Last year, the European Commission took a dramatic step in its effort to diversify.
Vĕra Jourová, the EU commissioner in charge of justice and gender equity, advocated for a gender quota that requires 40% of a company’s non-executive directors to be female. Firms that fail to meet that threshold would be required to prioritize female candidates over men when filling a board seat. (What a concept!)
The effort is aimed at fast-tracking progress toward gender equality on boards in the EU, where women currently hold about 22% of seats. By comparison, corporate boards in the U.S. are about 21% female, according to the Guardian.
According to The Economist, Norway—not a member of the EU—was a pioneer in corporate board quotas for gender parity when it introduced its 40% female representation requirement in 2006. A decade later, 42% of board seats in Norway belonged to women.
“Stronger regulations with mandates for minimum gender representations are in place in many of the markets with the highest percentage of female directors, while markets with less stringent regulations or no mandates tend to have fewer female directors,”says a study published in January 2017 by the Institutional Shareholder Services, Inc.
And then comes California, which just became the first state to require women on corporate boards. The bill requires that every publicly traded corporation headquartered in California have at least one woman on their board of directors by the end of 2019, according to the Los Angeles Times. It will most definitely face an intense legal fight but it has the support of a good portion of women executives.
For decades, men have held all the board seats for a quarter of the publicly traded companies in California and national numbers aren’t any better. Right now, women hold only one in six board seats in companies in the Russell 3000. Reaching gender parity will not happen, if we are lucky, until 2055.
But, quotas have fierce opponents. Those against the quotas say it will encourage token appointments of women and end up elevating under-qualified women.
No, I don’t think so. Why is it every time it comes to putting a woman in charge, it requires force or justification. Why is it that women are under-qualified, yet I seldom hear that about male board directors?
And another thing! Women still have to overcome strong cultural issues that most men don’t have to overcome to gain a seat in the corporate boardroom
On top of that, many businesses prefer veteran female directors over new, untested women directors, according to Equilar research. Most of the time, the only women executives’ male directors know are already on multiple boards.
Funny thing, being a board neophyte does not disadvantage male candidates because men have better connections to powerful men.
California is making the loudest statement, but organizations like State Street Strategies and BlackRock are all on board with gender parity and have openly stated that all companies should have at least 2 female directors. The lens is finally focused and that glass ceiling is getting more cracks by focusing on getting corporations to change their practices.
But what needs to change are attitudes!
Women are not under qualified. Women are the best thing to happen to the boardroom!
Women bring talent, experience, and a diverse perspective to board service.
According to 2020Women on Boards, having at least 3 women on Fortune 500 boards, results in 42% higher return on sales and 53% higher return on equity.
Women positively impact the bottom line!
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