Women on corporate boards

Introduction

In Europe, Norway was the first country to make the gender quota law; this brought about significant implications to the Norway board composition. This was following the concerns of a small number of women in the composition in boards. In 1992, for instance, in 764 board members positions, women accounted for only 3.4% only. In 2003 a voluntary gender quota was implemented which required a 40% of both genders represented. This was, however, made compulsory in 2006 for all the upcoming companies while the developed companies were given a maximum of two years to comply with the newly implemented quota law.

Analysis

A majority of countries have experienced the inequality disparities in the composition, and characteristics of the board this therefore resorted to the force law which requires all the corporate boards to abide by some level of gender balance in their operations. Norway has gone to the extent of dissolving all the companies which have failed to comply (Sweigart, 2012). For the longest time, I have dominated the upper and superior positions in the business world. Such laws being voluntary the growth of the number of women in the executive position has grown in a very small percentage, the men still dominate.

In Norway, for instance, 1992, companies listed on the Oslo exchange women were a mere 3.4% of the 764 board positions, some industries surprisingly had no women in the board positions. In a proposal for the new quota for women on the corporate boards in the public firms in 2001, the ratio was suggested to be 40 per cent for the public companies (Gidlund & Lund, 2017). This proposal was, however, received with different reactions from organizations and also the public, the NHO and also the financial community had the most negativity in their responses.

When an international comparison is made, it shows that this case is the same in other wealthy and developed nations, women are left behind when it comes to the corporate board composition. The need for gender representation was mostly inspired by the need to achieve social justice as well as societal need (STORVIK & TEIGEN, 2010). It has also been pointed out that there are specific interests and needs of women in the business world which would be better-taken care of by women themselves rather than men. Also, there is the aspect of women having a different background than men; therefore, they would bring a different perspective on the table, which would be beneficial for the business.

Solution

Norway implemented the quota law to transform the small numbers of women on the board and the slow increase in the female board membership due to the law being voluntary initially (DHIR, 2015). Even before this particular law, there was the slow growth of the women on boards even though there were other different measures which were in place for the women equality were present.

In 2003 the Norway government passed a law which required the firms to have at least 40% women in their board. Dramatic regulatory measures for non-compliance were also implemented in 2006. This was after the two year grace period for the developed countries, failing to achieve the quota of women in their board positions companies were at risk of being delisted (Gidlund & Lund, 2017). Programs increased in number which had female directors, other programs designed to train more women to become board members were created. Programs which were meant to mentor women were also established and also things like women archives who were board candidates were also started. This should be adopted with other countries which are still struggling with the inequality issues.  Although publicly listed companies which are currently operating with the quota laws for the board composition, the number of female CEOs remains stable in Norway.

The increased number of women in the Norwegian boards has improved the education level on boards. Also, scholars have reported having more women on the boards has encouraged a more focused strategic decision making, better communication, and conflicts have decreased in workplaces. In different countries in Europe, the quota law for female board participation has created a lot of interest, the quotas have been allowed they are just waiting for implementation.

Justification

The implementation of the quota is essential because:

1. Ensures there in gender equality in the business world which has helped achieve the element of democracy also; the purpose of this law was to balance the participation in boards since there was a question of democracy.
2. According to research, female directors tend to have a higher level of education as compared to their male counterparts in the organization.
3. It is easy to find a woman interested in the board position; they can be easily be recruited for the same positions as men even without a board position experience.
4. The quotas have helped med the extreme imbalance in gender on the corporate boards; this imbalance has persisted regardless of how well educated they are and their participation in the workplace.
5. Also, with the quota, there are specific interests of women which will be better taken care of by the women themselves in the boards than men taking care of them.
6. Different views will be presented since both men and women have different background experiences, and bringing them together would benefit the business.

Summary

            Changing the society’s mindset is hard, especially when the change requires a cultural transformation in a short time the normal encouragement is not enough. Being fair is relative; men, the majority in the board could be termed as fair by some people. Creating an equitable pool of employees and measures such as the quota can generate role models and more effective standards. Currently, the gender quota on boards is not looked at as a revolutionary concept or a foreign regulatory aspect. Norway has helped to prove that that policy can be useful and successful at the same time, this is because it has created commendable improvements in the way a company runs and also in achieving greater gender equality and participation.

References

DHIR, A. A. (2015, May 4). What Norway Can Teach the U.S. About Getting More Women Into Boardrooms. Retrieved from The Atlantic: https://www.theatlantic.com/business/archive/2015/05/what-norway-can-teach-the-us-about-getting-more-women-into-boardrooms/392195/

Gidlund, A., & Lund, T. (2017). The Norwegian Gender Quota Law and its Effects on Corporate Boards. Umea School of Business and Economics.

STORVIK, A., & TEIGEN, M. (2010). Women on Board: The Norwegian Experience. Friedrich Ebert Stiftung.

Sweigart, A. (2012). Women on Board for Change: The Norway Model of Boardroom Quotas As a Tool For Progress in the United States and Canada. Northwestern Journal of International Law & Business, 83.