Is 30 per cent representation the new gender-equality dream?

Campaigns to raise women’s representation on boards and in politics to 30 per cent are picking up steam globally
Thirty is the new fifty
Paul Yeung/Reuters

In February, Deutsche Bank CEO Josef Ackermann created a firestorm with his remark that more women on corporate boards would make life “more colourful and prettier.” Certainly it would at Ackermann’s bank, Germany’s biggest, whose 12-member executive committee is entirely male. Editorialists and bloggers around the globe slammed the banker for his sexist barb. Less discussed was the serious debate that inspired it: proposed quotas in the German Bundestag that would require the country’s largest publicly traded companies to fill at least 40 per cent of their management and supervisory boards with women, up from a current 8.6 per cent.

German Chancellor Angela Merkel, who has filled one-third of her ministerial positions with women, quashed the proposal. Instead, she offered companies “one last chance” to redress the issue before she imposed legislation. Ackermann’s comment, at least according to his PR people, was intended to support that idea; he was trying to highlight the bank’s achievement of filling 16.5 per cent of management positions with women.

Germany is not alone in focusing on gender imbalances in power echelons. Norway, Spain and Iceland all have imposed quotas in the boardrooms of publicly traded companies. Earlier this month, the EU’s justice commissioner, Viviane Reding, gave public companies 12 months to commit voluntarily to filling 30 per cent of board positions with women by 2015—going up to 40 per cent by 2020 before legislative action is taken. France is already on board: in January, it introduced a law stipulating the boards of its large publicly traded companies be 40 per cent female by 2017. Governments, too, are facing quotas. India’s parliament has passed a bill to reserve 33 per cent of its legislature’s seats for women, up from 10 per cent. Argentina established a 30 per cent female quota; Uganda reserves a percentage of seats in its 39 districts for women.

Suddenly, it seems, the vast estrogen deficit in business and government has reached a flashpoint. True, the disparity is severe: in Canada, women represent more than half of university graduates and comprise half of the workforce. Girls are raised believing they can achieve anything—become an astronaut or prime minister. Strapping on a space pack offers better odds of liftoff: only 21 per cent of Canadian MPs are women, a rate little changed over five elections. Women hold a mere 14 per cent of board seats and 17 per cent of senior officer roles on FP 500 corporations; close to half of these companies have no female directors at all. The trend is echoed globally: in the U.S., 15 per cent of corporate directors are women, in Britain, it’s 12.5 per cent. The pace of change is glacial; at current rates, it’ll be some 50 years before gender parity is reached.

Not that parity is even the goal. Politicians in France, the cradle of egalité, voted on a watered-down version of the original proposal for full gender equality. In February, Canadian Liberal Sen. Céline Hervieux-Payette saw her bill to establish full gender parity on boards, financial institutions and Crown corporations soundly defeated. The very term “gender equity” was eliminated by the Harper government in its communications, replaced by the cumbersome “equality of men and women,” a phrase absent of any strident feminist connotations.

Kathleen Lahey, a professor of law at Queen’s University, scoffs at the 30 per cent target. “It verges on institutionalized discrimination,” she says. “Anybody who thinks it is going to have any impact is wrong; it’s not enough of a critical mass.”

Thirty is the new fifty
Andreas Rentz/GETTY IMAGES

Organizations devoted to the advancement of women see any inroads as a matter of fairness: “Until women achieve parity in business leadership they’re going to be marginalized in every other area,” says Deborah Gillis of Catalyst Canada. But fear is more likely driving the trend in the corporate sector—fear that not complying with the new focus on gender analysis within the Organisation for Economic Co-operation and Development, World Bank and others will result in stricter measures. In 2009, the U.S. Securities and Exchange Commission introduced a rule requiring companies to disclose how they evaluated “diversity” when making board nominations. Though criticized as vague, the measure signalled a shift. Voluntary initiatives sprang up. Boston-based 2020 Women on Boards advocates 20 per cent women on U.S. boards by 2020. The U.K.’s 30% Club brings together chairs of top corporations, including Lloyds Banking Group, Sainsbury and Centrica, to proselytize about the value of women on boards, with a goal of 30 per cent by 2015. The Canadian Board Diversity Council, founded in 2009, has a target of 20 per cent women on boards of FP 500 companies by 2013.

30% Club co-founder Henrietta Royle, COO of London’s City University, says concern about imposed quotas is a motivating factor: “If business doesn’t get its act together, government will put more pressure.”

Quotas are thorny territory. On one hand, there’s nothing like a hard threat to ensure compliance. After Norway ruled corporate boards be 40 per cent female in 2004, female presence on boards rose from 25 per cent to 42 per cent. Yet many argue quotas marginalize those they intend to help. “They undermine women who are there,” says Sheila O’Brien, president of Calgary’s Belvedere1 Investments, whose CV includes executive positions in the oil patch and directorships at numerous publicly traded corporations. She recalls her time in the executive suite of a Crown corporation. “People said, ‘You’re here because you’re a quota person.’ No one wants to be a quota person.”

Quotas can have unintended consequences, says Sir Roger Carr, CEO of Centrica, the U.K.’s top gas and energy provider, and a member of the 30% Club: “If you force-feed the system with women who are under-qualified or inappropriately experienced, it will eventually prove to the non-believers that having women on boards was the wrong thing to do.”

