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Quotas would get more women into the board room Add to ...

There is a way to ensure that more women secure senior roles on corporate boards, but you won’t like it. I’m talking about quotas.

Dropping the Q-word sends many professionals, men and women alike, back to their corner offices in a huff. Like a bad-tasting medicine, however, the threat of treatment may instigate radical change.

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For the record, I believe corporate board appointments should be allocated to qualified individuals only. But if a percentage of those qualified board members were required to be women, wouldn’t that motivate companies to search harder to find suitable candidates or at least groom women for these roles?

The number of women on corporate boards in Canada varies depending on the source. A 2011 study by The Deloitte Global Centre for Corporate Governance listed the percentage of women serving on Canadian corporate boards at 12.5 per cent, while a 2010 report by the Canadian Board Diversity Council calculated that 15 per cent of board members at Canada’s biggest companies by revenue are women. In the United States, the number of women on boards of S&P500 companies slipped half a point to 16 per cent in 2011, according to Bloomberg Rankings.

We could keep engaging in national hand-wringing, or we could tackle this problem in a way that has been embraced by Norway, France and Spain: government-imposed quotas.

The duration of imposed quotas need not be long. Norway boasts that women represent 40 per cent of its publicly traded corporate boards, up from 9 per cent when the law was enacted in 2003. A quota for short duration may spur a positive domino effect, since research shows that there is a correlation between the number of women on corporate boards and the future number of women in that company’s senior leadership.

“We’ve been trying over the years to increase the number of women,” said Ronald Burke, a professor of organizational studies at York University’s Schulich School of Business, in an interview. “Leaving it to natural occurrences hasn’t worked in the past and it won’t work in the future.”

Yet Dr. Burke acknowledges that the likelihood of Canada enforcing quotas on corporations is a non-starter: “Telling a CEO [in Canada]to impose quotas is like telling them they have a sexually transmitted disease,” he quipped.

In our business culture, where corporations are highly averse to government interference, there is only a pie-in-the-sky chance that we’ll ever see an imposed gender quota here. But opening the dialogue on a national level might spark some change. In Germany, the threat of a quota led the companies listed on the DAX to set voluntary targets for promoting women. The European Union warns it may impose legislation if companies don’t voluntarily reach targets by 2012.

In Canada, quotas remain an unpopular option, even among those who actively endorse better representation of women in senior positions.

“I would like to think Canadian companies would move quickly to address this imbalance because they understand, not because they have been compelled,” said Bill Downe, president and CEO of Bank of Montreal and a member of the board of directors at Catalyst, a not-for-profit group that promotes the advancement of women.

“Women are successful in their role because they’re successful, not because you established a quota,” he added.

Jacoline Loewen, director of Loewen & Partners in Toronto, which sources capital for growing companies, has served on a range of boards and believes a quota would dilute the competitive, aggressive behaviour required to drive strong business results.

“I got to my position through hard work and would hate to be seen as a token appointee,” she said. “Men have to pay a price to get on a board, and the women I know on boards have worked hard to get there too.”

The threat of quotas appears extreme, but let’s not lose sight of a good reason to even out the demographics on corporate boards: It’s good for business. In 2007, Catalyst published a study that showed a correlation between the number of women on boards and a company’s financial performance.

The profit angle aside, diversity on boards offers better representation for employees in the ranks, as well as consumers, and brings an alternative voice to the debate. A 2002 report by the Conference Board of Canada showed a correlation between the number of women on boards and good governance practices.

Canadian companies could commit to advancing women by setting internal milestones and publicly marking their progress. If that doesn’t work, well, there’s always the Q-word.

Leah Eichler is a senior editor at Thomson Reuters who writes about women, their careers and success. E-mail: leah.eichler@rogers.com

Follow on Twitter: @LeahEichler

 

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