Tag Archives: earnings

It doesn’t pay to be too nice 

P1000657 - Version 2Professor Adrian Furnham’s column in The Sunday Times is always of interest to psychologically minded executives and his book; “The Elephant in the Boardroom – the causes of leadership derailment”, should be essential reading for all would-be directors.

As a psychologist I liked the piece in which he explained why nice guys don’t always win – because of their Agreeable personality.

Agreeableness is one of the Big 5 Personality Factors (along with Openness, Conscientiousness, Extraversion, and Neuroticism).

He points out that Agreeableness can be a handicap in business as the higher you score on this factor, the less likely you are to succeed as a business leader!

Most of us would prefer to work for an agreeable rather than a disagreeable boss, wouldn’t we? Well perhaps not says Furnham. Agreeable bosses may make you dissatisfied by not dealing with poor performers and being too forgiving, maybe treating you all the same, or being manipulated by your more devious colleagues.

One of my earlier posts Sometimes you just have to tell em” was about research at Roffey Park that showed that we are not very good at dealing with underperformance or telling people what we want, that strong managers get more respect, and that a firm consistent approach is better for morale and performance generally.

And it gets worse – if you’re a female. The Times reported last year on some research carried out by the Institute of Employment Research and concluded that;  “It doesn’t pay for a female boss to be too nice. The research showed that personality factors do come into account and that, for example, nice people earn less.

Too niceApparently nice women are being swept away by openly aggressive ones who know what they want.

A more recent paper presented to the Academy of Management by Beth A Livingston from Cornell University analysed surveys spread over 20 years. She found that  significantly less agreeable men earned 18.3% more than men who were significantly more agreeable. For women the difference was less, just 5.5%.

Livingston said; “Men’s disagreeable behaviour conforms to expectations of masculine behaviour“.

Apparently nice women are being swept away by openly aggressive ones who know what they want.

Working hard obviously helps but if you are too conscientious you may be seen as neurotic (or get bullied), and extraverts do no better than introverts.

Professor Cary Cooper, at the University of Lancaster Management School, agrees but also thinks women have more emotional intelligence than men and are not generally as egocentric.

So agreeable managers have to learn how to toughen up – for the sake of their team and the organisation, just as the disagreeable ones have to learn how to be nice – if only for the PR.

The July 2010 issue of Psychologies magazine has picked up on this topic in their article; “Why it pays to be tough at work“. It suggests that the prevailing view that it’s not the cleverest (presumably meaning IQ) but those with the highest emotional intelligence that succeed is wrong.

That was always a simplistic view at best and one that Adrian Furnham disagrees with as he says there is evidence that disagreeable poeple do better. The German research quoted says agreeable women earned £40,000 less over a lifetime than women who behaved more like ruthless men.

The article’s author then has a go at empathy. She quotes Jack Welch’s wife as saying that; “too much empathy is paralysing” when you have to give tough feedback or make tough decisions, and goes on to talk about women being prone to slipping into “good mother” roles where they create “gardens of entitlement” sowing seeds of future problems (such as?).

After dismissing empathy – by quoting Neutron Jack’s wife for goodness sake – the author next attacks self-knowledge which she doesn’t consider essential for top jobs as it can detract from self-confidence if it makes you aware of your failings (is she serious that these people don’t need feedback ?

Some people have short memories; what about Enron, the banks or BP?. Furnham is quoted as saying that people who get on may be narcissistic – which is not the only dark-side attribute.

If men overestimate their abilities and don’t navel gaze while women underestimate themselves and have self-doubt (imposter syndrome) then women seemed doomed to fail according to the author and people like Suzy Welch.

In fact the author seems to welcome emotional stupidity as it makes less demands on her. She even has a dig at Anne Mulcahy, ex-CEO of Xerox, because, although she has written about what women can bring to the workplace in terms of emotionality which makes them better leaders, she cut 1/3 of the workforce.

Did she not wonder how Neutron Jack got his nickname?

Original published on 12 April 2010

Public sector pay gap

Government exhortations to Councils to reduce CEO salaries – if only to set an example – is clearly falling on deaf ears.

The Sunday Times reported yesterday that the new Liverpool City Council CEO Ged Fitzgerald was paid £2,000 a day for 39 days work between February and the end of the financial year in March.

