My thanks to Tel Aviv-based gender diversity advocate Daniella Alpher for her blog piece on yesterday’s celebration by the 30% club of its second anniversary. Two years of assaulting the British business sector, with the collaboration of many FTSE100 chairmen. Hurrah.

Daniella’s blog piece is here:

http://daniellaalpher.com/2012/12/01/30-pcclub-opens-trading/

The piece contains a photograph of the happy event, and I’ve just sent the following comments to the blog, which hopefully Daniella will allow to be visible to visitors to her blog (she’s been very fair about publishing my comments in the past):

What a happy day for British business. Helena Morrissey is the CEO of Newton Investment Management, she founded and still leads the 30% club, and has nine children (I think the youngest is about four). So it’s understandable she NEVER has time to respond to our challenges, such as a recent one:

https://c4mb.wordpress.com/2012/11/16/our-public-challenge-to-helena-morrissey/

It really is about time we presented the Anti-Business Secretary, the odious Vince Cable, with a ‘Toady’ award. Now who’s that near Comrade Cable in the photo? Why, of course… it’s the odious Sir Roger Carr, chairman of Centrica, President of the CBI, founder member of the 30% club. He can’t hand over power to poorly-qualified women fast enough, can he? Ironically, he doesn’t personally maintain that ‘improving’ gender diversity on boards improves companies’ financial performance, but he says it leads to improved ‘meeting atmospherics’, which must be nice for him, if not for Centrica’s shareholders. Now we’ve presented HIM with a ‘Toady’, or at least our associated campaign, the Anti-Feminism League, has:

http://fightingfeminism.wordpress.com/2012/04/15/toadies-and-their-daughters/

Have a nice day.

Mike Buchanan

CAMPAIGN FOR MERIT IN BUSINESS

https://c4mb.wordpress.com

Here’s the 30% club’s press release on the event:

http://www.30percentclub.org.uk/press/30-club-leads-debate-on-transforming-business-culture/

There’s barely a paragraph in the press release I couldn’t comment on, but I’d only be repeating myself.

 

 

The uncorrected minutes of last Tuesday’s House of Commons inquiry have just been published and sent to those of us who gave oral evidence, so that corrections may be made. One of the ‘witnesses’ on our panel was Heather McGregor, a businesswoman and a member of the steering committee of the 30% club. Before the inquiry I emailed her details of five longitudinal studies (three of them concerning Norwegian companies) showing the negative impact on corporate financial performance of ‘improved’ gender diversity on boards, and her PA emailed me to say Heather had found the content of my email ‘very interesting’. Quite apart from this notification, it’s inconceivable to me that any person on the steering committee of the 30% club could possibly be unaware that quotas had a negative impact on the financial performance of Norwegian companies.

I raised the matter of these studies in the inquiry and the chairman, Rt Hon Adrian Bailey MP, asked Heather McGregor an interesting question. Herewith the relevant extract from the uncorrected minutes (the final form of the document has yet to be agreed by the Committee):

Chair: Have you read these longitudinal studies that Mike Buchanan has talked about?  If you have, have you any comment on them?

Dr McGregor: I believe that Mr Buchanan is referring to a study in Norway, but I do not know because he has not said so.  The study in Norway, where they have had quotas, Mr Chairman, shows that there has been no change in the financial performance of companies, despite the fact that they now have 40% of women on boards.

Heather McGregor’s statement about the financial performance of Norwegian companies is factually incorrect. Two days ago I emailed her to point this out, and I’ve not had a response to that email. An extract from the email from the House of Commons which accompanied the uncorrected minutes:

The House of Commons has emphasised the obligations on witnesses to be honest and open in the evidence which they give to committees. Knowingly to mislead a Committee is a contempt of the House. If you have become aware that you need to make corrections of any matters of fact or interpretation to ensure that the final record of what you said to the Committee is accurate and complete, you should submit a separate note which will be appended to the evidence either as a footnote or as a freestanding memorandum.

