Gender Representation In Decision-Making

[Opinion column written by Jonathan Starling]

Today, March 8th, 2015, marks the 104th International Women’s Day, and is celebrated as an official holiday in around 27 countries, while observed in other ways elsewhere – including Bermuda.

Each year a different theme is adopted for the day, either by local organisations or by international organisations. This year, the theme adopted by the International Women’s Day global hub is ‘Make it Happen’, while the UN has adopted the theme of ‘Empowering Women – Empowering Humanity: Picture It!’

My own focus for this year’s International Women’s Day is the need for greater gender representation in decision-making – to empower women in the process, and to make it happen.

The Need for Greater Gender Diversity on Boards

Women make up roughly half of the population, yet, in 2015, this is still not reflected in key decision-making bodies in our society, be it in Cabinet, parliament, corporate boards, public boards and senior management positions in both the public and private sector.

I believe it is time that we adopt a policy similar to Norway’s and ensure that, at least in public and corporate boards, there is adequate gender diversity, with at least 50% of the board being female.

Ensuring gender diversity is not just about fairness; there is ample evidence that greater diversity on boards leads to better governance. If a board more truly reflects the people it serves, then it will be better equipped to make decisions affecting them – and to improve overall performance.

Just last year, the UK Government released their third annual Women on Boards progress report [PDF] which, among other things, provided outlines of various ways in which increasing gender diversity on corporate boards made sound business sense, such as:

• Improving performance at board and business levels through input and challenge from a range of perspectives;

• Accessing and attracting talent from the widest pool available;

• Enabling businesses to be more responsive to the market by aligning with a diverse customer base, many of whom are women;

• Achieving better corporate governance, increasing innovation and avoiding the risks of ‘group think’ – where group members try to minimise conflict and reach a consensus decision without critical evaluation of alternative viewpoints, by actively suppressing dissenting viewpoints, and by isolating themselves from outside influences.

Just as these make sound business sense for corporate boards, the same reasons make improving gender diversity important for public boards.

International evidence indicates that expecting public and private boards to set voluntary targets and initiatives has been inadequate, and as a result there is a move towards legislative measures to increase the pace of change towards gender equality in the boardroom.

Various forms of gender quotas have been introduced in many countries, including Austria, Belgium, Denmark, Finland, France, Iceland, Ireland, Italy, Norway, Spain, Switzerland and the Netherlands. These countries have developed various approaches, including sanctions, timescales for reaching targets and company size and ownership structure.

Norway as a Model

Norway requires the boards of public companies to have at least 40% women directors, and a company may be dissolved for failure to comply.

Norway was the first country to introduce a quota for women on boards, with the Companies Act 2003. In 2002, before the law came into force, the proportion of women on boards was just 6%. By 2014 that number has changed to the mandated 40%. This clearly shows how the introduction of quotas by law can quickly make a significant difference.

In countries that have not adopted mandated quotas, voluntary measures involve a ‘comply or explain’ principle, covering transparency in promotion and recruitment processes, education and training, corporate governance codes and promoting women in management. However, with no significant levers to ensure change occurs and is maintained, progress has been far from adequate.

A report [PDF] on the Norwegian experience noted the following key lessons:

• Quotas required the cross-party support; it was introduced with the backing of centrist and centre-left parties.

• Sanctions are necessary to enforce compliance. In the initial phase, where there were no sanctions, it was found that companies did not generally implement the policy on a voluntary basis. However, the threat of fines and company dissolution was soon found effective in enforcing compliance.

• Positive measures were introduced to encourage companies to improve their gender representation. An example was the use of databases into which women could register and which companies were able to search for potential candidates. Another example is the Employers Association which created a ‘Female Future’ professional development programme for employees.

• It took a decade to achieve the mandated 40% female board members.

Just One Tool in the Toolbox

It’s important to clarify that simply ensuring true gender diversity on public and corporate boards will NOT end sexism in Bermuda. Rather, this is only one tool in the gender equity tool-box.

Other tools include the need for pay equity; it is interesting to note that the UK Government is about to introduce mandatory reporting by companies of men’s and women’s remuneration, following the failure of companies to disclose under a voluntary code.

More widely, and to paraphrase the prominent feminist bell hooks, the challenge of feminism as a movement to end sexism, sexist exploitation and oppression is multi-faceted. We still have a lot of work to do in confronting the horrors of domestic violence of sexual assault which continues to blight our society. Not to mention the need for greater work flexibility and child-care provision matters.

It’s also important to note that sexism exists with, and not in place of, racism and economic exploitation.

Much of the arguments for greater gender diversity in decision-making apply equally for the need for decision-making bodies to also reflect our racial demographics. And like gender diversity, leaving it ‘to the market’ has largely proven inadequate.

It is time to resurrect a version of the ill-fated Workforce Equity Act that was proposed in 2007, but to – this time – ensure that it is focused on improving both gender and racial diversity, while drawing on the experience of the Norwegian gender diversity approach.

There is no reason why we cannot replicate [and improve upon] the Norwegian experience and achieve a similar proportion of women on boards – say 50% – by 2025.

And there is no reason why we shouldn’t also address racial diversity at the same time, to ensure boards more adequately reflect our population demographics.

Tokenism?

An oft-used counter-argument to this is ‘tokenism’, which says that women will simply be appointed to boards to meet quotas rather than being qualified for the positions. I recognise that this may be a concern, although the documented evidence for it is not been plentiful.

Women are perfectly capable of excelling at all positions, and there are plenty of women who are sufficiently qualified and to fulfil the need. The question of whether quotas lead to tokenism is irrelevant in Bermuda today – it is only a noisy distraction. The question, rather, should be why there’s so little gender diversity on boards as it is.

We can also look at the Norwegian experience on his matter as well. A 2014 review of the Norwegian experience reached the following conclusions:

“…concerns raised by tokenism theory have, in large part, not borne out. The appearance of tokenism is ultimately a legitimate concern, but in the context of boardroom quotas, tokenism seems to be more of a perceived threat than an actual problem. Thus, the fear of tokenism operates more as a barrier to the passage of divisive legislation mandating higher boardroom participation of women rather than an obstacle to the effectiveness of women once they are situated on boards.”

This same report stresses that one factor in avoiding tokenism was achieving a critical mass, of three or more women, which ‘normalises women’s presence as leaders’. As a result ‘diversity becomes not a ‘women’s issue’ but group responsibility’.

In Norway, the concerns of tokenism are well documented as unfounded. There is no reason to believe the situation would be any different in Bermuda.

- Jonathan Starling

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