Fitzgerald was appointed CEO last November on an advertised salary of £197,000. This was said to be £35,000 less than his predecessor and without the performance-related bonuses previously paid.

The City Council has been unable to explain why he has been paid the annual equivalent of £400,000 for those two months.

His predecessor Colin Hilton did quite nicely too. He received £113,000 for two months work last year plus £30,000 compensation for loss of office – despite the fact he decided to retire – and a bonus of £26,000. He was appointed in July 2006 and in 2008 Liverpool was given a 1 star rating and condemned as the worst council in the country because of the poor state of its finances.

To put this in perspective the median pay for local government CEOs is around £150,00 and rose 34% between 2003/4 and 2007/8 according to the Audit Commission, more than jobs in the NHS and the social care sector. By comparison private sector CEOs average £400,000 plus bonuses bringing them up to around £590,000 and their pay rose 78% over the same time period.

See also: “Public sector fat cats”

Do family firms have more loyal employees?

Having once worked for a family owned business I was intrigued by the headlines about family firms having happier or more satisfied employees than other forms of enterprise.

When I read more on the research carried out by Stanley Siebert, a professor of labour economics at the University of Birmingham, it seemed to be measuring loyalty – but perhaps loyal employees are happier and more satisfied.

Anyway the survey of 20,00 employees in over 2,000 companies found that 28% of employees strongly agreed that they felt loyal compared with 22% in other organisations and 26% felt they had job security compared with 20% elsewhere.

This is apparently statistically significant. So whilst the figures are higher for family firms it’s still not a very encouraging picture overall is it? And doesn’t it also mean that 62% didn’t feel very loyal and 74% felt they didn’t have job security? 

So the headlines could have read: “Fewer than 1/3 of employees in family firms feel loyal”. And why should this be?

According to the survey staff employed in family firms:

  • have less job security and little protection from redundancies (only 7% of these companies have “no redundancy” policies)
  • work almost a day longer (5.5 hours) each week than employees in the public and private sectors (who average just under 33 hours a week)
  • aren’t paid any more than employees working elsewhere
  • have no or little Trades Union support (only 3% membership compared with 33% in private sector and 50% in public sector)
  • don’t receive much formal training (it’s mostly on-the-job)

Despite this the report claims that staff in family owned business are proud to say who they work for, feel more valued, are closer to the decision-making, and share the values of the company.

These companies are reported to have inclusive management practices and encourage the expectation of long-term employment (but don’t guarantee it – and job tenure is actually shorter than elsewhere).

Research at Warwick University demonstrated that happy workers are more productive so if companies can get employees better aligned with the company’s goals they will probably get more discretionary effort from them ie they will go the extra mile.

But note these are not your typical SMEs. The report was commissioned by the Unquoted Companies Group which includes companies such as Clarks shoes and JCB. Doubtless these are reputable companies but the group has lobbied parliament in the past opposing the growth of EU employment protection legislation and the working time directive.

Women are the winners at work

You’d have thought Guardian writers and readers would be pleased to learn that women had actually won the battle of the sexes at work according to an article in the Times (19/12/10).

The problem is the author of the article, Carol Hakim, a senior research fellow in sociology  at the London School of Economics is not necessarily seen as politically correct.

She was after all the author of the Erotic Report in which she suggested that women who lacked brains could always make up for it by using their Erotic Capital.This should come as no surprise as all the evidence is that more attractive people earn more anyway.

Now she is saying that women have won because they can make a choice whether to pursue their careers or settle down and have a family and passing tougher quality laws will not make any difference.

She says that many women in top jobs have only “nominal families” with whom they spend little time. Half of all women in senior positions are child-free and a lot more have only one child cared for by other people. A long article in the Times magazine (1/1/11) by Camilla Cavendish on extreme working with the title; “we don’t know how she does it – but they do” seems to bear this out.

“She” being one of the extreme workers, a partner with a well-known management consultancy, with a family of three putting in 100 hours a week across different time zones; “they” being the support team comprising parents, the handyman, a PA, and a nanny. And, in case you were wondering, her husband is a very senior civil servant.

In her new report – Feminist Myths and Magic Medicine – Hakim says: “Equal Opportunities policies have succeeded in giving women equal access in the labour market (but) people are confusing equal opportunities with equal outcomes and there is little popular support for the kind of social engineering being demanded by feminists and legislators”.

