30 percent by 2057 – Can we get there quicker?
By Roger Dassen - March 21, 2012
There is no doubt that the trend to have more women on company boards and their greater representation at the senior levels of companies and other organizations is on an upward trajectory. The problem is that the trend is moving at a slower pace than many would wish. And the reasons for this are infuriatingly varied. There is no one easily identifiable issue which is holding up progress and this makes it harder to try and accelerate that progress. But there are many areas where enthusiasm, enterprising initiatives and, in some cases, government action, are making a real contribution to change.
Much of this came to the fore at the recent workshop of the OECD, BIAC, the business and industry advisory committee to the OECD, and the American Chamber of Commerce in France. I’ve mentioned this event before in previous blogs, and it is its second session on which I reflect today.
This session was all about achieving inclusive governance strategies and looked to examine the benefits of women on boards, the ways of addressing the critical bottlenecks and the effectiveness of regulatory and voluntary approaches. While the discussion started with a sobering statistic from the moderator—at the current rate of change it will take until 2057 for there to be 30 percent representation of women on the boards of global large cap companies in emerging and developed markets—it was the effectiveness of regulatory and voluntary approaches which tended to divide the many participants. The idea of quotas was enthusiastically embraced by some and downplayed by others.
According to the discussion, we should let the figures tell the story. Norway still leads the way with legislation to eventually have women as 40 percent of board members. France introduced legislation to force a 20 percent quota in three years and 40 percent in six years. And this in itself was seen as having a significant knock-on effect. The law came into effect in 2011 but ahead of its enactment the percentage of women represented on boards had moved from 8.4 percent in March 2009 to more than 12 percent in March 2011 and 16 percent in January this year. Others reported that, for example, the simple act of introducing quota provisions in Italy had changed business attitudes. Those who had led the opposition to the ideas had, once they had been enacted, changed their tune and now offered their support. This was characterised as a general “never really been against it” attitude.
The use of a “comply or explain” approach in other countries where specific quota legislation was not seen as the way forward, at least for the time being, also showed progress, though of a lesser nature. Provisions for the disclosure of diversity figures in Australia had led to an increase in women on boards from just over 8 percent in 2010 when the disclosure provisions were first mooted to almost 14 percent in January this year with the provisions in full effect. A similar effect appeared to be occurring in the UK, for example. Germany had a similar experience, where the 2009 corporate governance code made diversity a consideration resulting in the number of women on executive boards at DAX-30 companies rising from 0.5 to 3.7 percent, and from 12.7 to 15.7 percent on supervisory boards. This was all seen as slow but steady progress compared to the US, where current regulation requires a very limited amount of reporting of whether or how a nomination committee considers diversity when looking for new directors. Progress was described by one person as “glacial.”
While not discussed in detail, 2009 data, as presented by the OECD later in the day, shows that many emerging markets are on par with developed markets. Countries like Chile ranked similarly to Germany, Japan and the Netherlands at the lower end of the table with representation below 6 percent.
Others were in the leading group, including South Africa (7th) which is seen as an emerging markets champion on corporate governance and sustainability issues. A further prominent discussion point was the need for programmes promoting greater understanding of the ways in which the perceived bottlenecks to progress could be steadily eroded. In Norway, for example, where the quota system has been relatively successful, there is also a programme called Female Future, described as “a business-driven response to the quota law.” This aims to attract more women to executive and leadership positions by simply mobilising talent, through initiatives like leadership training, networking, conferences and workshops. So far 1300 people have been through the programme and 62 percent were subsequently offered board positions or other senior executive positions. In the Netherlands a similar programme called "Talent to the Top" is aimed at encouraging companies to set their own targets and timetable to bring more diversity to their senior appointments. So far 200 organizations have signed the programme’s charter and 72 percent of them have shown an increase of women in management positions. Its positive aims were reinforced by a need to get rid of the idea of “name and shame” and replace it with “name and praise.”
The discussants also raised the point that quotas, though they may help, do not in themselves resolve structural challenges. Some said that the private sector had to become much more attractive to women who still tend towards their traditional role in the public sector as, for example, teachers and nurses. It was also important to counter the problems which issues of childcare and parental care created. This was seen as being an unfair problem but one which, nevertheless, existed and should be dealt with. In Germany, for example, women on average effectively had an almost five year career break. The issue was that women in childcare were out of the workforce and, paradoxically, greater provision of childcare made this particular problem worse. This was seen as having a real effect on the prospects of a woman progressing in business. In the Netherlands two-thirds of women in work worked part-time. According to some, this was, in some ways, an advantage. It made it possible to reconcile family life and it created flexibility for the employers. The downside was that it was seen as damaging the overall credibility of women in the workplace. This latter thought was countered vehemently by one participant who firmly pointed out that even though you may only have 60 percent of a person’s time you still have 100 percent of their brain. It was value, not time, which should count.
The notion that collaboration from greater diversity brings enormous value to business was a point of strong agreement, noting in particular the value from women, given the qualities of collaboration they regularly exhibit in the workplace and beyond. Enabling collaboration was the single most important task a manager can do, said one participant, and women do it better than men. Diversity as an economic imperative was another. It was considered that diversity should also be the “real clincher” in discussions over the compositions of boards and senior executive management. Diverse groups come to better outcomes was one conclusion. The idea that decisions were much more effective when reached by people from a whole wide range of experience and knowledge seemed clear. And the results would be much more sustainable and long-term. Any board with a narrow point of view had, inevitably, less chance of making the most informed decision. One participant quoted the late Steve Jobs of Apple computers. He had said simply that: "without diverse experiences you have less dots to connect."
Speeding up the process of gaining the economic and social value from having more women in senior management positions of companies and on boards, and enhancing the position and image of women in the business environment is possible. The discussions revealed the existence of programs and ideas to move that 2057 timeline forward, but it also highlighted the fact that there are real challenges that need to be overcome; challenges that are deeply seeded in culture and practice and which require government, business and societal change. On a positive note, optimism was the concluding sentiment of the session.
Charles Heeter is Global Leader, Public Policy Group, Deloitte Touche Tohmatsu Limited. In his role, he engages in Deloitte global public policy initiatives, is responsible for building cooperative relationships with capital markets stakeholder groups, and helps coordinate the Deloitte global regulatory network. Heeter is also Chairman of the Business and Industry Advisory Committee to the Organisation for Economic Co-operation and Development (OECD).