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Women on corporate boards: quotas won't help

November 3, 2016
Diversity & Inclusion

European governments have been making headlines for adopting ground-breaking quotas designed to give more women a seat in the boardroom. Embracing new mandates to close the disparity gap among female and male leadership roles, countries such as France, Italy, Spain and Germany have adopted quota laws as a powerful tool for ensuring equality.

There’s no denying that Europe’s quotas are helping bring more women into the top ranks of business, specifically the boardroom, and are accelerating change.

While still woefully lacking in equality, the share of female CEO’s doubled to 4% in Europe over the last seven years, a recent study shows. Data from the European Commission show the number of women holding board positions has increased materially since the quotas were first enacted in 2013, with Iceland currently in the lead for all EU countries at 44%.

While the lack of equality at the top is not disputed, and study after study shows positive outcomes for having women in leadership roles, the question becomes: could quotas work to accelerate gender diversity on boards in the United States?

In recent decades, the United States and its leaders have been skeptical of, and oftentimes openly hostile to, the idea of quotas. Quotas in the U.S. would be open to attack because they don’t directly advance the goal of corporate leaders — better corporate governance. This was a primary concern for Swedish opposition parties who in effect killed a board equality quota proposal. In the U.S., leadership diversity is (in most circles) acknowledged to result in better decision making, and thus better governance and performance, so if we want to see real change, we have to push for ways to work with corporate leaders on their terms.

While many U.S. leaders feel mandating a specific result, such as hiring a set percentage of women, is too prescriptive about how they should run their business, we have seen even highly traditional businesses like the NFL adopt a more top-of-funnel quota concept in sourcing, interviewing and considering talent (the Rooney Rule, where NFL teams are required to interview minorities for head coaching positions, is a perfect example). Positive changes at the top of the funnel will lead to changes to the ultimate goal — increasing diversity on boards. To drive change in the rest of corporate America, business leaders and policy makers should work together to set goals, create incentives and continue to demonstrate the value of female contributions.

Whether you are a supporter of mandated quotas or not as an additional catalyst for change, gender diversity on boards will not get solved until we begin to even create the opportunity for more female candidates to surface every time a board seat opens. While CEO demand for board diversity may be on the rise, one of the largest obstacles is the perception — one that is not rooted in reality — of a lack of qualified, board-ready women candidates. Quotas will not solve this perception issue.

While we’ve historically heard of “binders full of women” waiting for demand to materialize, the truth is board searchers are not connected to high quality supply in any trusted and scalable way, which leaves the perception that there is one small binder filled with the “same women” over and over again.

Nothing could be further from the truth.There are a growing number of initiatives focused on creating communities of board-level women leaders, including our work at theBoardlist, the UK and Australia’s Women On Boards, and Broadrooms. These communities are trying to virtually “extend” the horizon of strong candidates for companies that continue to pull from their own small, insular and commonly-tapped first order networks.

Additionally, investors — early, mid, late and public — must also intentionally prioritize board diversity and tap into these burgeoning communities given their influence in the boardroom and how often their CEOs look to them for board referrals. This is not a supply problem but in fact a demand problem. Helping these CEO’s know where to look and how to broaden their outreach and look outside of their current network can have a great impact on the number of women at the top here in the U.S. This is frankly the first step to making progress.

According to research conducted by the Government Accountability Office, it could take more than four decades to achieve gender parity on corporate boards in the U.S. Although quotas are one tool being employed to try to accelerate change, true acceleration of gender diversity will happen here in the U.S. when every board search is met with the opportunity for a full and diverse slate of candidates to be presented.

Sukhinder Singh Cassidy is founder and chairman of JOYUS and CEO and founder of TheBoardlist.

Source: USA Today

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