She believes that new government policies to promote equality are pointless and based on “feminist myths” and that maternity leave shouldn’t be extended as it makes female staff less attractive to employers. You can see why she is so unpopular with Harmanites and if you want to read a rant about this you should look up Tanya Gold’s article in the Guardian (8/1/11).

She’s also not happy with the idea of quotas for women on boards but neither is anyone else and the government aren’t going to pursue that anyway. There is still the issue of pay differentials but most of us would rather see an end to bankers’ bonuses and over-inflated pay at the top of the public sector.

Female CEOs are making a big impact in getting companies through the recession as employees seem to trust them more and think they are more understanding. But there is a price to pay for some women who try to have it all as there is evidence that women in senior roles are more prone to stress-related ill-health such as heart disease.

Updated 14 January 2011: The question of workplace rights and in particular maternity leave is centre stage at the moment.  Yesterday a long piece in the Times by Sylvia Ann Hewlett, an American academic and motherhood campaigner, explained why she thought women were paying too high a price career-wise for extended maternity breaks. She would have shorter breaks to allow the mother to get back to work provided she had a support team described in the Cavendish article.

Today in the Times Jill Kirby, director of the Centre for Policy Studies which published Hakim’s report,  joined the fray with: “More maternity rights are bad for mothers”. Referring to both Hewlett’s piece and the report by Carol Hakim she points out that for too long it’s been assumed that with enough workplace rights motherhood need not affect women’s lives but that the latest evidence proves that is not true – what Hakim referred to as the “feminist myth”.

Hakim’s research shows that those countries with the shortest statutory maternity leave, such as America, have more women in top jobs than other OECD countries. And in Sweden, where mothers get 14 months of maternity leave, women are more often found in low paid public sector work.

In the UK 12 months maternity leave regardless of how long you have worked for a company and even if you are part-time is bound to make employers think twice of appointing a “womb in waiting”.  Employers can’t even ask questions about family plans lest they are accused of discrimination and government plans to change maternity leave to parental leave are unlikely to make any difference if 30 years’ experience of that in Sweden is anything to go by.

The last labour government’s legacy on equal opportunities, and the idea of protected characteristics and indirect discrimination, spear-headed by Harriet Harperson is to say the least not business-friendly. Women who want careers and a family have tough decisions to make but at least they have that choice now they have more than matched men in higher education and achieved equal pay in most economic sectors.

Public sector fat cats

Government Ministers demanded a pay cut of 5% for Council CEOs being paid £150,000 pa or more and 10% if they were paid more than £200,00. It appears that only 7 of the 129 have done so. TheTimes yesterday (04/01/11) reported that Eric Pickles, the Communities Secretary, was furious. Yesterday his deputy ordered Councils “to stop dragging their feet” and protect front-line services after a planned 4-year 30% cut in central government grants. “It’s disappointing that so many earning six-figure salaries are not leading from the front in these tough economic times” he said.

Apparently there are 20,000 public servants being paid more than £117,000 per year which cost the taxpayer an extra 1/2 penny on basic rate tax and the earnings of Council bosses grew by 5.5% a year between 2001 and 2008, similar to the increases in Council Tax bills.

The Personal Finance Editor of the Times, commenting (4 December 2010) on the Fair Pay Review, and the recommendation that top pay should be capped at 20 times the salary of the lowest paid employee’s salary, scoffed at the idea that Councils must always pay top rates to get the right person and asked what would happen if these bosses have their pay capped. As he says they can hardly go off to manage a council in Switzerland can they?

The minister had written to CEOs last Summer urging them to take immediate steps to reduce their salaries after an outcry about public sector “fat cats”.The Times said that only two of those earning over £200,00 had agreed to have their pay cut. Many had argued that their wages were far lower than those in the private sector (well let’s see if they could get a job in the private sector in the first place!) and have opted for redundancy instead. They don’t seem to grasp the concept of being a public servant any more let alone the idea of servant leadership.

All local government staff had their pay frozen last year and are expecting the same again this year. Tens of thousands of workers have already been made redundant – many of them from low-paid jobs and who won’t enjoy the packages received by the CEOs.