Later this morning I shall be emailing Heather McGregor, inviting her to make a correction to her statement. If we don’t receive an assurance from the appropriate House of Commons official that a correction has been submitted by Heather McGregor and accepted for publication, we shall be submitting our own document on the matter. I invite Heather McGregor to arrange for a correction to be submitted to the inquiry, to be communicated to myself, and to ensure that I am informed by a House of Commons official that the minutes will be corrected accordingly.

Yesterday I gave evidence to a House of Commons inquiry into ‘Women in the Workplace’, in a panel along with Catherine Hakim (sociologist), Heather McGregor (businesswoman and a committee member of the 30% club), and Steve Moxon (researcher and author).

http://www.youtube.com/watch?v=zwqTi6HN0pM

The session started off in a curious manner, with the chairman, a Labour MP, asking me the following question:

You mentioned in your submission that men are more likely to become engineers and women are more likely to become nurses. Why do you think that is?

I wasn’t prepared for a question along these lines, partly because an email from a clerk to the committee stated that ‘witnesses’ would be given prior warning of ‘possible lines of questioning’, and this hadn’t been mooted. My personal belief is that gender-typical differences are mainly biological in origin – drawing on books by eminent psychology professors including Louann Brizendine’s The Female Brain and The Male Brain, Simon Baron-Cohen’s The Essential Difference and Steven Pinker’s The Blank Slate – so I outlined that position. With the benefit of hindsight, I suspect the question was intended to lead me to talk about biologically-based gender differences, because the viewpoint is hotly disputed, and thereby harm my credibility as a witness. You live and learn.

A belief in gender-typical differences isn’t universally held by supporters of C4MB, and one of our most prominent supporters fundamentally disagrees with it. I should have pointed that out, and also said that the source of gender-typical preferences is irrelevant to this campaign. In the meantime, in an effort to keep an open mind on the matter, I shall be reading material written by a number of researchers who dispute the existence of biologically-based gender-typical differences which are of importance in relation to the world of work. Let it never be said that C4MB isn’t open to alternative viewpoints.

I should perhaps have replied to the question by saying that there are a number of theories concerning the source of gender-typical preferences, but in a sense they’re irrelevant, because governments simply shouldn’t be in the business of seeking to change individual preferences.

[Note: this post was updated 22.11.12 with the content of another exchange of emails with the lady writing on behalf of Baroness O’Cathain.]

On 10 November we put up a post about the final report of the House of Lords inquiry on ‘Women on Boards’. We provided a written submission to the inquiry, which was duly published, although our requests to give oral evidence to the select committee were denied. All of the many ‘witnesses’ who gave oral evidence were proponents of ‘improved’ gender diversity on boards, and many were professionally engaged in the initiative. From the final report’s Summary, p4:

The report begins by stressing the benefits that come from a gender-balanced board. A more balanced board will be able to tap into the wealth of available talent in the labour market, provide a broader spectrum of ideas, better reflect a company’s customer base and improve corporate governance. We did not, however, find proven the argument that there is a causal link between more gender diversity on boards and stronger financial performance…

On p12 of the report we come to the following assertion:

Some studies point to the fact that greater diversity, particularly of gender, can have a positive effect on corporate performance.

‘Some studies’ refers, of course, to studies seeking to misrepresent correlation as causation. The report’s cited sources for this remarkable (and, of course, utterly erroneous) statement are the following:

IMA, Fawcett Society, An Inspirational Journey, Professor Sylvia Walby, Aviva, Arlene McCarthy MEP, Mary Honeyball MEP, NEST, European Commission, Q55 (Lord Davies of Abersoch), Q48 (Jonathan Rees, GEO), Q113 (Joanne Segars, NAPF), Q246 (Helena Morrissey), Q298 (Jo Swinson MP)

So, the ‘usual suspects’ then. We’ve challenged many of these organisations and individuals to cite even one robust study showing the ‘positive effect on corporate performance’, and collectively they’ve supplied nothing. On p13 of the report there’s an extraordinary statement:

It should be stressed that we reject any suggestion that improved diversity would be to the detriment of company performance, as was argued in some submissions we received.

