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  • LEGISLATED GENDER QUOTASTHE SLEDGE HAMMER WITH WHICH THE GLASS CEILING IS BROKEN?

  • Nicoll Curtin Equality, Diversity &

    Inclusion Report March 2015

    CONTENTS

    Contents

    Introduction: Breaking the Glass Ceiling Women on Boards: The European Statistics The Quotas The Pros and the Cons Appointment of Women vs. Crowd-Out of Others Promotion of Female Talent vs. Appointment of the Under-qualified Pipeline: Encouraging Womens Aspirations vs. Handing Women Opportunities The Improvement of Financial Performance vs. Unquantifiable Financial Results Diverse Perspectives vs. Homogenous Group Thinking The Norway Story The Resistance Emergence of the Golden Skirts Looking Beyond Traditional Sources Developing the Female Talent Pipeline The Earnings Gender Gap Board Efficiency The UK Story The Emergence of Transparent, Voluntary Targets Developing the Female Talent Pipeline Our Progress Conclusion From The AuthorAbout usReferences

    2

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  • Breaking the Glass Ceiling - an organising thought amongst both women attempting to progress their careers and organisations attempting to diversify their leadership. But what is the glass ceiling?In 1986 Carol Hymowitz and Timothy D.Schellardt pub-lished an article in The Wall Street Journal entitled The Glass Ceiling: Why Women Cant Seem to Break the Invisible Barrier That Blocks Them from the Top Jobs both coining and defining the term. However, is this definition still applicable? Is the barrier to women in advancement of their careers still invisible, unseen, and unacknowl-edged? Is it glass? You cannot read an article or book, attend a forum or join a network, or find any other reference to women in busi-ness and leadership without

    stumbling upon this phrase.As such, organisations and governments globally have been looking for tools to break the glass ceiling. These tools have taken the form of anti-discriminations laws, mentoring schemes, leader-ship skills training for women, the training of leaders on the perils of unconscious bias the list of recommendations goes on.One tool in particular has been identified as the sledge hammer with which the glass ceiling is broken: legislated

    quotas for gender diversity on boards. In Norway a 40% gender quota for boards was introduced in December 2003. Female representation then jumped from 15.9% in 2004, to 37.0% in 2007, and finally reached the 40% target in 2008. On 20th November 2013, the European parlia-ment voted in favour of a proposed draft law that would require 40% female board members in 5,000 listed com-panies in the European Union by 2020.

    Breaking the glass ceiling

    In the UK womens representation on FTSE 100:

    In 2013/14 women accounted for 28% of board appointments

    accross FTSE 100

    There are only 2 remaining all male

    boardsWomen account

    for 20.7% of

    overall board directorships

    The FTSE 250 have achieved:

    In 2013/14 women accounted for 33% of board appointments

    accross FTSE 250

    There are only 2 remaining all male boards Women account

    for 16.5% of

    overall board directorships

    There are 48 remaining all male boards

    Source: Great Britain, Department for Business, Innovation & Skills , Women on boards Davies Review Annual Report 2014

    INTRODUCTION

    3

  • Iceland passed a quota law in 2010, which legislated a minimum representation of 40% from each sex on the boards of publicly owned and publicly limited compa-nies with more than 50 employees. There are no official sanctions for non-compli-ance.

    In February 2002, the Norwegian government set a deadline of July 2005 for private listed companies to raise the proportion of women on their boards to 40%. By July 2005, there was only 24% female representation. In January 2006 legislation was introduced extending the final deadline for compliance to January 2008, after which they would face fines or even closure. Full compliance was achieved by 2009.

    ICELAND

    NORWAY

    In January 2011, France adopted a quota law that obliges listed companies and companies employing at least 500 employees and with revenues over 50 million to appoint at least 20% women on their boards within 3 years and 40% within 6 years. The main penalty of the law is that an appointment of a board member that does not meet the criteria in terms of gender will be rendered invalid.

    FRANCE

    The Law of Equality, was approved in 2007. The law recommends listed companies appoint women to up to 40% of all board seats by 2015. There are no sanctions for non-compliance, however the Spanish Government has pointed out that it will take compliance into consideration when assign-ing certain public contracts.

