2015-01-26

According to the 2013 Catalyst Census: Fortune 500 Women Directors, women in America held only 16.9 percent of board seats last year—virtually no change from the 16.6 percent in 2012.  Less than one-fifth of companies had even 25 percent women directors, and one-tenth of companies had absolutely no female board representation.  Gender diversity has been a hot-button corporate governance topic for years now, yet there seems to be a standstill in progress on American corporate boards.

A variety of legislative, regulatory, and voluntary methods are in use around the world to address this issue, and among these approaches, one seems particularly radical: Norway’s gender quota law, instituted in 2003, which requires at least 40 percent of a public company’s board members to be women.  Australia, Belgium, Brazil, Britain, Germany, Iceland, Italy, Malaysia, the Netherlands, Spain, and Sweden are following suit, though, each of these countries either having implemented a similar target, planning on imposing such a measure, or having threatened to do so.  The European Commission is considering a gender quota for EU Member States, with the European Parliament having backed the proposal in November 2013.  While the directive has yet to be finalized, the proposed EU quota would be non-mandatory but likely would mandate priority to the underrepresented sex in situations where candidates have equal qualifications.

Gender quotas have been gaining more support across the globe, and in face of this trend, the US too should strongly consider their use.  That is not to say that quotas are problem-free.  Yale Law Professor Anne Alstott says they could cast new female directors as tokens as well as undermine corporate performance by placing unqualified women in leadership positions.  Moreover, quotas may be difficult to implement in certain countries, and Harvard Business Review advocates for countries to adopt culture-specific strategies to promote women.

But Norway has shown that gender quotas have the potential to work effectively in practice, even in light of the aforementioned issues.  According to the Economist, critics of the Norway law had worried that it “would actually decrease diversity by forcing companies to dive for the same small pool of eligible women,” but this has not been the case.  Moreover, although quotas seem drastic, Professor Alstott asserts that the structural change they create can have a tangible impact on attitudes in corporations since “gender discrimination flourishes when institutions allow actors to give free reign to stereotypes and to unconscious biases.”  Voluntary change is preferable and less polarizing, but gender quotas may be just what we need “to kick-start lasting change in society.”  Even those who criticize the mechanism, such as Sue Liburd of talent management consultancy Sage Blue, recognize that they have merit as part of a short-term strategy.  If utilized in the right way, they could complement the current nationwide push for a more diverse workforce.

In September 2014, Secretary of Commerce Penny Pritzker emphasized the urgent need for more gender diversity in corporate boardrooms, and she listed five steps that would help corporations achieve this:

Engage men in senior leadership to look outside their known circle of colleagues.

Develop deliberate strategies for recruitment, including establishing a rule that a board’s nominating committee must consider at least one woman per opening.

Review the impact of internal policies on female employees, including sick, family, medical, and maternity leave and then change them where appropriate.

Ensure equal opportunities for mentoring and professional development.

Measure and disclose company’s diversity statistics and couple this with action.

Secretary Pritzker’s guidelines would be helpful if corporations were to commit to them (and that is a big “if”), but even so, the five steps are process-focused instead of results-focused.  While they could improve workplace attitudes on gender diversity, they are unlikely to have much bearing on the outcome: the actual representation of women in the boardroom.  Without relying on measures that are more drastic, progress towards gender diversity on corporate boards is bound to remain slow.

Show more