European Affairs

Cracking The Glass Ceiling In European Boardrooms Via Quota     Print Email
By Ann Crittenden -- Journalist and European Affairs Editorial Advisor

The pressure is building in Europe for more women in corporate boardrooms. A continent that has seen female prime ministers, chancellors, foreign and even finance ministers is asking why, in the  second decade of the 21st century, so few women wield power in publically traded corporations.  And the remedies being discussed, including quotas, go far further than anything comparable in the United States.

The problem is this: after years of informal efforts to increase gender equity, corporate boardrooms in most European countries remain an old boys’ club. In Germany, only 3.2 percent of executive board positions in the top 200 companies are held by women, lower than in Russia, China, or Brazil. In the U.K., women make up only seven percent of the board members at FTSE 250 companies (comprising  the 101st to 350th largest corporations in Britain). France is doing somewhat better. 14.4 % of board seats are held by women in the CAC 40 (the 40 largest French companies traded on the Paris Bourse). Overall, however, women make up only 10 percent of boardroom members within the EU, despite parity or better in higher education and near equal percentages of women in the workforce. (In the U.S., in comparison, about 15.7 percent of board seats in the Fortune 500 are held by women. In 2010, more than one-quarter of all chief executives were women).

The situation has spurred new calls for more aggressive remedies, including mandatory quotas. Norway was the first to take this route. After imposition of a 40 percent quota, effective in 2008, 40.3 percent of board members in Norway are now women. Skei Grande, the female leader of Norway’s Liberal Party praised the result: “quotas have helped make equality a way of thinking, and no one would dare to say today that women are stupider or less competent. Today, it's understood that if we only use men, we lose a lot of potential and opportunities."

The French government has given companies three years until 2012 to reach a 20 percent target, six years to reach 40 percent. Other governments may follow suit.

“I have not been a advocate of quotas for women in senior business posts in the past, but given the lack of progress in this area, we might in the future have to consider taking initiatives at the European level,”  EU Justice Commissioner Viviane Reding stated recently. Reding plans to make a formal recommendation in April on how to achieve greater gender equity.

[In the U.S., which employed quotas in the form of "affirmative action" preferences for African-Americans' advancement,  the approach to promoting an enlarged female contingent among corporate executives and board members has swung toward training and "coaching" -- or the lack of it. This approach seems to offer diminishing returns, according to a new McKinsey report. It found that "despite efforts by major [U.S.] companies, just a handful of women have ascended to the leadership pinnacle...[and] only 11 chief executives of Fortune 500 companies are women, down from a peak of 15 in 2010, according to a spokeswoman for Catalyst Inc., a nonprofit women's research group. There were two Fortune 500 female CEOs in 2000, up from one in 1995, Catalyst said in a 2000 report."]

A recent UK report by Lord Davies of Abersoch, who was chosen to lead an official government inquiry on male dominance of UK boardrooms in 2009, when he was a Labour Party business minister, urged Britain’s FTSE 100 companies (top hundred publically traded companies in Britain) to increase the proportion of women on boards to at least 25 percent by 2015, threatening quotas as a last resort if such a voluntary effort failed.

The ultimate rationale for such measures is of course fairness, but political pressure plays a part as well.  In Britain, research by the Institute of Leadership and Management, a trade association that is the largest of its kind in Europe, found that among 3,000 managers, 47 percent of women supported quotas.

“I’m completely in favor of quotas,” said Anna Ford, a former broadcaster who sits on the boards of J. Sainsbury, the second largest supermarket chain in the UK, and N. Brown, a large British home shopping retailer. “I think women have waited long enough.  We’re half the population, we’re not a disabled racial minority.”

Supporters of greater female leadership also argue that greater diversity will improve the bottom line.  A 2007 report by McKinsey, a major management consulting firm advising leading companies on issues of strategy, organization, technology, and operations, demonstrated a link between a company’s performance and the proportion of women serving on its board.  An earlier study by Catalyst, a nonprofit organization whose mission is to expand opportunities for women and business, similarly found that major companies with more women in senior management perform better financially than companies with proportionately fewer women at the top.  This link doesn’t prove causality, but several studies have established that cross-culturally, female leaders excel in their ability to motivate their workforce, and in focusing on delivering results. Common sense would argue that broadening the talent pool, and the range of experience of board members, could only help corporations compete in a global environment.

Still, European business leadership for the most part remains unconvinced that there is a problem, unsure that there is sufficient female talent available, and uniformly hostile to anything resembling compulsory quotas. Whether these attitudes can continue to prevail in the face of growing pressure for change remains to be seen.

As Lord Davies, author of the British report pushing for increased hiring of women on boards of British companies, recently told a Financial Times roundtable gathering, "This is a crisis in the boardroom of Britain and we need immediate action from a collection of people."

"If the institutional shareholders do not put pressure on the boards, if the headhunters don't come up with a new talent pool, and if the chairmen don't fix this in the next two or three years, absolutely there should be quotas... – I think we are in the last chance corral.”

(Here is an article from New York-based conservative policy magazine City Journal that contrasts Crittenden's plea for using quota to boost the number of women in boardrooms, claiming that most women willingly pursue part-time careers – hence, wage-gap discussions should “begin with the mommy track, not with proofy statistics.”)

Award-winning journalist Ann Crittenden was an economic reporter for the New York Times and Fortune Magazine., and sits on the European Affairs editorial advisory board. Her books include “The Price of Motherhood.”

 
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