We were, to put it mildly, astonished by this casual dismissal of the robust evidence we’d submitted, and we wanted to learn the grounds – if any, other than ideological – on which the select committee had reached this conclusion. I duly emailed Baroness O’Cathain, chair of the committee, with the following, after pointing her to our critique of the report, and the particular statement we were querying. I copied the email to a number of the other peers on the committee.

The (written) ‘submissions’ cited here were from ourselves, Michael Klein and Ray Russell. Both we and Michael Klein (now this campaign’s Research Director) cited two studies which show a negative impact of ‘improved’ gender diversity in boardrooms (‘GDITB’) on corporate performance, the Ahern/Dittmar study and the Deutsche Bundesbank study. The committee is, therefore, implicitly rejecting not our ‘suggestion’, but these studies. We might reasonably ask, on what grounds is the committee rejecting them?

Last Tuesday, 13 November, I received an email from a lady clerk, with the following:

Baroness O’Cathain has asked me to reply on her behalf to your email. In its deliberations, the committee had recourse to a significant range of written and oral evidence, which it carefully considered in coming to its conclusions. This involved discussion of each written evidence submission as well as carefully considered questioning of oral witnesses.

As you have noted, while the committee concluded that there was no causal connection between increased female representation and improved financial performance of businesses, we acknowledged the existence of various studies that argued contrary to this viewpoint. While the committee scrutinised evidence which argued for both a positive and negative causal connection, it did not find either to be robust enough to be relied upon in the report.

Later the same day, I replied to the lady as follows:

Many thanks for your response, but I regret it misses a key point.

The committee was right to reject the studies which are said to demonstrate a positive causal link, because those studies have been shown to be flawed, as Susan Vinnicombe’s position on the matter implies. They were simply ‘snapshots’ which have been misrepresented as implying causation from correlation.

Conversely, the studies this campaign and Michael Klein put forward in our written evidence to the inquiry – the Ahern/Dittmar and Deutsche Bundesbank studies – were, conversely, longitudinal studies, the ‘gold standard’ in the social sciences. We recently drew up a short summary of the evidence for the ‘negative link’, please see attached. The two studies in question are the first and last of the five studies shown, and all five are longitudinal studies. We’ve invited challenges to these studies from many proponents of ‘improved’ gender diversity on boards, and not a single challenge has ever been received.

Our key question to Baroness O’Cathain was, therefore, this – on what grounds did the committee reject the Ahern/Dittmar and Deutsche Bundesbank studies? We ask again for an answer to this perfectly simple question. We’re genuinely baffled by the rejection of the studies, hence our assumption they’ve been rejected because they don’t accord with, or support:

– the government’s policy and legislation directions (and that of the preceding Labour administration, come to that)

– the pro-gender diversity ideologies of all the people who gave oral evidence to the inquiry

To present the ‘negative link’ studies as being even remotely comparable to the ‘positive link’ studies in robustness terms is simply wrong.

On 21 November I received the following email:

Thank-you for your email. Lady O’Cathain has asked me to reply on her behalf. She thanks you for contributing to the body of evidence for this inquiry. The inquiry has now been completed, and the published report represents the agreed view of the Committee on the subject, reached after extensive deliberation on the many submissions received.

I replied with the following:

Thanks <name omitted>. I accept the report is now finished, but I’m simply asking for the basis  on which the scientific studies we cited were rejected as evidence. In the absence of a reply, I am forced to conclude that the Committee had no rational basis for the rejection, it was literally an irrational (and obviously ideological) rejection, and I’ll put up a post to that effect unless I hear from you by midday tomorrow.

