Sector News

Quotas could harm women’s careers

December 22, 2014
Diversity & Inclusion
Women deserve more seats in the highest corporate echelons. But a mandate is the wrong way to get there.
Germany seems to disagree. After months of debate, the German Cabinet recently imposed a quota for women on big companies’ boards. The policy was a response to the fact that women are currently under represented in leadership positions: They comprise 46 percent of the labor force but hold just 15 percent of supervisory board seats at Germany’s 200 biggest companies.
Germany is not the first to implement such a policy; Norway instituted corporate board quotas several years ago. France, Spain, Italy and the Netherlands followed suit. There is periodic agitation for importing such policies to the United States, too.
At first blush, these types of quotas seem like they should be good for women, good for corporate governance and good for countries that are now under utilizing the human capital of the Second Sex.
Multiple studies, after all, have found that corporations with more women on their boards tend to do better. Exactly why is unclear; maybe greater diversity produces more robust debate, leading to better decision-making. Or maybe the fact that having more women on a corporate board reflects other ways that a company is more forward-looking.
So far, though, research suggests that forcing companies to appoint women onto their boards has been somewhere between unhelpful and damaging, both to women aspiring to leadership roles and for the companies themselves.
One of the objectives behind such quotas is to improve the career and pay prospects of women further down the line, but a recent study of Norway’s system finds no evidence of a trickle-down effect for other high-achieving women or on the marital, fertility and career plans of other women. Quotas may, in fact, hurt women’s opportunities if they lead to women being perceived as unqualified, unwanted diversity hires.
In Norway, dozens of companies chose to delist from the stock exchange, apparently to avoid being subject to the quota. And among those companies that opted to stay public, quotas were associated with worse corporate performance. They “led to younger and less experienced boards, increases in leverage and acquisitions, and deterioration in operating performance,” one study found.
One likely reason women elevated by the quotas were more likely to be less experienced than the men they replaced, mind you, is that so many competent, talented women drop out of the running during the time they might otherwise be collecting the credentials usually needed to obtain a board seat.
In the United States, the pipeline to high-powered positions is so leaky for women, largely because of a lack of institutional protections. Of 185 countries studied, the U.S. is one of only two that don’t mandate paid maternity leave, and day care is ridiculously expensive. In many parts of Europe, though, women face the opposite problem: Well-intended public policy is instead too protective of women’s maternal responsibilities. When combined with traditional gender norms, these mother-friendly policies end up holding women back at the workplace by ghettoizing them in part-time, non-managerial or pink-collar positions.
Germany presents one particularly extreme example of good intentions running awry. German women are legally required to go on paid maternity leave for at least eight weeks after giving birth (usually six weeks before birth, too). They are then allowed to stay on some form of leave up until the child’s third birthday – meaning that their employer has to hold the position open for them for up to three years. Other policies and practices encourage women to pull back at work, too, including a new law that gives a subsidy to parents providing in-home child care and the fact that the majority of German school children come home for lunch each day. 
Persistent norms that say a woman with a demanding career or who puts her children in day-long schools is a rabenmutter (“raven mother”) don’t help, either.
Employers internalize these benefits awarded to, and expectations placed upon, female employees. Companies then become reluctant to hire women for demanding, high-paying jobs – which in turn reduces the opportunity costs for women to take long leaves or work part time, encouraging mothers, rather than fathers, to be primary caregivers, thus reinforcing the entire cycle.
The way to help women rise to leadership positions and better use all the precious human capital they’ve accumulated is not to try to legislate an outcome, as Germany and other European countries have done. It’s to address the incentives, institutional structures and gender norms that lead to that outcome.
By Catherine Rampell
Source: Hutch News

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