Free market in talent.

Yesterday – in response to an earlier article – Gillian Wilmot makes a claim on the FT’s editorial page for more women in senior executive and Board positions in the UK:  “Men have messed up. Let women sort it out.”

The more worthy the task the more women, and the more financially rewarding the task the more men. So the public sector and charities, where work is pro bono or modestly paid, have far more women directors than private equity houses, banks, city firms and hedge funds, which are dominated by the “white, male accountant”.

“So what? Why should I care?” Because it is in the financial institutions where the big decisions and risks are taken and where all our pensions and savings are invested. The testosterone-packed “winner takes all” approach does not sit easily with looking after the interests of all stakeholders (shareholders, employees and customers) and managing the downside risk. A lethal combination of testosterone, complexity and greed has brought UK plc to its knees.

The City knew by 2006 that their seven times debt-to-profit deals were unsustainable. They did the deals to win the game and get their bonuses – the individuals cash out, the rest of us lose out.

Would it have happened with more women on these boards? Not if those women had been in the powerful roles of executives, chief executives and chairmen at big financial institutions.

Well, she’s right. Although I can’t say I agree with her claim that quotas are the only way to redress the ridiculous situation of having a homogeneous group of old white guys running everything. I think that generational change, the enormously compelling arbitrage which exists (pound for pound hire women rather than men and you’ll beat the competition hands down – more talent for the price, what’s not to like), and the blindingly obvious fact that heterogeneous groups of people are smarter, more creative and robust than brittle monocultures will ultimately lead us to a more balanced executive suite rather sooner than most people think. I especially think ubiquitous broadband and mobile computing and communications technologies will allow us (as a society) to keep the interest of bright women who heretofore were pushed out by the need to choose between work and family. (By the way, it will also allow men to maintain a more intelligent balance and in so doing not only result in happier families and children, but smarter, better adjusted men in the Boardroom.)

But ultimately the only way real change will be effected in the boardroom is quotas, as in Norway. These can be done in a staged way but there must be targets for executives, chairmen and non-executive directors.

All female shortlists can work well and it is highly successful companies that have led the way. Admiral, the FTSE 100 insurance company, ran an all-female shortlist in 2005 when I joined the board.

Men created the current financial mess; they need women to help them clear it up and restore everyone’s faith in the system.

I’m not against quotas per se, just that they shouldn’t be imposed by the government from above – if companies are too stupid to see the competitive advantage inherent in a balanced executive team, let them suffer the consequences. Except perhaps for the banks (or any other industry that the State cannot allow to fail catastrophically…) But now that the government owns 60% of RBS they don’ need to pass a law to get more women on the Board, just a shareholder’s resolution, or a quick call to Mr. Hester.

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