Not having had a response by the deadline, I think we can now accept the inevitable conclusion, that the rejection of our evidence was irrational. Let’s hope that the final report which will follow the House of Commons inquiry into ‘Women in the Workplace’ will treat our evidence with the seriousness it deserves.

Regular visitors to this blog will be very familiar with the role of Helena Morrissey (CEO of Newton Investment Management, founder of the 30% club, mother of 9 children, champion kick-boxer – I may have made one of those up) in the whole gender diversity in the boardroom debate. Only recently I described her as the doyenne of the movement in the UK, and arguably beyond. So I was interested to read her reaction to the recent announcement that the EC is dropping its plans to introduce legislation to financially punish EU-based companies which don’t meet legislated gender quotas. We’ll put up a blog on this matter when fuller details are made available. We can be sure that Viviane Reding, EC Justice Commissioner, won’t let the matter lie.

Helena Morrissey’s reaction to the news:

http://www.30percentclub.org.uk/press/30-club-comment-on-eu-quota-announcement/

I was particularly intrigued by the following line:

The threat of a legislated quota has been an unwelcome distraction in recent months…

This is ironic, given that what’s increased the proportion of new FTSE100 directorships going to women more than fourfold in two years, has been the UK government’s continuing threats of legislated quotas, reflecting the 2011 Davies report recommendation of legislated quotas if FTSE100 companies don’t reach 25% female representation on their boards ‘voluntarily’ by 2015. I’m about to email Helena Morrissey’s PA (contact details on the link above) with the following question:

We were interested to read Helena Morrissey’s comments concerning the recent announcement about EU-legislated quotas. We’d like to pose her the following public challenge. If the threat of EU-legislated quotas has been an ‘unwelcome distraction’, how can the threat of UK-legislated quotas not be likewise? Would Helena personally support a suspension of the government’s threat of legislated quotas, and if not, for what reasons? Thank you.

It’s perhaps a good time to consider the range of arguments currently being expounded for ‘improving’ gender diversity in the boardroom (‘GDITB’), because individuals and organisations are increasingly to be found in one of four distinct camps:

1. GDITB WILL LEAD TO ENHANCED CORPORATE PERFORMANCE

This was the standard argument used by leading proponents of GDITB when this campaign was launched in April 2012. It was designed to silence critics who see GDITB as nothing more than a left-wing social engineering exercise, an exercise being vigorously pursued by our Conservative-led coalition. Leading people in this camp include EC Commissioner Viviane Reding. We know she still maintains this position in her public utterances, and we recently posted some evidence of that:

https://c4mb.wordpress.com/2012/10/25/is-eu-justice-commissioner-viviane-reding-a-liar-incompetent-or-both-her-speech-to-the-harvard-club-belgium/

However, when challenged by us to provide evidence of a positive link with enhanced corporate performance, Mrs Reding admitted (having taken nearly two months to consider the matter) that no such evidence exists:

https://c4mb.wordpress.com/2012/11/06/a-letter-is-received-from-viviane-redings-head-of-cabinet/

Perhaps it’s partly in response to our campaigning, but no leading proponents of GDITB (in the United Kingdom at least) – to the best of my knowledge – still argue for the existence of a positive link. At the same time, they refuse to challenge the findings of the five studies we cite showing strong evidence of a negative link.

We’re aware of a number of researchers, almost all of them of the female persuasion, who continue to seek evidence of a positive link, despite the failure of hundreds (or possibly thousands?) of researchers to find it in the past. As I’ve pointed out to a number of these researchers, they’re more likely to find evidence of the Easter Bunny, an observation they don’t always welcome. In psychological terms, they’re clearly experiencing ‘cognitive dissonance’. They must resolve the dissonance between what they believe – that GDITB leads to enhanced corporate performance – and the evidence which overwhelmingly suggests they’re wrong. Rather than accepting reality and dealing with it, they engage in a perpetual hunt for something that doesn’t exist. Which is no way to spend a life, especially when financed by long-suffering taxpayers, as such researchers invariably are.

