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The problem with quotas for women on boards and why they won’t work

Seems everyone is now weighing in on the quotas debate with our Governor General, Quentin Bryce becoming one of the latest champions for mandatory female representation on boards.  As I’ve said before, I’m a supporter of quotas largely because it’s time.  But even I don’t believe – in the short term – they will have a material impact on the number of women in leadership roles.

It’s time there were more women in decision making roles and driving the strategy of the companies that serve our communities. It’s time there was a better return on the investment we make in educating Australia’s women.  And it’s time to see a real shift in attitudes around what meritocracy really means – because I simply can’t believe only 3% of Australia’s vastly educated women are capable of being CEOs and only 4% are capable of holding line executive roles.

Norway is the poster child for gender quotas on boards, and much has been said about the success of its legislation in upping the number of female directors.  However so far even Norway hasn’t seen a flow on effect to other decision making roles: since Norway introduced quotas in 2004, there has been almost no increasein the number of women in senior line-management positions. So why so much focus on following their lead?

The advantage of focusing on boards first is that it’s easy to measure progress and it’s an easily definable group.  The number of board seats is easily calculated and percentages are easily tracked.  But the total number and reach is small: if the average board has ten directors, we’re talking about a total of 2000 board seats across all the ASX200.  Accounting for multiple directorships, the number comes down substantially – but even if every director held only one seat there would be only 800 board seats available to women at a 40% quota.

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If the average board has ten directors, we’re talking about a total of 2000 board seats across all the ASX200… even if every director held only one seat there would be only 800 board seats available to women at a 40% quota.

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Contrast this with the potential for promoting women into key executive and decision making roles inside our top organisations. Most of the big ASX listed companies will have leadership pools that encompass more individuals than the number of all the ASX200 directors combined – so surely that’s a better place to focus than boards if we’re serious about advancing women in business. Westpac alone – for example – where 3 of its 10 board directors are women – is focusing on it’s top 4,000 roles as it moves towards a target of 40% women across the Bank’s top 10% of leaders – that’s more than twice the number of board seats in the ASX200 combined, in just one company!

Of course one could argue that having women on boards is more likely to drive the gender agenda down through the executive ranks, particularly boards tie CEO remuneration to gender balance targets.  To again use the Westpac example it’s good to see this playing out: its CEO Gail Kelly has declared gender balance is now one of her strategic priorities and let’s hope it will drive some behaviour change given she had no women on her leadership team at St George, and currently has no women on her leadership team at Westpac.

To me, the important message from the Norway experience is that until quotas were mandated, gender targets on boards had been unattainable.  Companies decreed they had tried to find talented women for their boards, but there weren’t enough out there.  That is until it became a requirement for listing that at least 40% of board seats were held by women. Suddenly – at the risk of being delisted – the companies were motivated to try a little harder, and guess what?  

As if by magic, there were enough qualified, experienced and board ready women, after all.

I wonder if the same would be true if quotas now followed into its executive ranks?

What do you think? Will quotas work? Is it the right place to start? Does it really matter anyway? Should we start a petition for quotas across all key executive roles?  I’d love to hear your thoughts on this…

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