Want to Make More Money? Increase Global Reach? Hire More Women, Like Norway Requires
This isn’t new, but it’s worth repeating in the news world, that Norway was one of the first countries to require female representation on the boards of all of its public companies:
Norway’s law requiring at least 40 percent of public limited company board members to be women has made the panels more professional and globally focused, the head of its largest domestic-focused investment fund said on Monday.
In 2003 Norway became the first country in the world to impose a gender quota, requiring nearly 500 firms, including 175 firms listed on the Oslo bourse, to raise the proportion of women on their boards to 40 percent.
Sounds a bit drastic to the draconians here in the US who might feel that this sort of play could be heavy handed, and if we were to quote the Old White Men’s Club, that there might not be enough qualified women to act the part. Guess what though? Having women on the boards turned out to be a huge advantage. Companies took more time to recruit, to focus on a better search, a more thorough search for board members and actually expanded the expertise in their firms.
“You had to look more thoroughly to find females. This started a more professional process,” said Svarva, who is also the head of the corporate assembly and the election committee at Statoil, the largest company in the Nordics.
Another effect has been that nomination committees have looked outside Norway’s borders in the search for suitable candidates. “Boards have become more global,” she said.
This program has been so successful that more countries in the UK copied the winning formula for success–hiring more women:
Norway introduced a 40% quota for female directors of listed companies in 2006, to come into force in 2008, it was a first. Non-complying firms could theoretically be forcibly dissolved, though none has in fact suffered such a fate. Since then gender quotas for boards have been imposed in Belgium, Iceland, Italy, the Netherlands and Spain (though with less severe sanctions: non-complying firms must generally explain in their annual reports why they fell short and what they plan to do about it). The European Commission is considering imposing quotas across the EU. Malaysia has imposed a 30% quota for new appointments to boards, and Brazil a 40% target, though only for state-controlled firms. The governments of several other countries, including Australia, Britain and Sweden, have threatened to impose quotas if firms do not appoint more female directors voluntarily. So why are gender quotas becoming more common?
Quotas are common because there is still so much gender bias in the workplace that is unfounded. To counteract that, quotas have been instituted to try to break gender stereotypes. The Economist article, from which I quote above, elaborates on this succinctly:
Oodles of research demonstrates that women are evaluated less positively than identically qualified men when applying for stereotypically male jobs, such as leadership roles. One study found that a commitment by hiring committees to shortlists with at least 25% women helped to remove anti-woman bias.
The study also found that there was a bias against women expressing any signs of anger or showing a sense of self promotion. Strangely enough, the study also showed a hiring preference related to perfume or cologne scents, that stereotypically masculine scents were preferred: “Masculine-scented perfume favored the hiring of both sexes.” If our lizard brains are focusing on scent rather than performance, what chance do we have to change these dynamics?
There is reason to believe that sudden change in leadership roles and dynamics creates lasting change:
Over time, advocates of quotas hope that a sudden large increase in the number of women in leadership will change attitudes. They point to the results of a law passed in 1993 in India that reserved positions for women in randomly selected village councils. A decade later women were more likely to stand for, and win, elected positions in those villages that had by chance reserved positions for women in the previous two elections.
Since gender quotas have been implemented, representation of women on executive boards has increased; however, women have yet to make it to the role of CEO:
In Thursday’s Personal Journal, Christina Zander points out that none of Norway’s 32-large cap companies have a female chief executive, even though 41% of directors are female. Less than 6% of general managers at Norway’s listed companies are female.
The theme that gender equality at board level fails to trickle down to executive roles is known, but the example of Norway is interesting because its quota system has been in place for such a long time.
One could say that there is no downside to hiring more women, and that would be true, but is there a downside to quotas for hiring women? If one were to look at the Nordic region, one might say that there is a downside to hiring quotas–no female CEO’s are present:
Members of the U.S. Fortune FT.T +1.30% 500–not under a similar quota system–are more apt to appoint women to chief executive. And so are Norway’s private companies, which have far fewer female directors but a far greater number of women leaders (18% of private-company board members are female, 15.1% of general managers at these companies are women.)
And this isn’t just a Norway problem. In Finland, where female board participation is highest, none of the Nordic nation’s 27 biggest companies have women as CEOs.
The trend, in fact, permeates the entire Nordics. Sweden, Denmark and Iceland have sparse female representation at the top. “The cork is still in the bottle,” Sydbank SYDB.KO +1.34%’s Karen Frøsig, one of the few female CEOs in the Nordics, told The Wall Street Journal. She’s not a fan of quotas, but she suggests policy makers continue to keep the issue in focus.
Just 3% of the 145 Nordic large caps have a female CEO, compared to 5% of Fortune 500 firms.
Of course, it’s easy to say that quotas are the problem, when in fact, gender bias is the problem. The quotas were put into place because of such extensive gender bias. It’s not quotas, but it’s discrimination that is the issue at forefront. Maybe the Nordic region needs a quota for CEO’s.
Top pay for female CEO’s still focuses on traditionally female venues: cosmetics, retail, and cosmetics and retail…
The top compensated female CEO in the US is for Avon Products, a cosmetics company, Sheri Mc Coy. Ursula Burns is the CEO of Xerox,and Indra Nooyi is head of Pepsi Co. Rosalind Brewer is CEO of Sam’s Club. The trend is toward retail products, but we do have a CEO of IBM, Virginia Rometty, here in the US. Top pay for female executives went to Oracle Software CEO, Safra Catz. Of the top five paid female CEO’s, three out of five were in retail niches, like Victoria’s Secret. So, yay, women get to be CEO’s. Boo that it relates to women’s underwear promotion; however, perhaps with more women at the top, the trend will continue. One could look at it as an example that the buying power still sits proportionally with women, as long as underwear are the items bought.
I can’t forget the tech companies though. First time I thought I would say it, but thank goodness for Oracle and IBM. These companies are a welcome break from lacy underwear and nubile recently post adolescent advertising campaigns. Quotas, maybe, but how about focusing on the success or the income related to hiring more women. Finances don’t lie. Let’s study how diversity increased income, the bottom line. It’s clear that it does for some companies, so why not study that?