2. MIS-REPRESENTING CORRELATION AS CAUSATION

This is a favourite tactic of pro-GDITB politicians, most notably Vince Cable, Business Secretary. He continues to cite (in speeches, newspaper articles and official reports) data from Catalyst, an American campaigning organisation, suggesting very strong positive economic impacts (e.g. 66% higher return on capital) from having more women on boards. We wrote to him on the matter:

https://c4mb.wordpress.com/2012/07/21/a-new-open-letter-to-vince-cable/

We know that Catalyst themselves stopped making claims of positive links in September 2011, but I can find nothing on their website http://catalyst.org admitting to that fact. Indeed, you can still download numerous reports from the website claiming positive links, including the 2007 report from their ‘Bottom Line’ series (2004-8) which was the basis of Vince Cable’s claims:

http://catalyst.org/publication/200/the-bottom-line-corporate-performance-and-womens-representation-on-boards

You could be forgiven for missing one of the notes in small print at the bottom of the page:

Correlation does not prove or imply causation.

Numerous individuals in this camp, whilst not personally claiming a causal link, are happy to cite reports and studies which appear to give evidence of a link, even though a reading of the reports themselves (Catalyst, McKinsey, Credit Suisse…) invariably make it clear that correlation doesn’t prove or imply causation. A prominent example is Helena Morrissey, doyenne of the GDITB movement in the UK.  She founded the 30% club. On the club’s website we find the following gems http://www.30percentclub.org.uk/research/ :

UK board diversity at a glance

• At the end of 2010, the percentage of women on FTSE 100 boards stood at 12.5%. Women held 5.5% of executive directorships and 15.6% of non-executive directorships.*
• Companies with three or more women board directors achieve return on equity 45% higher than the average company.**
• More gender-diverse companies (defined as the top quartile companies in terms of proportion of women on their executive committees) exceed operating results (EBIT) delivered by those companies with no women on their senior management teams by an average 56%.***
• In the UK, women are expected to own 60% of all personal wealth by 2025.
• There are more female millionaires than male in the age range 18-44.
• Women represent 60% of university graduates in Europe and the US.

* 2010 Female FTSE Report, Cranfield School of Management

** The Bottom Line: Corporate Performance and Women’s Representation on Boards, Catalyst

*** Women Matter: Gender Diversity, a Corporate Performance Driver, McKinsey & Company

The point about female millionaires is an intriguing one. Assuming it’s correct – and I have no reason to doubt otherwise – what might be the motivation for including it? My hunch is it’s meant to imply women are outnumbering men as successful entrepreneurs, but we know that man are far more likely to be entrepreneurs than women, the gender imbalance increasing markedly as you move from smaller to larger companies still run by the original founder. So what might explain the inclusion of the female millionaire point? I assume the gender differential is attributable to divorce settlements enjoyed by women in this age bracket. How is this a valid argument in support of putting more women on boards?

And what has women’s personal wealth got to do with the matter, either? Most of the differential will be attributable again to divorce settlements, not money earned through work. As for the female graduates point – why should there be any link between the gender balance of graduates, and board composition? Might post-university gender-typical work/life decisions have a great deal more influence on board gender composition? Of course they will. We only need to have a basic understanding of Catherine Hakim’s Preference Theory, or Steve Moxon’s material on inter-sex competition outlined in The Woman Racket, to understand why company boards are male-dominated.

3. GDITB IS WORTH PURSUING EVEN IF IT DOESN’T LEAD TO IMPROVED PERFORMANCE AT THE INDIVIDUAL FIRM LEVEL

More individuals and organisations are to be found in this camp over time. It’s the one increasingly favoured by pro-GDITB academics with some integrity. Professor Susan Vinnicombe (Cranfield) is a prominent example, arguing for example that having few women at senior levels in organisations reflects a poor use of the money invested in women’s educations. I met the good professor at a fringe meeting in Birmingham recently, and remarked that I thought Catherine Hakim’s Preference Theory alone explained most of the gender ‘imbalance’ we find at the top of major organisations. She didn’t look very happy after I’d made that remark, it has to be said.

