Quotas Not Necessarily Good for Keeping Women on Boards

I don’t like writing that headline, being a self confessed proponent of having quotas for women on boards. I think quotas are right thing to do and that companies should be legally required to address the issue, and then they will invest in their female talent way down the line.

However, I am also interested in evidence and facts so when I spot a piece of research saying quotas are not helpful, I am honour bound to take a look and consider it seriously.

The research was undertaken by by BNY Mellon, the wealth and asset management firm, and conducted by Sucheta Nadkarni, a professor at Cambridge University.

The research found that a nation’s female economic power — defined by expected number of years of education for girls and the percentage of women in the work force, and a corporate governance code,  a written policy at a company that mentions gender diversity, were more influential in getting women onto boards and ensuring that they stayed on.

Australia, Norway and Denmark registered the highest levels of female economic power. The United States ranked sixth and Britain was in ninth place. (See also The problem of women on boards and golden skirts.)

Although quotas worked in placing women on boards, they did not necessarily succeed at encouraging women to remain in the posts, the research showed.

For me the striking and most encouraging finding is that empowering women and girls outside the boardroom is key to getting them into the boardroom — and staying there,” said Helena Morrissey, chief executive of Newton Investment Management, owned by BNY Mellon.

Helena Morrissey is also the founder of the 30% Club, which aims to increase female representation on boards of British companies.

“It is not about a few token women on boards,” she said. “If done through real change, it can impact all.”

Some European countries have required quotas to ensure that corporations add female board members. The Cambridge study found that it was not this system, or political influence of women in governments, that mattered most.

Academic research into what policies influence board representation has largely centred on US  boards. This latest report is more global and asks what factors contribute to both more percentages of women on boards as well as longevity, or how long they stay on boards.

Certain policies have been helpful in aiding the efforts to increase the number of women on boards. Those include more substantial maternity leave (the longer the leave, the higher the percentage of women on boards and the longer they stayed on boards. I’d love to see that called parental leave.). Political power also had an impact: The more women in politics, the greater the number and the longer they stayed in corporate boards. That is very interesting, particularly in light of the new Equality Party recently launched in the UK. Will that encourage more women into politics and thus address some of the issues of female representation on boards?

However, the most effective policies seem to be the economic power of women and the governance policies of any given corporation. Unlike quotas legislation , these factors are not binding on businesses. Focusing on equality for all seems to be the answer.

Changing People works directly with businesses to improve their female representation at al levels.


Posted on November 13th, 2015 by

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