Governments Consider Overcoming Gender Imbalances With Quotas - Building Gender Balanced Business

“We have tried mentoring, coaching and networks, but nothing worked.” — Anne Wenders, Deutsche Telekom spokeswoman, addressing the company’s effort to promote more women to upper management

Many governments have decided to take matters into their own hands, with Europe leading the way.

• In 2003, Norway passed a law forcing all publicly listed firms to put women in 40% of all board seats by 2008
• Spain and France have passed similar laws, and they are working on one in the Netherlands right now
• European Parliament is calling for EU-wide legislation that will reserve 40% of supervisory board seats at listed companies for women by 2020

THE ARGUMENT AGAINST QUOTAS

• Voluntarily appointed women are of a high caliber, maybe even more than their male counterparts since they have more obstacles to overcome. But quotas mean that women who would not have otherwise been appointed will advance forward.

• Norway’s statistics suggest that the quotas have not been good for business. In order to raise female representation from 9% to 40% (a feat that had to be accomplished in just five years), many companies promoted women with less experience than what their predecessors had.

• A study by Amy Dittmar and Kenneth Ahern (from the Ross School of Business) showed that companies made to increase the number of women on their boards by more than 10% saw the ratio of market capitalization to the replacement value of assets (aka Tobin’s Q) fall by 18%.

Although women do as well as men or better in college and go on to hold more than half of the entry-level positions at blue-chip companies, they soon start falling behind. The failure to rise in the ranks could be partly due to a lack of aggressiveness on the part of many women.

• Carnegie Mellon University’s Linda Babcock found that her male graduate students’ starting salaries are 7.6% higher than her female grad students
• Men are four times more likely to request a pay raise than women are
• Women are less likely to ask for favors than men are
• According to Catalyst, 37% of middle managers at big firms in America are women; 28% of senior managers are women; and just 14% of executive committee members are women

There is also the fact that women put significantly more time into childcare, eldercare, and household chores, which necessitates a demanding family/work balance. This makes women more likely to choose jobs with predictable hours in fields where their skills won’t become obsolete if they take a career break. Some opponents of quotas believe that state- or employer-sponsored childcare, along with telecommuting options, will be more helpful to women climbing the corporate ladder.