by Shealyn Kirts, edited by Monika Mitchell
Seats in corporate boardrooms are finally opening up for women. Female representation is reaching new levels as European countries adopt quotas for more women to be placed in high-level positions. This remedy seems long overdue, especially since European countries currently have women in positions of power overseeing the affairs of their countries. The boardroom shift marks a milestone for female equality in the workplace.
In 2003, Norway adopted a law requiring 40% of all board members of state-owned corporations and publicly listed companies to be women. France, Belgium, Iceland, Italy, the Netherlands and Spain followed suit and are adopting similar quotas. Germany has pledged to raise the amount of female participation by 30% or greater by 2013.
The idea of countries focusing on gender equality sounds hopeful, but will companies follow the new regulations? Will this affect bottom-line profits? According to France24 International News, France became the first model of success in 2011 by appointing 20.1% of women to boardrooms after implementing the law the previous year. This is a 13% increase from 2004. French banks and telecom companies also decided to follow the law, even though they were not mandated to. The quick response by French companies demonstrates the speed at which this change can occur.
The new policy is not only a mandate for equality, but a business opportunity as well. According to CWDI, a nonprofit organization dedicated to the research and advocacy for women on boards globally, companies with women in leadership roles have higher levels of financial progress and success. In the CWDI 2011 Report on Women CEOs Opening Doors to Boardrooms and C-Suites, CDWI proposes the question: “Does it make a difference if a woman is in charge?” The answer: A resounding yes! The study analyzes 112 women CEOs in 39 countries. Three important points obtained from the research are as follows:
1. Top companies led by women have more women directors in boardrooms and in executive officer positions.
2. Companies with women CEOs have 22.3% women on their boards. This is compared to the 9.8% average on boards of blue chip companies.
3. Women-led companies have a higher percentage of women in senior management at 24.3%. The average representation of women in executive roles in peer companies is 12.2%.
Further supporting the CDWI study is evidence of the “feminine skill set.” Daily Finance delves into the importance of a woman’s attributes, such as communication and flexibility to a company’s success. A team composed of male and female members produces better results concluded researchers from the MIT Sloan School of Management and Carnegie Mellon’s Tepper School of Business.
However, there are concerns that the quota system might not be wholly effective in establishing female inclusion. Companies might simply appoint women to abide by the law, but not take them seriously as part of the board. Ultimately, will the inclusion of women in top corporate positions improve the companies themselves?
Alex Edmans, a finance professor from Wharton, states, “The problem with quotas is that they are a one-size-fits-all solution.” Edmans is referring to the problem that people who are not fit for the job may be placed there because of the law and, consequently, the business will suffer.
Some nations, such as Finland and Sweden, have decided not to use quotas. Instead they have had public discussions to increase diversity in the workplace. The percentages of women in the corporate board in these countries have now reached 26%.
Regardless of which steps are being taken by various countries, the need for change in the corporate boardrooms will continue to be a major issue. The European Institute quotes 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 is quoted saying “I think women have waited long enough. We’re half the population.”
Hopefully these steps toward increasing gender diversity will continue to spread globally. It appears that the glass ceiling for women has cracked substantially with their entry into the boardroom. Perhaps the day is near when board positions are based on qualifications and experience and not discrimination. For now, this is a large stepping-stone for women and the companies they wish to represent.
(Editor’s Note: The U.S. is far behind Europe on the trend to include women in top C-Suite and boardroom roles.)
Shealyn Kirts is a recent graduate of the University of Delaware with a degree in International Relations.