Two weeks ago, Germany’s lower house of parliament approved a new gender quota that will require its largest companies to have 30 percent of their boardrooms be female by the end of the year. As of now, Germany has a 22 percent representation of women in boardroom seats. This new quota follows a string of similar quotas by other European countries in the last few years: Norway, France, Iceland, Spain and the Netherlands, to name a few. These quotas are designed to empower women and are heralded by many as a progressive solution to a male-dominated business elite. I do not deny there is a distressing lack of women in the leadership of companies. However, gender quotas fail to create an inclusive atmosphere for females at every level of large companies. There needs to be a new, comprehensive approach to preventing gender inequality in business, such as a more holistic quota or incentivizing having female employees.
Since gender quotas are relatively new there has been very little research into their effects. The most recent and comprehensive study done on them so far was by the University of Texas in 2014. Focusing on Norway, the study has very interesting findings. Researchers found that female CEOs who were hired after the implementation of quotas were “observably more qualified.” The wage gap between males and females on boards also decreased significantly. However, the study states “there is no evidence that these gains at the very top trickle-down.” The authors argue there has been no significant change in the wage gap or gender proportions among the upper leadership of large companies, boards excluded. Additionally, the study found that the quota did not significantly affect women’s decisions. Women are aware of more opportunities but many outside factors, such as a marital plans, still hamper them from fully taking advantages of the quotas.
Data back this point up. Norway was the first country to impose gender quotas of 40 percent, all the way back in 2003. After 12 years any positive effects from quotas should start to show. However, it is very hard to see any change. Less than 6 percent of general managers in Norway are female and not a single CEO out of their 32 largest companies is female. This is with 41 percent of directors being female, a proportion that has stayed surprisingly close to the quota limit even more than a decade after it was introduced. Norway is not alone in this. The Wall Street Journal points out a list of countries that gender have quotas but still lack inclusive female leadership. Clearly quotas have not yet created inclusive change.
Failing to bring about trickle-down advantages, gender quotas do not accomplish any sort of significant shift in business attitude. Gender quotas were originally created with the idea that more women in the top leadership would lead to an increase in equal hiring practices across the rest of the company. This has not been the case for most companies. Going off the 2014 study, there was growth in the representation of women in the top 5 percent of the companies but no growth in any other percentile. Even after over a decade it is clear gender quotas are only effective at addressing business elite.
There has already been too much time wasted on waiting for gender quotas to create significant change. Norway’s policy is already over a decade old and change has been minimal. For quotas to work anytime soon countries need to address their inherent problems or find a new solution. A gender quota that applies to whole companies or at least larger sections of companies could solve the top-heaviness of reform. Alternatively, the government could incentivize putting women in mid-tier leadership positions instead of forcing companies to meet a quota. Either of these options addresses the problem of gender inequality on a multiple levels, allowing for inclusive change. The lack of female representation in business is a problem and there needs to be comprehensive reform — not just gender quotas in the leadership — for inclusive change to occur.
Bobby Doyle is a Viewpoint writer.
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