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Quotas mean better decision-making in the boardroom

Sep 21, 2018
Of course, in an ideal world, no one wants gender quotas. Real gender equality means selecting people solely on merit and without having to resort to gender targets or balance because one gender isn't given an advantage, by law or by personal bias.

However, the problem is that the world is far from ideal, and very far from a meritocracy, as shown by the mass under-representation of women in most boardrooms in Ireland. As long as that is the case, quotas are the best way of moving towards the meritocratic ideal.

Ireland has, in fact, addressed this issue, albeit belatedly. Under laws introduced in 2014, all state boards are required to have a minimum of 40% of both men and women. However, there is no penalty for boards that don’t have the appropriate gender balance. And so, more than half of the country’s state boards are falling short of the gender quotas set down in law, according to the Irish Independent in a survey conducted in 2017.

In 2003, the Norwegian government passed a law that required listed companies to have at least 40% of board members to be women. The law was enacted in 2006 and in the event of non-compliance, the company would be delisted. Existing companies were given an initial grace period of two years.

Many decried that mandatory quotas were the wrong way to promote women but they have caught on. In Belgium, Germany and France, women make up 30-40% of board directors in large listed firms, three to five times the share of a decade ago. In the USA, representation has increased to 20% despite having no quotas, showing that quotas could be contributing to changing attitudes.

No organisation wants to appoint board members who do not have what it takes to contribute to the boardroom. So, quotas force companies to think more deeply about how to recruit, develop, support, retain and reward female talent at all levels. Making quota’s mandatory will address this issue in a number of ways but, most importantly, could help shift societal attitudes and break the psychological barrier of only men being associated with boards rather than women.

It also ensures there are more women appointed to nomination committees whose job it is to make sure that they recruit strategically for a more diverse world and will provide role models and mentoring to support a future supply of women to boards and to senior management.

We have many fine examples of world-class female directors and CEOs in this country, but we need more. Quotas will help.

David W. Duffy is the founder of the Governance Company 
and author of A Practical Guide for Company Directors.