4. IT’S ALL ABOUT FAIRNESS AND EQUALITY

When proponents of GDITB employ this argument you know they’ve run out of ammunition. It’s routinely employed by people – men as well as women, sadly – who see inequalities of outcome as reflecting discriminations. The ‘old boys’ network’ creating the ‘glass ceiling’, and similar claptrap. I’ve never met or communicated with a single person who has personal experience of such phenomena. But their faith in them is absolute and unshakeable. You would as usefully seek an intelligent discussion on the matter with a goldfish.

IS THERE AN ARGUMENT – WITH INTEGRITY – FOR GDITB?

Given the evidence about the impact of GDITB on corporate performance, there remains one possible argument for GDITB which I would respect. I wouldn’t agree with it, on numerous grounds, but I would respect it as a position with some integrity. It’s this:

I accept the empirical evidence which shows that GDITB leads to declines in corporate performance, but I think that’s a price worth paying in the interests of (blah, blah, blah…)

I’m not aware of even one person anywhere in the world arguing along these lines. The myth that equal numbers of women are at least as good as men in all fields (other than in physical competition terms) but superior to men in a number of fields, must be maintained at all costs, whatever the negative impacts of the myth.

From time to time we refer to five studies which support the argument that ‘improving’ gender diversity on boards leads to a decline in corporate performance. They’re referred to in a number of posts, and have been included in a number of our documents. But we thought it might be useful to have one short document with details of the studies and their Abstracts, so here it is:

121111 ‘Improving’ gender diversity on boards leads to a decline in corporate performance – the evidence

This campaign is going from strength to strength, and our exposure and impact increases with every passing month. We’ve now reached the point where we need to call on further support to assist with a number of initiatives. The work can be carried out at home by anyone with a computer and access to the internet. Even a few hours a week would make a real difference to the campaign, and would be highly appreciated. We’re not currently in a position to pay volunteers, but hopefully that will change in time. If you’d like to support us, please contact Mike Buchanan, Chief Executive, at mikebuchanan@hotmail.co.uk. Thank you.

The House of Lords inquiry’s final report on ‘Women on Boards’ has just been published:

121109 House of Lords final report on ‘Women on Boards’

The inquiry was called to respond to Viviane Reding’s threat of legislating EU-wide quotas for women on corporate boards. Given Mrs Reding’s utter contempt for everything sent to far by the British and other governments – including the official DBIS response in May 2012 – we shouldn’t expect this new report to influence Mrs Reding in any way. But hope springs eternal.

The report’s opposition to EU-legislated quotas reflects official government policy, and shouldn’t surprise us. Given that the select committee only took oral evidence from people who are supporters of ‘improving’ gender diversity in the boardroom (‘GDITB’), many of them professionally involved in the initiative, and declined our request to give oral evidence, we also shouldn’t be surprised that the report strongly supports GDITB throughout. We were given a written assurance that equal weight is given to written submissions as to oral submissions, and our written submission pointed to strong evidence that GDITB has a negative impact on corporate performance.

So… equal weight. Let’s see, shall we? We counted a total of 85 references in the report to Cranfield and/or the 30% club, the leading proponents of GDITB in the UK. There are just two references to our own written submission. The first is a rejection of our key argument – that GDITB has been shown to lead to a decline in corporate performance – although no grounds are provided for the rejection. The second reference is, ironically, to one of the key studies (Ahern/Dittmar) which underpins that key argument. You couldn’t make it up.

