• Opinion
  • October 10, 2018
  • 7 minutes
  • 2

Gender quotas for corporate boards work — even if they’re never enacted

Opinion: The glacial advance of women into top leadership has become a policy problem

This opinion piece was written by Jennifer Piscopo, a professor at Occidental College in California. It also appears in our gender equality newsfeed.

The European Union emphasises the importance of parity democracy: the equal participation of men and women in political, social, and economic decision-making. But even as more women take up “pipeline professions”, they are rarely well-represented in positions of political and economic power. Women have been graduating from universities, law schools, and business schools in high numbers — but glass ceilings remain.

The glacial advance of women into top leadership positions has become a policy problem. In 2000, women held 13.9% of seats in the world’s legislatures. By 2005, this number had increased just two percentage points, to 16.1%.

Progress has been even more slow on the corporate side: in the European Union, the proportion of female directors increased from 8.5% in 2003 to 13.7% in 2012.

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Frustrated by this slow pace of change, advocates have adopted “time’s up” rhetoric to justify government intervention, in the form of gender quota laws. The consensus is that voluntary action — relying on the goodwill of party leaders or company directors to nominate talented women — does not move the needle.

Belgium, for example, has gender quotas for both political candidates and corporate boards. Justifying these policies, Belgian MPs argued that the over-representation of men in top offices could no longer be considered normal or appropriate.

In France, ministers insisted that quotas for corporate boards were necessary to shock the system, which had stalled in promoting women on its own. Only legal measures would bring about change.

Consequently, gender quota laws have spread through Western Europe and the rest of the globe. France, Belgium, Italy, Spain, and Portugal all elect their parliaments with quotas or parity rules. Norway adopted the world’s first quota for corporate boards in 2004, applying the measure to companies in the public and private sector. Eight additional countries — most recently Germany and Denmark — have since adopted corporate quotas for all company types.

Frustrated by the slow pace of change, advocates have adopted “time’s up” rhetoric to justify government intervention in the form of gender quotas

But there is a crucial distinction between quotas for political candidates and quotas for corporate boards. Political parties are “public” in that they perform tasks vital to government: parties provide the platform through which citizens articulate policy preferences and choose their leaders.

Corporations aim to make money. Even when the state is a shareholder, corporations do not represent citizens’ interests in the way parties and parliaments do. This difference explains business leaders’ strong resistance to corporate quotas.

But the “time’s up” rhetoric alone has made a difference in some countries. Our research found that, over an eight-year period, some European and Anglo democracies without corporate quotas raised the proportions of women on boards as much as countries with quotas.

Why? Ministers in countries without quotas threatened companies with these laws if they didn’t promote more women voluntarily. And companies listened.

In the United Kingdom, tough talk from then-Prime Minister David Cameron and his cabinet worked. The proportion of female directors in the FTSE 100 rose from 12.5 to 26% in just five years. British corporations demonstrated a good faith commitment to gender diversity, and the government backed down.

Countries without quotas threatened to impose them if corporations didn’t promote more women voluntarily. And companies listened

The central premise of “time’s up” rhetoric is that 21st century businesses do not discriminate against women: companies must do better, or else. Our research concluded that these threats are more effective than arguments about the “business case for diversity.”

That argument posits that better outcomes — like improved profits — flow from women’s presence. It speaks to corporations’ bottom line, but holds women to impossibly high standards. Adding two or three additional female directors does not transform corporate governance. But their presence can demonstrate a corporation’s commitment to ending discrimination.

As corporations increase their proportion of women leaders, Europe’s experience with gender quotas for political candidates should calm sceptics’ concerns. Ministers, corporations, and even the public may fear that quota laws privilege gender over merit.

But the political science research does not support this conclusion. First, affirmative action raises the bar for women and men: gender quotas weed out the mediocre men, because with fewer positions available, men must justify staying in the top positions. Second, women nominated under gender quotas are as qualified as, or even more qualified than, their male peers.

The “time’s up” language reminds selectors that qualified women are out there — and it’s your job to find them. The most popular policy tool for achieving parity democracy has been quota laws. These laws do work — and that can be true even when they’re only threatened, but never implemented. — Jennifer Piscopo

(Picture credit: Pexels)


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