Of those who did take a pay cut, one was the CEO at Essex County, Joanna Killian who took a drop of 5% even though she was on almost £290,00 and therefore should have taken a 10% cut, and Kevin Lavery, CEO at Cornwall Council, who took a £30,000 cut from his £200,000 salary ie 15%. In a council not far from here the CEO is retiring and his deputy taking over on £30,000 pa less than his former boss  – close to a 20% reduction. So there are some authorities getting the message but the rest probably wouldn’t understand the meaning of leadership anyway!

Updated 3 May 2011: Andrea Hill, Chief Executive of Suffolk County Council  and one of the higher paid CEOs on £218,000, has been criticised in the press for agreeing over 1/2 million pounds-worth of gagging orders for departing staff at a time when the Council has to make savings of £44 million. She has also refused to take a cut in salary (10% was requested by the government for those earning over £200,000) as she says she has refused two pay rises.

It is also reported that she  has been on leadership coaching sessions which cost £14,000. Despite all this she further enraged public opinion by having professional photographs taken which cost the Council £1,500. Not sure why she needed to do that other than to boost her ego and make the best of herself but you can see the results on the Council web-site and elsewhere.

It seems she has now been slapped down about her hotel and travel expenses but if you want to read her side of the story click here.

Updated 3 June 2011: Things are moving apace at Suffolk County Council. The leader, Jeremy Pembroke, has stepped down. He was leading the outsourcing and change agenda “New Strategic Direction” which would have outsourced most if not all of the Council’s services. That programme has now been put on hold.

He also appointed Chief Executive Andrea Hill on her £200k plus salary. Mrs Hill has become the focus of media attention particularly when it appeared the Council had paid for some glamour photography for her. She is now on extended leave whilst there is an inquiry into whistle blowers’ reports about her alleged bullying and complaints about her extravagant expenses claims.

Updated 5 July 2011: Andrea Hill has finally proved too much of a distraction to the Council and will be leaving after 3 months on extended leave (plenty of time to polish her CV and put those glamour shots to good use).

According to the Times (05/07/11) she will be leaving with a full year’s payout of almost £220,000 (she refused to take the government recommended 10% pay cut as she thought “she was worth it”)  which has not gone down well with hard-pressed ratepayers. The good news is that her replacement will be on a lower salary reflecting economic realities but the public sector is still rewarding failure far too often.

NB This post was originally part of: Why are we worrying about gender differentials?

Updated 25 July 2011: To add insult to injury some civil servants are receiving generous redundancy packages running into hundreds of thousands of pounds.

Particularly irksome is the news, reported in the Sunday Times (24/7/11), that Bernadette Kenny, who was head of personal taxation at HMRC  until she stepped down after denying that her staff had made mistakes when they got the tax wrong for 6 million tax-payers – received a £150k lump sum when she retired on a £50k a year pension six years early. She is now working for the CoE’s pension fund. The newspaper says she is a roman catholic so she’s probably been to confession.

Apparently these eye-watering amounts were paid under the old compensation rules and the new ones are meant to be fairer to the lower paid and capped for the higher-paid.

The TaxPayers Alliance isn’t happy and feel that some people viz Bernadette Kenny, have been rewarded for failure. How often do we see that in the public sector?

Updated 4 September 2011: It seems CEOs of quangos are doing very nicely in terms of their pensions. We are talking about people who would have been civil servants before we created quangos eg NHS Blood, H&SE, regional development agencies, and the newer Care Quality Commission.

As civil servants they would have enjoyed a non-contributory final salary pension but now have gold-plated £1 M pension pots.  Even the head of the Olympic Delivery Authority, which is not a permanent organisation and will be wound up after the event, has put £1.3M into the CEO’s pension pot with more to be added. (This latter is sheer lunacy, a generous contract would have been sufficient).

Updated 12 September 2011:  Another fat-cat quango chief in the headlines this weekend. Kevin Roberts was CEO of the quango, the Agricultural & Horticultural Development Board (AHDB), and left in April just in time to avoid the 50p tax rate, thus saving almost £30k, and cleverly spreading his pay, benefit, and bonus of over £220,000 and his similar sized redundancy package over two tax years.

He picked up the £218k redundancy cheque when he was made redundant in 2008 from the Meat and Livestock Commission because he didn’t want to relocate 50 miles from his home at the time. This despite the fact he was immediately appointed head of the super quango which replaced it and four other agricultural levy boards!

And the icing on the cake is that he moved immediately into a job as Director General of the NFU – sort of gamekeeper turned poacher – which is located just a few hundred yards from the AHDB building.