So far, so depressing. But it would be a mistake to miss a key admission in the report. From the Summary, p4:

The report begins by stressing the benefits that come from a gender-balanced board. A more balanced board will be able to tap into the wealth of available talent in the labour market, provide a broader spectrum of ideas, better reflect a company’s customer base and improve corporate governance. We did not, however, find proven the argument that there is a causal link between more gender diversity on boards and stronger financial performance…

At last, an admission in government circles, in an official report, that there’s no evidence of a positive causal link. (A timely admission, given that earlier this week we had the same admission from Viviane Reding’s private office, an earlier post refers). There is, of course, strong evidence of a negative link – as strong as evidence can be in studies in this field, from longitudinal studies with panel data – but we’ll have to hope that the forthcoming House of Commons inquiry on ‘Women in the Workplace’, at which we’ll be giving oral evidence, will review that evidence.

Also from the Summary, p4:

We do not consider that the Commission has made its case for stronger action in the form of a quota for women on boards. We consider that quotas should not be resorted to until all other options have been exhausted. They generate negative perceptions amongst women and business leaders and do not address the root causes of inequality. Quotas should be used only where business has shown itself unwilling to change its ways.

We have a reference here to the government’s ‘voluntary’ business-led approach, which is official policy. It’s the same argument used by the mugger who threatens you with violence if you don’t hand over your money ‘voluntarily’. On p12 we come to the following assertion:

Some studies point to the fact that greater diversity, particularly of gender, can have a positive effect on corporate performance.

‘Some studies’ refers, of course, to studies seeking to misrepresent correlation as causation. The cited sources for this remarkable (and, of course, utterly erroneous) statement are the following:

IMA, Fawcett Society, An Inspirational Journey, Professor Sylvia Walby, Aviva, Arlene McCarthy MEP, Mary Honeyball MEP, NEST, European Commission, Q55 (Lord Davies of Abersoch), Q48 (Jonathan Rees, GEO), Q113 (Joanne Segars, NAPF), Q246 (Helena Morrissey), Q298 (Jo Swinson MP)

So, the ‘usual suspects’ then. We’ve challenged many of these organisations and individuals to cite even one robust study showing the ‘positive effect on corporate performance’, and collectively they’ve supplied nothing. However, things pick up on pp 12/13:

The last of the stated business benefits [C4MB: a positive effect of gender diversity on corporate performance] is the most contentious. The idea of a demonstrable financial benefit derives from studies by the consulting house McKinsey and Catalyst, a research and advocacy organisation for promoting female career development, which suggested a correlation between women’s representation at board level and the financial performance of companies worldwide. These assertions have been reiterated in subsequent studies and were drawn upon in evidence by the Government. However, Professor Susan Vinnicombe OBE, Director of the International Centre for Women Leaders at the Cranfield University School of Management, noted that Catalyst and Cranfield had now renounced this line of argument owing to the difficulty of inferring causation from the data.

We do not find the case for a causal improvement in the financial performance of businesses from increased female representation, in terms of improved revenues or returns on investment, compelling in the form advanced at present. There are too many other factors to take into account for diversity to be disaggregated reliably, and the fact that the case has been renounced by some of its most notable former proponents is indicative of its weakness…

We come on to an extraordinary statement on p13:

It should be stressed that we reject any suggestion that improved diversity would be to the detriment of company performance, as was argued in some submissions we received.

The (written) ‘submissions’ cited here were from ourselves, Michael Klein and Ray Russell. Both we and Michael Klein (now this campaign’s Research Director) cited two studies which show a negative impact of GDITB on corporate performance, the Ahern/Dittmar study and the Deutsche Bundesbank study. The committee is, therefore, implicitly rejecting not our ‘suggestion’, but these studies. We might reasonably ask, on what grounds is the committee rejecting them? Later today I’ll email the chair of the committee, Baroness O’Cathain, to ask this very question. I’ll copy the other peers on the committee for whom I have email addresses.

