Lack of women on boards linked to 'group think' in banking crisis

A lack of women on the boards of City firms may have made challenging executive decisions “less effective” in the run up to the UK financial crisis, a report by British MPs said today.

The British Treasury Select Committee said the small proportion of women at the top could have contributed to “group think” in boardrooms.

However, it also said suggestions that greater female representation at senior levels would have made the banking crisis less likely “may be going too far”.

The report said diversity among financial firms in the FTSE 100 Index is lower than for other top companies, with women making up 9% of listed bank boards compared to 12.2% on the index as a whole.

The committee’s report said: “We believe the lack of diversity on the boards of many, if not most, of our major financial institutions may have heightened the problems of ’group think’ and made effective challenge and scrutiny of executive decisions less effective.”

The 14-strong committee – which itself has only one female member – said change should be cultural, rather than legislative.

Chairman John McFall said: “Our report urges the City to take matters into its own hands and improve gender diversity.

“However, we recommend that the Treasury Committee in the next Parliament monitors this: I am sure it will want to see evidence that this voluntary approach is yielding results.

“If it does not, then the pressure for compulsory measures is likely to grow.”

Responding to the report, Harriet Harman, minister for women and equalities, said firms should “play their part” in encouraging greater female representation in senior positions.

“Businesses that run on the basis of an old boy network and do not draw on the talents of all the population will not be the ones that flourish and prosper in the 21st century,” she added.