In Greece the government has decided to appease angry public opinion by docking every elected official 1 month’s salary. This sounds dramatic until you realise they get 14 months salary a year with bonuses at Easter, in the Summer and at Xmas (we won’t mention spinster pensions for unmarried daughters and Foresters getting extra pay for working outdoors…).

However this is on top of a 30% reduction in their bonuses announced in March as part of the country’s austerity measures.

Why are we worrying about gender pay differentials?

When we should probably be asking why CEOs are being paid astronomical amounts compared to the shop floor?

The Observer (28/11/2010) printed a fascinating analysis by Professor Danny Dorling in advance of the publication of the government’s Fair Pay Review.

The headline figures are staggering. Bart Becht, of Reckitt Benckiser, and the highest paid FTSE100 CEO, is paid £93 million (I can’t bring myself to write that someone, leaving aside the fact that he sounds like a cartoon character, actually earns that much).

Pay differentials are almost back to 1918 levels when 1% of earners received almost 20% of income. This inequality declined steadily until the mid 70s but since then the position has reversed and inequality has increased close to where it was almost 100 years ago.

Salaries in most jobs have increased between 3 and seven times since 1980 but for executives they have increased fifty-fold. Nurses earned £5,000 in 1980, now they earn over £29,000; teachers earned £6,500 then and earn £35,000 now; GPs earned £12,500 then and earn £78,000 now. The PM earned £34,500 then and earns £150,000 now.

But CEOs of  FTSE100 companies who earned £85,000 then now receive on average almost £5 million according to Income Data Services which also showed that this 2009 figure had increased 50% in the previous year (recession? What recession you might ask as average boardroom pay in top companies increased by 45%). This is 200 times the average wage of £23,360 including bonuses, an increase of 1.5% over the previous year. CEOs basic pay rose by 3.6% but they received bonuses averaging over £700,000!

To put this in perspective, if you are paid the minimum 21-year-old wage of £5.93 per hour you are typical of the poorest 20% of employees. Double that to £10 an hour and you are typical of the average earner, and if you earn £14 an hour that puts you in the top 20% of earners. Hard to believe when you see the stratospheric sums paid to these executives (and let’s not even go to “Rooney-world” – fantasy football indeed). Perhaps not surprisingly a recent poll showed that only 1% of people think CEOs should be paid so much and 2 out of 3 think they should be paid no more than £500,000.

Britain has one of the highest pay differentials in the world. Higher than Australia, New Zealand, Canada and Japan. And in the OECD only Italy, Poland, USA and Portugal have higher inequality. And it’s not as if these are generally the entrepreneurs, the inventors, the innovators or people who have invested in the company. So how did we get to this position? Don’t forget things were improving ie less inequality up to the mid-late 1970s when it did a U-turn under Margaret Thatcher’s tenure.

First, I think the privatisation of public companies such as the GPO, British Gas and water companies played a part. Suddenly public service managers who were either civil servants or local government employees, and therefore not the highest paid but with a good pension plan, wanted to have pay parity with their competitors in the private sector because of the assets they had inherited. The fact they were often in monopolistic positions and had no real competitors didn’t matter. It suited the government and the soon-to-be public sector fat-cats to pretend otherwise. The BBC is another example. They were set up as a public service broadcaster yet manage to reward their top people with extravagant salaries and pension packages.

Secondly, the influence of private sector practices on those areas that remained within the public sector such as the NHS. The government put senior managers on performance related pay (not to be confused with bankers on minimum 50-100% bonuses but a miserly 1 -3% if you were lucky) which allowed them to use Job Evaluation to set salary levels. I have nothing against Job Evaluation and when I was in HR was happy to use it. But at some point you have to decide who your comparators are and at what percentile.

So public sector organisations which said they “valued staff” wouldn’t want to be seen to compare their senior managers with just the median rates because they didn’t want to be seen employing averagely paid people. Upper quartile (top 25%) sounded significantly better without seeming profligate with tax-payers’ money. And in the beginning there weren’t other NHS or local authority comparisons but there were the newly privatised utilities. And we know they had already ramped up their pay rates.

And now we have private sector remuneration committees who do exactly the same – comparing their own salary levels with their competitors without regard to internal differentials and increasing inequality.