My hunch is that Baroness O’Cathan (if she responds) will employ the standard criticism of studies showing the negative impact of GDITB on Norwegian businesses, that the quotas were legislated, and the UK has not yet adopted legislated quotas. This ignores, of course, the obvious point that the threat of quotas has caused a more than fourfold increase in the proportion of new FTSE100 directors who are women in just two years (from 13% to 55%), and all the women appointed in 2012 have been as non-executives. The appointment of women as non-executives is the same ‘solution’ that was adopted by Norwegian companies in the face of legislated quotas. The ‘solution’ still led to declines in corporate performance, as Ahern/Dittmar and others show.

Ironically, given the above, the report recognises the existence of the Ahern/Dittmar study. On p.22 we find:

There were also concerns that quotas would lead to practical problems, with attention drawn again to the experience of quotas in Norway. Some cited research indicating that the quotas there had led to a reduction in shareholder value…

The ‘cited research’ is the Ahern/Dittmar study. No mention is made of the Deutsche Bundesbank study.

Following a request from a supporter, Dorothea, to read the government’s response in late May 2012 to the EC consultation exercise, I’ve informed her it can be accessed through the following link:

http://www.bis.gov.uk/policies/business-law/corporate-governance/women-on-boards

The link leads to the following material relating to the government’s response:

28 May 2012: Government response to the EU consultation on Gender Imbalance in Corporate Boards in the EU.

In March this year, European Union Justice Commissioner Viviane Reding launched a consultation seeking views on action at an EU-level to address the issue, including legislative measures such as introducing quotas.

The Government has today written to the Commission making clear it does not support EU action in this area, backed by evidence that the number of women in senior positions can be increased without resorting to burdensome regulation.

The Business Secretary, Vince Cable said: ‘Increasing the number of women on boards is not just an aspiration for greater equality; it is also an important issue for economic growth. Research shows that diverse boards make better decisions and are more effective. Since Lord Davies published his recommendations, there has been strong momentum for change and real engagement from business and investors in addressing diversity issues. The UK’s voluntary, business-led approach, backed up by commitment from Government, is achieving a culture change in a way that burdensome regulations never can, and where women take a board position based on merit rather than making up the numbers.’

The formal response is downloadable from the link, and it’s here too:

121108 UK response to the EC consultation on gender imbalance on corporate boards in the EU

It’s full of the usual guff, but I’d like to draw your attention to one piece in particular:

3. In your view, would an increased presence of women on company boards bring economic benefits, and which ones?

Yes, we believe that more women on company boards brings many benefits including economic ones.

Importantly, a growing body of empirical research is beginning to show that diverse boards are more effective. One such report conducted by Catalyst (1) suggests that companies with more women on their boards out-perform their rivals, with a 42% higher return in sales, 66% higher return on invested capital and 53% higher return on equity.

We also know that women make around 70% of consumer purchasing decisions. Connecting better with the female workforce and customer base offers more opportunity to understand what drives decision-making and better enables businesses to understand their customers.

Continually recruiting individuals who share the same backgrounds and experiences creates a ‘group-think’ mentality within the board, which runs the risk of making flawed decisions because there are no fresh or different perspectives. Ultimately of course such businesses will be unable to stay ahead of the game.

Finally, good role models of both genders provide a clear link to aspiration within the workforce and society in general.

(1)   ‘The Bottom Line: Corporate Performance and Women’s Representation on Boards’, Lois Joy, Nancy M Carter, Harvey M Wagener, Sriram Narayanan, Catalyst, 2007.

‘Importantly, a growing body of empirical research is beginning to show that diverse boards are more effective.’ Oh dear, there appears to have been a typing error there, because the sentence would be correct if the word ‘more’ were replaced with the word ‘less’.

The inclusion of the Catalyst data is little short of scandalous, given that Catalyst itself ceased making claims of causal links in September 2011 –eight months before this document was written. Still, what else would we expect from Vince Cable and his team at the DBIS? I’m still awaiting a date for a meeting with Vince Cable and Helen Whitehead (the most senior civil servant at the DBIS involved with this matter).