and effectual executives, keep an eye on process, etc. it’s like saying referees make the game of football better: true in a way. it’s a rather indirect impact on “business performance.”

    i suspect Noms and Rems Committees are both lazy and timid, and so are headhunters, and so a quota might not be a bad way to force them to think and act outside their comfortable rut.

    I don’t mind requiring quotas on shortlists for vacancies to boards rather than on boards themselves.

  8. Quotas are bad – look at the problems with racial quotas in US higher ed, for instance. And quotas have unintended consequences, such as harming supposed beneficiaries by reducing the value of their achievements.

    Bad idea, avoid.

  9. Checking “evidence that putting women on boards correlated with better business performance” on Google shows a large number of PC types making exactly this claim and no trace of the alleged actual evidence.

    The technical term for making such a claim then is lying & clearly represents the very highest standard of honesty to which these people aspire.

  10. Is it possible (genuinely; I don’t know the answer) that there are few women qualified to sit on boards? That’s not sexist, or at least not meant to be. I’m thinking of Tim’s oft-repeated point about the “motherhood pay gap.” If a women takes time out from scaling the corporate ladder to raise a child, she wouldn’t have the accumulated time in that a man would, and so may be deemed less qualified. Maybe.

  11. Ambrose Murphy – “I don’t mind requiring quotas on shortlists for vacancies to boards rather than on boards themselves.”

    So I assume you sit on all the boards you want or need at the moment and have no desire for more?

    I should not have to point out all private companies are owned by their shareholders. There is no justification for meddling with their property rights. There is certainly no public need to have more women on Boards, no public good to be served. This is just corruption in the form of a clique that has the ear of the State and wants to use it to enrich themselves at the expense of the private sector.

  12. SMFS: why would you assume anything? and if you assumed this, what would it have to do with anything? From the rest of your point should i assume you’re desperate to sit on boards and can’t think of an explanation for why you’re not selected except that there’s a corrupt clique with the ear of the state out to get you?

    As for the rest, yawn to the obvious bit about ownership, and you really ought to show some kind of logical link between your obvious premise and your nutty conclusion. We rightly meddle with property rights all the time. “No public good to be served:” discuss, don’t just assert.

    oh, and some argument why my point of quotas for shortlists would interfere with anyone’s property rights might also help.

  13. Ambrose Murphy – “why would you assume anything?”

    It is such an odd suggestion. Why for short lists and not for boards apart from the fact that it allows those in possession to continue to possess?

    “From the rest of your point should i assume you’re desperate to sit on boards and can’t think of an explanation for why you’re not selected except that there’s a corrupt clique with the ear of the state out to get you?”

    You could. As it happens I too am happy with the number I sit on. And I can think of many good reasons why I am not asked to sit on more.

    “As for the rest, yawn to the obvious bit about ownership”

    Sorry but no. Basic freedoms may be boring and old fashioned but they need to be fought for every single day. It may be obvious but it still needs to be said and defended.

    “and you really ought to show some kind of logical link between your obvious premise and your nutty conclusion. We rightly meddle with property rights all the time. “No public good to be served:” discuss, don’t just assert.”

    Sorry but again no. If someone wants to make a change that restricts the freedom and property rights of other people it is up to them to justify the change. Not for me to defend the status quo or our basic rights.

    If there is a public good here I do not see it and I do not see that anyone has managed to find one. Will it improve corporate governance? If so then the quota needs to be applied to Boards, not to short lists. But even if it did, it is none of anyone else’s business. A private corporation has a right to be governed as badly as the owners want. If you want this change, explain what public good it will serve.

    We meddle with some property rights, but it is an utterly bizarre argument to claim that in itself justifies any half baked meddling the State feels like. We also jail some people. After a legal process. For good reasons. Usually. That does not justify the State jailing anyone it feels like. Even if we “do it all the time”.

    “oh, and some argument why my point of quotas for shortlists would interfere with anyone’s property rights might also help.”

    It is interfering with property rights because it is taking a portion of the control of an asset (the corporation) away from the people who own it and are in a position to vote anyone they like on the Board.

  14. A requirement that short lists have women candidates on them makes people think without requiring them to act. It doesn’t infringe their property rights.

    if you want to distinguish between private and publicly-listed corporations, that’s fine. Might be useful. Also between big listed ones and small listed ones. The bigger, the more likely that there is a public interest and the more likely that cozy old-boy group-think is bad not just for the company but for the economy it sits in.

    is there a public interest in having boards – at least of big, economy-influencing public listed companies – reflect at least the broadest strokes of diversity in the population? Yes I reckon so. The diversity should make them better overseers of companies, better guardians of ethics.

    Enough to justify infringing their property rights? well, i didn’t actually suggest we do so. but i reckon at the least reasonable people can disagree about it.

  15. What happens in Sweden is that there are a few “superskirts” (as they call them) who sit on a dozen boards each. Makes the quota numbers.

    It’s sordid, discriminatory and is probably illegal

    Well we have that here too but the women are full-time company directors, perhaps after leaving behind their executive career. It’s not necessarily a problem. I disagree with quotas but our directors’ institute is attempting to promote the utilisation of female talent voluntarily.

  16. Sorry, can I correct that? The ‘superskirts’ here might have two or three board positions but obviously twelve is preposterous.

  17. SMSF, you’re being ridiculous. Limited liability companies are a creation of the state – there are no “rights” whatsoever associated with them.

    Because we have decided the concept of limited liability companies is useful for society, the state allows people who follow certain specific rules that it lays down to avoid responsibility for their debts under certain circumstances.

    If the rules said that everyone who was a director of a limited liability company had to wear orange socks on Thursdays, or had to speak Latin, there would still be no violation of anyone’s property rights.

    If you want to avoid state meddling, then don’t form an organisation whose sole aim is to enjoy the benefits of state meddling.

  18. There are probably some correlations. Let’s say your business is more profitable than most due to your government contracts, and you have close relations, both business and personal, with the contract enablers in government.

    You know government is pushing for more representation of X at board level. You appoint a representative of X. It’s not necessarily a deciding factor in whether you keep the contract, it’s just another signifier that you’re ‘a progressive employer’ (plus it’ll reduce the chances of being targeted by pressure groups). You may even get X to address said pressure groups or other political/economic gatherings – ‘we did it, why can’t they?’, turning their fire elsewhere.

    You keep your contracts and your close relationships, and remain profitable.

    You are used as an example of how the profit correlates with representation of X.

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