So why is it a bad thing? Research suggests that where societies are more equal there are better indicators of mental health and social mobility. And of course there is a profound sense of unfairness. It’s been predicted that the Fair Pay Review might recommend a pay multiple of 20:1. So a minimum wage earner working 38 hours earns £11,700 a year. Twenty times that would be £234,000 a year, almost twice the Prime Minister’s pay and what most people would consider more than adequate. Given what I said earlier about public/private sector pay comparisons this ratio would have to apply across the board.

And if David Cameron is serious about a well-being index what better place to start?

Updated 16 May 2011:  Interesting report in Saturday’s Observer by its business editor, Andrew Clark, on the Institute of Directors (IoD) event at the O2 arena.

Brendan Barber from the TUC was there encouraging companies to pay their workers more to increase economic demand and get the economy working again. Partly he was arguing for a fairer economy but he also quoted various economists to support his argument. Even Boris Johnson has said it is “morally right” to pay workers in London a “living wage” of £8.30 an hour compared to the current adult minimum wage of £5.93 an hour.

Perhaps not surprisingly the IoD delegates were unimpressed and denied that workers were being exploited – at a time when pay for the top 350 board members jumped 45% last year.

But as Clark commented, loyalty works both ways and when the good times return workers won’t necessarily stay with their present employers if they are not looked after when times are hard.

Of course there are gender pay differentialsbut probably not as wide-spread as some people claim. Public sector has had equal pay for years but the financial institutions are probably the bad boys here (literally).

The Department for Business, Innovation and Skills found that FTSE100  CEO’s pay rose by 14% annually between 2000 and 2010. The FTSE100 index rose by 1% annually over the same period.

In 2000 bosses’ pay was 59 times that of their average employee. In 2010 that had increased to 119 times.

Updated 7 September 2011: And it’s not just the pay but the pension pots for top directors. For a FTSE100 company director it averages almost £4 M, enough to provide a pension of over £220,000 a year according to the TUC.

The average private sector pension is £9,568 and £6,497 in the public sector. The TUC points out that these company directors are paying themselves high salaries and bonuses and making sure they have these gold-plated pensions whilst closing pension schemes for their employees.

Updated 12 September 2011: Who would have guessed that FTSE bosses have had their pay frozen for two years! Even IF they did they are making up for it with basic pay up between 4 and 10%, regardless it seems of company performance. The 4% raises amongst FTSE350  executives is twice as much as the average worker according to Deloitte.

Deloitte also say bonuses have increased. For FTSE100 directors from 71% to 87% and for FTSE250 directors up from 54% to 86%.

Some companies have built in payback clauses in the case of poor performance and some are offering deferred bonuses.

Nevertheless remuneration committees could do more to reign in excessive pay awards way ahead of inflation and of the average worker.

Getting women on board

Back in July I posted a blog about Alpha Males and made reference to the paucity of women in board-level jobs and the Norwegian attempts to overcome it by passing legislation in 2008 requiring all listed companies to have 40% of directors women.

Apparently it wasn’t very popular as businesses felt that inexperienced women would push out experienced men and women though they would be seen as token appointments. The fuss has died down now, according to a report by Carly Chynoweth in the Sunday Times (24/10/10); “Where quotas can succeed”.

She cited the Norwegian Institute for Social Research in Oslo where researchers found that 70% of male directors and more than 50% of women directors said that the quota has either made no difference or improved things (I’d love to know the split between women and men on how they rated the level of improvement). Only 11% of men and 1% of women felt that working on a board had become more difficult.

Female directors now hold a higher than average number of positions because of the demand for experienced women and the effect has been to replace younger, less-experienced, men – thus keeping standards high. Back in 2004 a survey of companies on the Oslo stock exchange found that 75% of board members were male, aged between 56 and 69 years of age, had attended Bergen Business School and all lived within 5 miles of west Oslo.

Diversity wasn’t an issue: women were just ignored when recruiting directors. Quotas aren’t new to Norway, their Labour party has had a 40% women quota for elections for 30 years, and proponents argue that having a quota didn’t give women an unfair advantage but just stopped them being overlooked. Before the quota was imposed females made up 29% of directors and this rose to 44% in 2008 before dropping to 38% in 2010.

