A teaser clip for a British sitcom is playing on NZ TV at the
moment. The pub owner, a man, is leaning on his bar and, with a
self satisfied smile, telling a male patron, "I'm all for equality,
I am. That's why I let my female staff work longer, so they can
earn the same as the men."
It tugs a wry laugh from me every time.
When it comes to women's progress, be it on pay or promotion,
you don't have to look far for other forms of twisted or simply
faulty logic. In this article I want to focus on the issue of
quotas, particularly quotas for women on boards. They've been back
in the mainstream press in recent months thanks in part to Lord
Davies' report in the UK on measures to increase women in senior
positions and also to the Australian Governor General's support for
quotas for women.
I won't review here the arguments for more diverse boards, and
for women as one important expression of that diversity. The
business case is well-established and the 'fairness' case is
intuitively obvious. What is less clear is how to achieve boards
with more women, and that is why quotas remain a core part of the
Quotas? No thanks!
If you've ever read the vituperative Letters to the Editor, and
the hostile forum comments whenever women-on-boards-quotas comes
up, you'll know that the key reason they are denounced is that they
undermine the well-functioning meritocracy that we have now. Impose
quotas, we're told, and Boards will be forced to scrape the
candidate barrel to find enough women; apparently, it's inevitable
that these women will be inferior to the current mainly-male
This scenario surely contains a lapse of logic. None of
the detractors ever bothers to cite research* that the status quo
is in fact:
- a meritocracy ie based on objective measures of desirable
characteristics and not influenced by connections, affinity,
familiarity or any other bias
- well functioning ie successful in getting the best possible
*(And if someone has cited it, do please send me the research
The thinking seems to be that because the current system
presupposes economic rationality, and because there is the ultimate
'market' sanction of shareholder votes at AGM time, it somehow
follows that directors' appointments are systematic, judicious, and
unbiased in their pursuit of merit (however 'merit' may be
As the Tui beer ad so eloquently puts it, yeah, right.
Since 2008, one or two people have wondered aloud, and in writing,
whether we have really had the best directors available. And if we
have, if this is as good as it gets, heaven help us.
Let me nail my colours to the mast. 18 months ago when I
attended the Women on Boards conference in Sydney I was strongly
against quotas. Why? Two predictable reasons:
- Because quotas meant any woman director would have to wonder if
she had been appointed on merit or simply to tick a quota box.
(Note - it never crossed my mind that I could look at male
appointments and wonder which had been on merit and which to tick a
Boys' Club box).
- Because Government mandated quotas would be just one more
instance of the already rampant Nanny state telling us what to
And now I say: bring 'em on.
Why? Because I'm fed up.
Every time the NZ Human Rights Commission and the Australian
Equal Opportunity for Women in the Workplace Agency publish their
censuses of women's participation the stats grow more dismal - as
you can see below. Australia's listed company boards have been
heading backwards and so have NZ's Crown Companies. NZ's listed
companies have, however, made progress of about 1.5 points every
That particular statistic implies that if we women can just be
patient until 2065 we will reach gender parity in the boardroom. By
then I shall just about be receiving birthday telegrams from
whoever is on the English throne. My daughter will have reached
retirement age but her daughter, if she has one, could well be in
line for a directorship. Goodness me, I'm very encouraged by
Directorships held by women (dates reflect report
2004 - 8.4% 2006 -
8.7% 2008 -
8.3% 2010 - 8.4%
% NZ Crown Companies: 2004 - 35.7% 2006 -
35.4% 2008 - 34.7% 2010: 32.9%
2004 - 5.0% 2006 -
7.1% 2008 -
8.7% 2010 - 9.3%
Note - the ASX's mandatory requirement for companies, from
January 2011, to report the gender diversity of their boards had,
by late 2010, pushed up the number of ASX200 directorships held by
women to 10.3%. Time will tell if this represents a new plateau or
the start of a long run upward trend.
Refining and repeating the business case for women at the top is
proving to be a necessary but insufficient call to action. The
inherent and often unconscious biases are too powerful.
When you have a particularly resistant nut to crack, it's no
good tapping it with a teaspoon. You need to bring in a very big
Logic dictates I research what has happened in Norway where, as
many of our readers will know, the Government wielded its mighty
sledgehammer to increase the number of women on boards. After a
period of 'voluntary' targets had failed to shift the dial much
between 2002 and 2005, the Government imposed a mandatory quota for
40% women on boards with 9 or more directors at state corporations
and publicly listed companies (about 500 large organisations out of
a total company population of over 150,000). Failure to reach
this level within the two year transition period to 2008 would
spell rising penalties from fines through to company
The 40% level was finally reached in late 2008, on the cusp of
What has happened over these years? The Norwegian Institute for
Social Research at the University of Oslo conducted the first major
study of the impact of the quota law on boards in late 2009. [As
reported on Women on Boards and Jump] the report found:
- The new women directors are younger (72% are under 50
compared to 35% men)
- They are slightly better qualified than the men (92% of women
have at least one university degree compared with at 87% of
- 75 % of female directors are independent compared with 45% of
- The fear of "golden skirts" (multiple directorships in the
hands of a few competent women) was unfounded: 21% women have more
than one directorship, versus 38% men.
