In 2003, and accompanied by fierce debate, Norway became the first country to pass a law legislating for 40% female representation on the boards of publicly listed companies. New research published today by four female academics looks at the impact of this board quota and draws some very interesting (and stark) conclusions.
On a headline level women do now make up 40.7% of NED positions at listed companies in Norway, and while it would be easy to argue that this number speaks for itself, the trickle-down effects have been negligible – only 6.4% of top managers in Norway are female, and none of the top Norwegian listed companies have a female CEO.
The research goes deeper than that, concluding that while the quota may have helped in the boardroom, it has had zero impact elsewhere in helping women close the pay gap or helping to increase the number of female executives. The quota also had no obvious impact on highly qualified women whose qualifications mirrored those of board members but who were not appointed to boards.
The research also found little evidence that the quota affected the decisions of women more generally; it was not accompanied by any change in female enrolment in business education programs, or a convergence in earnings trajectories between recent male and female graduates of such programs. Indeed, in the short run the quota has had very little discernable impact on women in business beyond its direct effect on the newly appointed female board members.
The research’s findings do not call into question the idea of boosting female participation in the boardroom, rather it suggests such quotas should not be seen as a panacea on the issue of gender equality. The 30% Club has long argued that developing the pipeline is the real key to sustainable change, not legislating for optical change at the top, and it is revealing to look at Norway a decade on and find that under the surface, nothing has really changed.
The full research can be found here: http://faculty.chicagobooth.edu/marianne.bertrand/research/papers/Paper_and%20Tables_5_29_2014.pdf