Besides, there may be a more persuasive argument to be made for stocking boards with the “prettier, more colourful” sex: it makes good business sense. A 2004 Catalyst study found Fortune 500 companies with the most women on their boards sported 25 per cent higher returns on equity and 34 per cent higher shareholders’ return. A Mc­Kinsey & Co. report reveals the operating income of companies with the most women on their boards was 56 per cent higher than those with all-male boards. Not all research backs this up: a 10-year study published in the November 2009 Journal of Financial Economics found gender diversity on boards actually had a negative impact on company performance.

But Carr, whose board is 30 per cent female, has seen a business advantage in his boardroom, he says: “Women bring a different mindset and skill set. The social chemistry of a boardroom changes when it moves from all-male. It makes everyone a little more thoughtful and considerate.” And it’s not all soft skills. A 2010 Heidrick & Struggles survey found women on boards posed more critical questions. Sheila O’Brien observes that a diverse board is less likely to fall into “group think”: “the only way to do that is get the smartest available talent in the room, and that’s not a single-gender pool that belongs to the same club.”
Breaking through the perennial old boys’ network is the challenge. One solution, says the 30% Club’s Royle, is to banish the Catch-22 edict that people on corporate boards must have board experience on a listed company. “It assumes sitting on a board is rocket science. It isn’t.” Centrica recently appointed a female director with sterling qualifications but no public-company board experience.

Such measures are crucial, says Catalyst’s Gillis: “Women are over-mentored and under-sponsored,” she says. That means there’s no shortage of mentors—people who provide advice, share experiences and help women understand the unwritten rules, but women still lack advocates who will put their name forward, promote them, put their own credibility on the line, she says: “Men are far more likely to have senior-level sponsors.”

Thirty is the new fifty
Rene Johnston/Toronto Star; Daniel Lynch/eyevine/Redux

There’s one North American sector the 30 per cent target has helped: the equality industry itself, which includes corporations that organize task forces, hire gender equity officers and celebrate women’s progress. Trouble is, posing as part of the solution while remaining part of the problem can be a recipe for stasis. One need only look at the board composition of many of the 46 corporations given “founding company” status on the Canadian Board Diversity Council: TransCanada Pipelines’ board, for example, is an underwhelming 15 per cent female; Suncor, 14 per cent; Canadian Tire, 12.5 per cent. The council itself is a private-sector and government-funded for-profit enterprise; its founder, Pamela Jeffery, who also runs the Women’s Executive Network as part of her consulting company, explains the poor performance saying the companies were top performers in their sectors, and that all of their CEOs expressed a desire to improve their diversity as board directors retired. And if we don’t hit the 20 per cent target in three years? “We’ll be willing to consider proposing alternatives—even regulation,” Jeffery says, a remedy that her client base would be loath to endorse.

But the council is hardly the only group to talk the talk while under-delivering on the walk. Even the World Economic Forum, whose predominately white, male-ruling-class membership gathers in Davos annually to solve world problems, and which measures female representation in government with its widely quoted “Gender Gap” survey, is scrambling to address its own gender imbalance: only 16 per cent of attendees are women. (Search for “women and Davos” on Flickr: up pop images of cleaning women—and Angela Merkel.) Last year, organizers had to order partner delegations to include at least one woman—a target of 20 per cent.
Quotas aren’t the only route to greater gender equality, of course. But alternatives take creative thinking, and political will. Sweden, for instance, introduced household tax cuts, child care services and incentives for fathers to take parental leave. Now 19 per cent of executive board positions and nearly half of all board seats in state-owned companies are held by women.

And it will take more than looking at board management, says Lahey, who notes Canada, once a world leader in promoting women’s equality, is moving backwards, a fact reflected in statistics: only 26 per cent of Harper’s cabinet was female, down from 30 per cent in Paul Martin’s 2003-04 Liberal cabinet. Canada ranked 20th on the 2010 Davos Gender Gap survey, down from 14th in 2006; and in terms of female political representation measured by the UN, we stand 51st of 135 nations, behind the United Arab Emirates.

Lack of interest isn’t the problem, says Nancy Peckford, the executive director of Ottawa-based Equal Voice, a non-profit dedicated to electing more women. “We see women every day who want to run. They want to be change agents,” Peckford says. “They’re willing to fling themselves over to Africa to make a difference, but they don’t see themselves represented here.”

That’s doubly true in corporate life, says Lahey: “Not only has the number of women in upper management been shrinking, but the number of young women in the management pipeline is declining as well.” Add to that the fact the wage gap between women and men with university degrees has actually increased since the late 1980s, and it’s shameful.

That shame, too, can be a motivator. Boston-based 2020 plans to issue U.S. corporations scarlet letters: an online report card listing “W” (winning) companies with more than 20 per cent women; “V” (very close) with more than one; “T” (token) companies with one; and “Z” (zero) companies with no women. “Companies don’t like that kind of attention, and the media loves that story,” says 2020 co-founder Malli Gero. “Sometimes it takes a little public embarrassment to move things along.”
Carr sees the next 12 months as a “testing period”: “It all has to be converted from good words into good deeds.” Thirty per cent women on boards is inevitable, he says: “It’s the sensible thing to do, then it becomes an obvious thing to do, and then a fashionable thing to do.” That would make 30 per cent the new 50 per cent, and female equality the new black. Now it’s only a question of how many people buy it.