In Europe, gender quotas are old news.
In 2003, Norway became the first country in the world to introduce a gender quota for boards of directors, requiring listed companies to add female members to make up at least 40% of total board representation. Other countries, such as Belgium, France and Italy, followed suit.
But in the United States, companies are reluctant to enact gender and diversity requirements for inclusion, even as representation numbers continue to lag.
Margarethe Wiersema, a professor of management at the University of California-Irvine, says the reason behind the hesitation is very simple: Americans don’t like being told what to do.
“Europe is so far ahead of us. It’s like we’re in the dark ages in it,” he says. “I think it’s about mindset.”
Stopped progress
A bill moving through the California legislature could make the Golden State the first in the nation to mandate gender quotas on corporate boards. If Gov. Jerry Brown signs it into law, publicly traded California-based companies will have to put at least one woman on their boards by the end of next year or face penalties.
“Unfortunately, they need that push and prod because obviously it was necessary,” says Paula Loop, assurance associate and leader in PwC’s governance information center. “You have to push and push these people to get there, but there is an overwhelmingly positive effect when they are there.”
In Norway, the country considers its legislation to have been successful. With female members now making up 40% of board seats, overall diversity has increased as the gap in board member pay has narrowed.
As for the effects on financial performance and other indicators of success, some experts say more time is needed to assess.
In the United States, however, the statistics are clear: while the majority of S&P 500 companies have at least one woman on their boards, only 25% have more than two, according to a PwC study.
“I think we are very far behind the rest of the world and it would be great if we could make more progress on that,” says Wiersema. “Having spoken to a lot of female CEOs, they just can’t believe how little traction there is. That’s not acceptable in their eyes, that we’re at this level. Especially when you look at other countries. It’s not just Scandinavia anymore, it’s Spain, it’s Italy They’re countries that the US thinks we’re better than, and we’re not.”
More progress to come
Opponents fear that pressure from quotas will promote unqualified female members to prestigious positions or even potentially discriminate against male candidates.
But there’s no precedent for this, according to Ariane Hegewisch, director of the employment and earnings program at the Women’s Policy Research Institute.
“That certainly hasn’t happened,” he says. “There is no indication that this has happened and that it has in any way worsened governance… [but] there’s research showing that companies without women on their boards don’t perform as well.”
Appointing just one woman to the board is not enough to create progress, however, according to Alison M. Konrad, author of a 2006 study “Critical Mass on Boards.” Without female representation already on a board, some women are hesitant to be the first, she said.
“They didn’t want to go through the stigma of being the icon,” says Konrad. “They wanted to be added to the board because of their ability to contribute. From their experiences, the stigmatizing dynamic emerges. It’s hard enough to just be the first woman without being the first woman slapped with a label that you ‘exist as symbol.”
CNNMoney (New York) First published September 7, 2018: 11:42 am ET