    SPAIN

    THE QUOTAS

    5

  • Boards of state-owned companies are required to have an 'equitable proportion of women and men'. From 2008, the corporate governance code requires that every board should have at least one man and one woman. Although there are no official sanc-tions, there is a comply or explain code that requires transparency and explanation of efforts to achieve board gender diversity.

    FINLAND

    On 12 August 2011, Law 120 Gender Balance on the Boards of Listed Companies, became effective. The legis-lation requires at least 20% of board members to be female by 2015 and 33% to be female by 2018. If a company does not comply in due time a fine will be applied of a minimum of 100,000 euros to a maximum of 1 million euros for the board, and a minimum of 20,000 euros to a maximum of 200,000 euros for the board of statutory auditors. If the failure continues, the board of directors or the board of statutory auditors will be replaced.

    ITALY

    In December of 2009 the government approved a quota which went into effect in 2013. The legislation requires at least 30% of board members to be male and 30% to be female by 2016. The appointment of the remaining 40% will be at the discretion of the company. Again, there are no official sanc-tions however the comply or explain code applies.

    THE NETHERLANDS

    The Belgian law on gender diversity was approved in 2011 and legislates that all boards must have a minimum of one-third male direc-tors and one-third female directors. In the context that directors mandates are usually for a six-year period (the maximum allowed), the quota remains in effect from the first day of the sixth fiscal year following the publication of the law. Sanctions for non-compliance include the loss of benefits for board members, or non-com-pliant appointments being rendered invalid.

    BELGIUM

    THE QUOTAS

    6

  • Pipeline: Encouraging Womens Aspirations

    vs. Handing Women Opportunities

    THE PROS AND CONS

    Appointment of Women vs. Crowd-Out of Others

    The Davies Report details the key themes cited by respondents as barriers causing women to be under-represented in posi-tions of seniority:

    30 30

    22

    18

    2

    31

    0

    5

    10

    15

    20

    25

    30

    35

    Attitude in the w

    orkplace

    Work environm

    ent

    Career A

    dvancement

    Promotion/ H

    iring Recruit

    Com

    pensations/Benefits

    Miscellaneous

    Quotas can be instrumental in removing barriers and rendering bias or discrimination irrele-vant, by reserving seats specifically for female appointments.

    The flipside to this is that gender quotas may crowd out other under-represented groups; by reserving certain positions for women, there will be fewer positions open for these candi-dates. Men may also be negatively affected.

    attitude was referred to by 30% with bias, prejudice or stereo-typical behaviour being the top factor

    22% responded that it was the lack of career advancement, often due to a lack of opportunities

    18% of respondents described issues around recruitment and promotion, including the likelihood of men recruiting men, or of people recruiting in their own image.

    7

  • Pipeline: Encouraging Womens Aspirations

    vs. Handing Women Opportunities

    THE PROS AND CONS

    The reservation of board posi-tions for women indeed allows opportunities for talented, experienced and qualified women that may not have previously had access.

    However this is only the case if there is a qualified woman available to fill each of these reserved seats. Those oppos-ing gender quotas suggest that this is not the case. If quotas encourage the promo-tion of inexperienced women (and experience, in turn, predicts performance), there would certainly be negative results.

    The unavailability of qualified women for board positions is

    certainly unproven. However, widespread concern regarding the number of women that are qualified in the corporate sphere could have a positive impact: organisations invest-ing in the development of female employees ensuring a pipeline of experienced future leaders. A future pipeline is also improved by gender equality on boards since it creates role models for women in less senior positions. As Rohini Pande, noted economist and Harvard Professor, writes:Mandated female lead-ers may serve as role models for other aspiring women [...] a female board director can effec-tively demonstrate the payoff of being a female director to other aspiring businesswomen and acquire expertise on how to effectively manoeuvre as a female director in a traditionally male-dominated envi-ronment.

    Quotas allow women to perceive positions of leader-ship as more realistic and attainable aspirations, encour-aging women to invest in corporate advancement. It is argued that the reverse can be true: a quota can reduce a womans incentive to invest if she believes her path toward adv

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