- Recruitment processes have not changed significantly and women
are being recruited the same way as men - via professional networks
and personal contacts.
- The majority of male directors said that more women on the
board led to new perspectives and more issues being added to the
On the downside, as reported in a study from the Ross School of Business by
Amy Dittmar, associate professor of finance, the share price of
some of the companies affected fell, and the greater the changes in
board gender composition, the greater the fall.
The constraint imposed by the 40-percent women quota led firms
to recruit women board members that were younger and had different
career experiences than the existing directors. It is reasonable to
suggest that these changes led to decreases in firm value because
new directors did not have the same monitoring or advising
capabilities of the other directors before the imposed change.
I have an alternative hypothesis. Since share prices reflect
expectations of future performance, not a scorecard of the
current situation, it may be that stockholders were worried by all
the press about a forced influx of inexperienced directors. They
opted to sell before the companies they'd invested in could go to
Another issue that has concerned some commentators is that the
increase in women on Norway's boards has not, so far, led to a
trickledown (or pull through) effect into senior line-management.
For now, women are entering Norway's boards via external advisory
roles or internal staff positions, usually HR. There's a concern
that the best and most ambitious women may bypass line management
in order to access Board roles, and thus perpetuate the need for
If we're aiming for more women in positions of influence should
we even be focusing so much effort on increasing women on boards?
As Jen Dalitz
over at the SheEO blog cogently points out, getting women to
hold 40% ASX200 directorships means about 800 women at best
(remember the golden trousers will reduce the available number of
directorships). By contrast there are thousands upon
thousands of senior management roles in the ASX200 companies.
Increasing the percentage of those roles held by women by even ten
points would have an absolutely much larger impact. The same logic
would of course apply to the NZX100.
However, Dalitz agrees that the advantage of focusing on boards
first is that it is easy to measure progress and is also an easily
I would add that a powerful positive of a significant jump in
women in a leadership team like a board is that they quickly reach
critical mass where their voices and ideas can truly be heard; research suggests 3 women or 30% is
enough. At that point they cease to look different and
can start to be judged on their merits as individuals rather than
on stereotypical expectations of only contributing 'women's points
of view'. For men who are uncomfortable at the idea of
having women on their boards, the personal experience of
constructive contributions from these women would demonstrate their
value, and do so more convincingly than testimonials from the men
who already 'get it'. In turn, this generates a rapid jump in the
number of success cases and normalises the presence of women.
Are there alternatives to quotas that could achieve significant
increases in senior women's numbers before I'm dead and
buried? I've been pondering a one liner I read on a forum
that was vigorously debating women-on-boards-quotas. (One-liners
tend to stand out amidst all the sound and fury).
What about equality of opportunity instead of equality of
That reminded me of studies of the positive effect of blind
auditions for orchestras. Traditionally, women had been
underrepresented in American and European orchestras. Renowned
conductors asserted that female musicians had "smaller techniques",
were more temperamental and were simply unsuitable for
Proving discrimination in hiring practices, however, was always
difficult until Goldin & Rouse (The American Economic Review,
2000) measured the effect of blind auditions. Use of a screen was
found to increase a woman's chances of moving to second round
auditions by 50% and "increased severalfold" that she would be
selected in the final round.
Of course, being a director isn't the same as playing the
clarinet. Equality of opportunity for board directorships would
probably need to include:
- Continued efforts to promote women into line management
positions in order to prime a vital pipeline
- Gender mix targets - another quota, in truth! - for those
charged with developing long lists (these targets are increasingly
prevalent, I believe)
- Openly advertised positions instead of reliance on shoulder
tapping (lobbying for this has been around a while)
- Anonymous first round review of CVs
That's a challenging list. In New Zealand, we've been
working on the first three of those opportunity enhancements for
some time and we know how little has changed in terms of
No - for me, it's still 0800-SLEDGEHAMMER.
What do you think?
Other recent resources and references
May 2011: Women on Boards: America is
falling behind by Sylvia Hewlett
December 2010: An interactive map of Europe from the FT shows
government policies on women-on-boards quotas as well as recent
October 2008-2010: The "Women Matter"
series by McKinsey