Gender equity in the corporate world has long been a goal that’s paid much lip service, but has nothing to enforce it but good intentions. Unsatisfied with the slow progress, a handful of countries have, over the last ten years, embraced the idea of gender quotas to govern corporate boards (a potential solution to inequality Bryce Covert suggested in a piece for The New Republic this summer). According to the 2014 International Business Report, the percentage of world business leaders in favor of gender quotas has increased from 37 percent in 2013 to 45 percent in 2014. And it isn’t just in Europe, where the quota trend began. 68 percent of leaders surveyed in Latin American and 71 percent of those in Asia Pacific (not including Japan) supported gender quotas.
When looking at the statistics, this shift in favor of quotas is not wholly surprising. The number of female leaders in business and on corporate boards remains stubbornly low, despite global efforts throughout the years to promote equality. Today, only 12 percent of businesses worldwide have a female CEO. Women also only hold 24 percent of all senior roles in companies—a stat more or less consistent since 2007.
Corporate board gender quotas were first introduced in Norway in 2003. Before their implementation, the country had a long history of using quota policies to help increase female representation in public office. The Gender Equality Act in 1981 required 40 percent female representation in public appointed offices and councils, and the Municipal Act in 1993 required 40 percent female representation in for all appointed bodies in the Municipal Council. However, when quotas came into the economic sphere, there was a prolonged back-and-forth, as a wide swath of employers tried to halt the legislation. But after three years of debate, corporate board gender quotas passed the Norwegian Parliament.
The government ordered companies to have a 40 percent female board or be shut down. As the number of female board members in Norway drastically increased, jumping from 15.9 percent in 2004 to its 40 percent target in 2008, other countries in Europe followed suit, including Spain in 2007, and France and Iceland in 2010. Most recently, in 2013, the European Parliament passed a proposal for publicly listed companies to have 40 percent of non-executive board members be female by 2020. The proposal states that if these European companies fail to meet that target, they will be required to fix their selection criteria so that the hiring of women is prioritized. The proposal is now waiting for approval among the 28 E.U. member states.
Corporate titans like Renault-Nissan Alliance’s CEO Carlos Ghosn have publicly come out in support of the quotes. At the “Gender-driven Growth” panel at the 2014 World Economic Forum, Ghosn summed up the argument in favor of quotas succinctly: “When you have two percent of your management pool made by women, there is no way with big principles and good attitudes that you are going to change this radically. Quotas are important. Why? Because quotas lead to action. Action means hiring, training, coaching, and putting in the process of the company the systematic decision, forcing the selection of female potential at all levels.”
Also at the forum, Christine Lagarde, managing director of the International Monetary Fund, admitted that while she had objections to gender quotas initially, she is now an advocate of them: “I soon realize that unless we had targets, if not quotas, there was no way we were going to make the right step.”
Part of the reason for this prolonged stagnancy is because much of the discrimination that impedes the hiring of female board members is subconscious. While employers may not actively seek to exclude women, factors such as perceived family and child-rearing responsibilities lead to deep-seated stereotypes suggesting women are not be able to take on corporate leadership roles.
“Some of the corporate board members I have spoken to hold the outdated view that discrimination occurs only when there is conscious animus, as in ‘I don't want to hire women.’ … But the dynamics of discrimination are often, today, more subtle than that. Stereotyping (as in ‘women have kids and won't travel’) can lead to the exclusion of qualified female candidates, and so can unconscious bias,” wrote Anne Alstott, a Yale Law professor who has studied gender quota policies, via e-mail. “Gender quotas might be one way of prompting attention to the twenty-first century dynamics of discrimination that can exclude qualified women from high-level positions.”
Despite progress, gender quotas aren’t a global solution. To have the most impact, quotas need to fit within the country’s cultural expectations of authority. In a Harvard Business Review piece about their recent study, authors Soo Min Toh and Geoffrey Leonardelli argue that countries with “tight” cultures will be more successful in promoting gender parity through gender quotas than “loose” cultures.
For their study, published originally in the journal Organizational Dynamics, Toh and Leonardelli looked at 32 countries with varying levels of cultural tightness—defined as “the degree to which cultural norms are clear and likely to be enforced by authorities through the use of sanctions.”8 (So by this definition, Norway qualified as “tight,” as well as Pakistan and South Korea, while the United States and New Zealand were deemed “loose.”) Using 2005 World Bank data, they investigated the percentage of female representation in different leadership positions (legislators, senior officials, and managers) in these countries and found that within tight cultures, authorities are more likely to strictly enforce policies and demand higher levels of compliance. Additionally, people within tight cultures are more likely to accept and adhere to top-down policies such as gender quotas.
On the other hand, “loose” countries like the United States (officially deemed “slightly loose” by Toh and Leonardelli), are less likely to reinforce egalitarian practices, despite the higher likelihood to believe in equality.
To put it simply, quotas go against many of America’s cultural norms. Kathleen Gerson, a New York University sociology professor and author of The Unfinished Revolution: Coming of Age in a New Era of Gender, Work, and Family, explains: “Arguing in favor of quotas goes against the notion that everyone has an equal opportunity to be represented as an individual rather than as a member of a group."
Such arguments run close to those regarding affirmative action in the United States. Opponents of affirmative action have made the case that students would be favored because of their race rather than their academic achievements and abilities, resulting in admissions policies that would not provide equal opportunities. Similarly, some believe that gender quotas would give gender-based preferences to board candidates, leading to the possible exclusion of more highly competent male candidates and the hiring of less competent female candidates.
Beyond such cultural reservations, there is considerable skepticism that quotas actually make a significant difference in improving female representation. In Norway, a strict gender quota certainly boosted the percentage of women in senior positions, but it also caused what’s been dubbed the “golden skirt” phenomenon: Certain women hold multiple board positions, meaning that while more board positions are held by women, not as many new women are entering the board room as hoped. And, even now, Norway has fewer women CEOs than the United States. It was thought that with corporate board quotas, more women could then have access to higher senior management positions. However, only 3 percent of Norway’s large companies (with a capitalization market value over $10 billion dollars) have female CEOs, while 5 percent of U.S. Fortune 500 companies have female CEOs.
Given the skepticism as well as the cultural, social, and legal barriers, the United States will have a hard time enforcing gender quotas. One possible alternative that uses a top-down approach would be to create a system of incentives and penalties based on a company’s success in gender equity. According to Alstott, this system more closely fits the business culture of the United States, as the federal government already uses tax incentives to encourage certain business practices. Unlike the Norwegian model of liquidating a company for not meeting a quota, tax incentives are less threatening. The hiring of women would be more voluntary than forced, eliminating at least some of the bias that a woman was hired to just fill a quota.
But until a far-reaching, top down policy comes to pass, the United States will have to take steps that stem from the voluntary efforts from individual companies, female advocacy groups, and individual women.