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Should Quotas be set to Expand Board Opportunities for Women?

European and American Women on Boards of Directors

I have previously blogged about the difficulty women have "Breaking through the Glass Ceiling." The barrier can impede a woman's progress in an organization and bring challenges that often do not apply to men. Outdated views such as women will leave the workplace after giving birth and their difficulty dealing with emotional reactions to events do a disservice both to women and all those who serve on boards of directors.

Yesterday it was reported that the European Union is moving closer to introducing mandatory quotas for the number of women on company boards after businesses failed to make sufficient progress in gender equality over the past year.

The EU's Justice Commissioner, Viviane Reding, said Monday that at the current rate it would take more than 40 years for women to hold 40 percent of board positions in Europe's publicly traded companies.

"One year ago, I asked companies to voluntarily increase women's presence on corporate boards," Reding said. "However, I regret to say that despite our calls, self-regulation so far has not brought about satisfactory results."

The European Commission, the EU's executive arm, said that over the past 12 months, only 24 companies had signed a pledge to ensure that 30 percent of their board positions are held by women by 2015; by 2020, that figure should increase to 40 percent.

At the moment, only one in seven — or less than 14 percent of — board members at Europe's biggest companies are women, the Commission said. The percentage of women chairing major European companies even fell slightly over the past two years, to 3.2 percent from 3.4 percent in January 2010.

The results are lower than in the U.S. where 16.1 percent of women sit on boards. Notably, the highest percentage is in Scandinavian countries with an average of about 30 percent almost double that of the U.S. and even larger than in the EU.

The Commission is now asking companies and citizens whether they believe quotas are necessary, as well as what targets and potential sanctions should be set. It said legislation on gender equality — including quotas — could come later this year based on that consultation.

Several EU states — including Belgium, France, Italy, the Netherlands and Spain — have already adopted gender quotas for companies, while others have minimum levels for women in state enterprises.

I believe it would be a mistake to impose quotas. It implies women are not qualified on their own merits and need a push to break through the glass ceiling. In fact, a 2010 Mckinsey study found that across all industry sectors, companies with the most women on their boards of directors significantly and consistently outperform those with no female representation: by 41 percent in terms of return on equity and by 56 percent in terms of operating results.

From an ethical perspective two issues jump out at me: a lack of equality and fairness in the way women are treated and promoted within organizations and the failure of male-driven boards and top managers to respect women for what they can bring to the table.

The results of a study by the Center for Work-Life Policy support these views. Their leadership study indicates that male managers simply don't see the lack of women around them, conditioned as they are by decades of initiatives dedicated to correcting gender inequities. More than half (56 percent) of men think that women have made considerable progress at their companies over the past ten years; only 39 percent of women agree. The majority of men (58 percent) say that the reason for the progress is that their company has been trying harder to promote women; the majority of women (57 percent) say it is because women have made great strides in terms of performance and educational credentials. Some 49 percent of women think gender bias is alive and kicking; only 28 percent of men do.

I believe the relative lack of women in the boardroom threatens to stifle innovation and growth in business. Women are increasingly involved in the workforce; they now comprise about 50 percent. Women have attributes that add value to decision-making and that can help deal with ethical dilemmas. They bring a sense of intuitiveness and emotional connection with difficult issues that enables them to deal more effectively with challenges that may have a right and wrong component to it. Let’s face it, it is the men who have ruled corporate America and Wall Street for far too long and who were at the helm of a variety of financial crises, the most recent of which was the meltdown of the system in 2008.

Blog posted by Steven Mintz, aka Ethics Sage, on March 6, 2012