[Prague, 25 October 2012] In Czech society, the word “quotas” excites rather incongruous reactions. When it gets linked with the word “business”, reactions become even more acute. Do gender quotas in companies truly represent a threat? We are honored to offer you the answers of Viviene Reding, the person, who, as the EU Justice Commissioner, wishes to motivate European companies to achieve a better gender balance on their boards. Interview by Nina Bosni?ová of EWL Czech member organisation, Gender Studies.
Why, in your opinion, are gender quotas in business (on boards of companies) necessary?
We want to give qualified women a chance to break through the glass ceiling. Today 60% of university graduates are female. Yet we only find 14% (1 in 30) women on the boards of the biggest publicly listed companies who do business on our Single Market.
Change via self-regulation remains stubbornly slow. While the number of women on supervisory boards EU-wide has gone up from 12% to 14% over the past year, in two thirds of Member States there has been no progress at all. At the same rate of progress, it would take another 40 years to arrive at a balanced representation (40%). Therefore, I believe it is time to explore EU level policy options to enhance female participation in decision-making. The biggest progress in getting boardroom diversity has been in countries that adopted quotas. France, which introduced legislation on gender balance in boards in 2011, has since gone from 12% of women on boards to 22%. This rise alone accounts for around half of the overall increase in the EU.
Quotas have clearly brought results. They can therefore be a helpful temporary measure to break the glass ceiling.
Do you think it is easier to put through gender quotas in politics than in business? Why, why not?
The European Commission has no competence – neither the intention to intervene in national political systems and choices. For this reason I am only concentrating on increasing the number of women on the boards of big publicly listed companies operating on the European market.
The argument is easy: women are not a cost but a benefit to every company and to the economy in general. In these difficult economic times, it is increasingly important to take advantage of everyone’s skills. And there is a clear business case for more women on boards from a microeconomic perspective, in terms of individual companies’ performance. A number of studies – which are not coming from ‘feminist’ organisations – show the link between a higher number of women in senior positions and companies’ financial performance. For example, a McKinsey study found that gender-balanced companies have a 56% higher operating profit compared to male-only companies. Ernst & Young looked at the 290 largest publicly listed companies and found that the earnings in companies with at least one woman on the board were significantly higher than in those that had no female board member.
Having said that, I think that change in the domain of politics offers great visibility by setting an example, such as M. Ayrault’s new government in France has done by including an equal number of male and female ministers.
Why, do you think, are gender quotas perceived as such a threat by many businesses in Europe (in the Czech Republic, for instance, absolute majority of firms rejects them)?
The word ‘quota’ has always had a negative connotation. There are people arguing that women have made it to top-positions just because of the quota, such as the “golden skirts” myth in Norway. The fact is that Norway is a pioneer when it comes to setting binding gender targets for company boards – and the results are impressive. A study conducted by the Institute for Social Research in Oslo revealed that 80% of the male supervisory board members of companies in Norway believe that the Norwegian quota law has brought an improvement to their economic performance or else has maintained the status quo. The improvements have been brought about mainly due to more diverse views, skills and qualifications that women have brought to the supervisory boards. Trade associations and companies in Norway do not complain about the quota. The law is now an integral and accepted part of the Norwegian society, the research shows.
For me the word ‘quota’ simply illustrates that qualified women often cannot break through the glass ceiling. And we have all these qualified women. Just look at the list of 7000 ‘board-ready’ women that major European Business Schools just published. All of these women fulfil stringent criteria for Corporate Governance as defined by publicly listed companies, are well qualified and ready to go on the boards as of tomorrow. I feel that a quota should not be seen as an offence but as a chance for these qualified women.
What is the way to convince companies about gender quotas being the right way to go at the present moment?
The issue of how to achieve gender balance and the need for public intervention is complex. What is crystal clear, however, is that it needs to be addressed.
Quotas are a tool and they can be very effective. I have seen the results in several countries. It’s clear that they can be a solution when the top positions in companies are blocked for women.
However, they are not the only way to get results. There are many ways to improve gender balance on boards. There is mentoring and working with business schools to train women who can move up the corporate ladder into management and board positions. Some companies, such as Deutsche Telekom, have realised that more women on supervisory boards is good for business and set themselves voluntary targets.
There is also the use of corporate governance codes to promote gender balanced boards: the Finnish corporate governance code (2003) is one of the first national codes in the world to mention the gender of board members. This has been followed in other countries such as Sweden, the Netherlands, Austria, Denmark, Luxembourg, Germany and the UK.
British Prime Minister David Cameron has said that promoting more women to senior roles would boost business performance. The 30% Club is working hard to push for more top companies to increase gender balance on their boards.
For me, in the end the result counts: more women on Europe’s boards. The quota is a means to get there, not an end.
What we need to do is find out what is the best way to address the situation – and that’s precisely why I launched a public consultation to seek the opinion of citizens and stakeholders. The number of responses we received shows the great interest in this matter: we received responses from almost 500 individuals, companies, organisations and governments from all over Europe and we will take their input into account. We are now analysing all the responses and preparing an economic analysis. You will see the result of our assessment in the legal instrument which the Commission will propose in autumn this year.