Here in the UK the proportion of female directors has risen from 6.4% in 2001 to 13.6% in 2010, comparable to similar increases across Europe: from 9% to 12%. Spain, which also introduced a quota in 2008 with a target of 40% by 2015, has increased its percentage of female directors by 67% bringing the proportion up to 11%, France is considering a quota of 40% by 2016 after increasing the proportion by 57% to 12%, and Holland is aiming for 30% by 2016.

In the UK headhunters think that chairmen are looking for more balanced boards with an increase in demand for female non-executive directors (NEDs). Whilst Norway doesn’t appear to be recruiting women from other Nordic countries it seems European businesses are keen to recruit British women, who now seem in short supply as many already have NED portfolios.

In fact having a flexible NED portfolio might be more attractive to women than pursuing a career as a CEO considering there are only 5 in FTSE 100 companies. And in financial companies at least, male directors still earn more than female ones. According to the Chartered Management Institute the average salary for men is £150, 283 and £126,704 for women.

According to a more recent story by James Ashton in the Sunday Times (7/11/10) the government is now considering introducing a quota for women on boards of directors. Research at Cranfield shows that the  proportion of women on boards has doubled in the past 8 years to 12% but the financial crisis put the progress on hold as companies turned to more experienced men to help them out of recession. A 40% quota has been mooted which would mean that FTSE 100 companies would need to triple their female board members from the existing 100.

As mentioned above some countries already have quota systems but the government is hoping that companies will recruit more women without a quota being enforced. The Prime Minister pledged to bring in legislation to ensure companies recruited more women, suggesting that half the candidates on long lists for directors should be women and that vacancies should be more widely advertised.

There are mixed views about quotas with some believing they don’t work at all. The government’s review, led by former trade minister Lord Davies, is open for consultation until the end of November with a report due in the New Year.

Updated 31 December 2010: It now seems unlikely that the government will impose quotas for women directors. According to The Times today, Lord Davies has said in his commentary; “Quotas have proved successful in some countries but I am not convinced they are the right method to encourage progress.Female executives need to be recognised for the talent and skills they possess.”

He is considering other initiatives to tap the pool of potential women directors and has “thought about the merits of setting up an academy for female executives.” So positive action rules OK? More sensibly he argues for more transparency in the recruitment process and a best practice code for headhunters.

Employers’ organisations have differing opinions on the matter. The CBI believes that companies should have targets for the appointment of women and have to explain why they miss them but the IoD dismisses the idea as an “undesirable quick-fix solution” and one that politicises the issue of women in the boardroom and promotes gender diversity above other inequality issues.

See also:

“Pay Differentials”

“Why are we worrying about gender pay differences”

“What sex is your job”

Updated 10 February 2011: Those bureaucrats in Brussels are now getting involved. They are drawing up  proposals to have at least 40% women on all publicly registered companies. Initially the scheme will be voluntary but if companies fail to sign up it could become compulsory by the year-end.

The proposal is being championed by the Justice commissioner Vivien Reding and would require companies to employ 30% of women at board level by 2015 and 40% by 2020. She says if companies fail to achieve appropriate self-regulation by the end of 2011 “we must initiate an EU legal instrument”

The Luxemberger’s threats should not be taken lightly as she was the commissioner who forced mobile phone companies to lower their prices for international calls.

Lord Davies in the UK is still finalising his report on this topic and is expected to come up with something similar but unlikely to make such immediate demands. The Sunday Times thinks he will call for a doubling of female board members to 25% by 2015 otherwise companies would be subject to a quota.

Updated 23 February 2011: More speculation about Lord Davies’s report due out this week. It seems likely that he will expect headhunters and shareholders to sign up to a new code of practice in an attempt to install more women in the boardroom. He is also expected to recommend that 20% of directors should be women by 2013 rising to 25% by 2015. The current figure in FTSE 100 companies is 12.5% and only 7.5% in the FTSE 250 list.

Only 11% of people responding to Davies’s report thought quotas were a good ideas and companies vary: Centrica already has 25% females whereas there are 18 FTSE 100 companies, including Associated British Foods which owns Primark, which have none. Some companies are unrepentant saying things like: “we have a duty to get the best candidates – which to date had been male” and “we need people with time to devote to the job”

The worry is that pushing women onto boards before they are ready will dilute the quality although there is some research which suggests companies can be more profitable with women on the board.

Do women want to be judged on a quota basis as token females or get there on their own merit?