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Gender boardroom quotas

Posted by Flux on 

16 January 2021

The phrase gender boardroom quotas refers to the trend of governments stipulating a mandatory minimum percentage of women in private sector management teams.

Globally only 16.9% of board seats were occupied by women by the end of 2019 and if we continue at this rate, it will take more than three decades to achieve gender parity in the boardroom. Of the corporations that are taking steps towards increasing female representation, the majority have utilised self-imposed targets or followed corporate governance regulations issued by their government. Five years ago, the UK government set a target of 33% women on the boards of the country’s top companies. This has been achieved but critics argue there is a long way to go. Only nine of the FTSE 100 have achieved a 50:50 split. Targets can be effective but progress is often slow.

To achieve parity, gender quotas, although controversial, provide a way to accelerate this goal.

Germany’s cabinet has just approved a draft law that requires at least 30% female representation at board level for the country’s listed companies. The bill now needs to be signed into law by the country’s parliament. “This one breakthrough is historic. We are putting an end to women-free boardrooms in large companies. We are setting an example for a sustainable, modern society. We are exploiting all of our country’s potential so that the best in mixed teams can be more successful. Because nothing is done voluntarily and we need guidelines to move forward,” said Franziska Giffey, Germany’s federal minister for women.

The French government imposed a 20% boardroom gender quota in 2011; this was  increased to 40% in 2014. This legislation has successfully resulted in 44% of seats on company boards being held by women.

In 2018, California mandated that listed companies headquartered in the state had to have at least one woman on the board by the end of 2019. For boards with five directors, two female directors are required. At the time, over 27% of the  affected companies had no women on their boards at all. That number has since fallen to 2.3%. Clearly gender quotas work.

Only 22% of the board of directors in listed companies in South Africa are women. While gender equality is enshrined in our constitution, in practice, transformation at the leadership level of corporate South Africa is taking place at a slow pace. There is still progress to be made towards achieving gender parity in the boardroom.

According to the 2018 McKinsey report ‘Delivering through Diversity’, companies with gender diverse executive teams were 21% more likely to outperform on profitability and 27% more likely to have superior value creation. Critics of voluntary compliance with gender equality in the private sector, argue that this approach has failed to achieve significant progress and that gender quota legislation will achieve quicker results.

How many women do you have in your executive team? 
Can your organisation afford not to have gender diverse leadership?

By Faeeza Khan 


Image credit: Rawpixel

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