A bold decision

I read with interest about Norway’s legislated quota for women’s presence on publicly traded private limited liability (“ASA”) corporate boards. The improvements in equality on boards in Norway were not coming fast enough*, so, in 2005, the government put in place a minimum quota of 40% of women on every ASA corporate board by the end of 2007, with consequences if not met. In the last six months of 2007, it is estimated that 400 additional women were voted onto corporate boards, making Norway by far and away the country with the highest representation of women on boards. Quoting from GlobeWomen.org, “In its 2007 study, ‘Women Directors in the Fortune Global 200 Companies’ released in Berlin at the June Global Summit of Women, Corporate Women Directors International reported that only 11.2% of corporate board seats are held by women in the 200 largest companies in the world.” The successful implementation of the Norwegian law has been observed by many other countries (including Canada, Spain) seeking similar diversity. I note that Sweden apparently balked on a similar quota initiative five years ago.

A 40% target

Having been set the objective of 40% female representation on boards, the targeted Norwegian companies are now on average at 37%, at parity with the 37% of their women parliamentarians, although below the true parity achieved in PM Jens Stoltenberg’s current cabinet (8/16)**. The very least one can say is that the Norwegians are putting their money with their mouths are…and with great courage. I was able to find, for example, many sites with stats on gender equality (including this one at Statistics Norway).

I was intrigued by a blogger’s following explanation for the strong presence of women in Norwegian society:

usini wrote (find in the comments section): “I think that one has to be very careful not to generalise from the particular. Women in Norway always had quite a strong position politically, because, so I believe, of the economy being based on fishing and sea-faring which meant that a lot of men were absent when decisions had to be made. Thus a solution which is suitable for them may not necessarily apply to other cultures.”

One of the items to watch closely in the near future will be how the Government deals with non-compliant companies. This Guardian article identifies the scope of the problem with 111 yet to comply and 5 companies that still have zero women on their boards. Clearly, closing down those companies will be an explosive solution. The second evolution to watch carefully is how the board members are re-elected… When/if a woman leaves a board, will she systematically have to be replaced by another woman?

Sensitive topic

This quota law was naturally a topic of great sensitivity. Quotas are a generally reviled policy. And most of the commentary I have read on this particular policy are predictably unfavorable. Certainly the ambition of going from 6% to 40% was enormous, if also artificial, over such a short period of time. As much as some Norwegian unions might have been delighted by the quota, most of the private sector was up in arms and there is probably continuing concern that foreign companies will look less favorably at installing in Norway. As reported by the Centre for Corporate Diversity, there was also concern that some of the 500 concerned companies would change their ASA status to avoid this law. That particular concern has proved unwarranted. Meanwhile, even the Norwegian Gender blog, authored by Ragnhild Sohlberg, has put up reservations as to the success and/or desirability of a quota system. Susan Gunelius at Women on Business also issued reservations against quotas. In any event, finding qualified talent in those numbers over such a short time frame does not appear healthy–and one has to imagine some negative fallout in the first few years. Nonetheless, I applaud the courage of their convictions.

In many ways, the trick for the Norwegians will now be to validate the new status to show that corporate performance is at least as good as in the past (if not better) in order to encourage other companies (such as Luxottica, which has committed to 30% of women in management positions) if not other governments, to follow suit. Proving that the performance has otherwise been altered by a higher presence of women will ultimately fall to the numbers and bottom line. The question is whether the benchmarks and interpretation of those numbers will be clear.

Looking at the global playing field, it is interesting to note how a smaller country can become, in a certain fashion, the experimental laboratory for other bigger countries. Not that the context in any country can perfectly translate for other countries, but this policy and its successful implementation could surely give rise to new initiatives in other countries. Its failure would only reinforce the “I told you so” against quotas. In the same vein of looking at “small” country initiatives, I am tracking Norway’s actions on the ecological front (including this Green Prison initiative in a prior post) where they are pioneers as well. The least one can say is that they are attempting to bring about change. And since the end is desirable…to what extent does that justify the means? Any thoughts?

Other blogs on this topic:

• Yvonne Roberts speaks out in favor on Guardian Unlimited. The comments are quite heated.
• Ibibo Blogs – One blog supporting the notion that Quota works…
  Fresh Inc. — 40% of business school students in Norway are women.
• NYT Article from Jan 2006 — Women more reasonably represented in politics & media…
• Mises Blog – The Ludwig von Mises Institute is the research and educational center of classical liberalism, libertarian political theory, and the Austrian School of economics. Even this post inspired a lot of debased, inflammatory comments (from 2005)…
• Reinvention Inc... where I picked up the story about Spain following Norway’s example (not on the imposition of a quota, but an incentive to have higher female representation. In 2006, Spain had under 4% female representation on corporate boards.
• CareerDiva [now removed] – with a balanced comment section to date (just 5 comments).

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* The initial request from the Norwegian government was made in 2002, with a non-binding law established in 2003. In the following three years, the percent of women present on boards rose from a poor 6% to an ‘average’ 11%. I read a 2003 article from Time magazine on the topic… makes for good recent retrospective information. [Link defunct]

** I found a blog posting on Writes Like She Talks, referring to a Huffington Post posting from 2006 that discusses the representation of women in politics across the world, where the USA ranked 67th. Write Like She Talks has an updated blog site now, here.

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