Newsletter | Volume 1

In spite of several warnings, Norway went ahead and introduced minimum quota for gender representation for the board of directors for a stock listed/ traded companies. Now the Minister for Corporate and Business Affairs Monica Maeland recognises that the world's first Norwegian Quota Act has neither had sufficient impact on corporate results nor served its purpose.

In the nineteenth century, the global challenge was slavery. In the twentieth century, it was the battle against autocracy. In this century the top governance challenge is the corporate struggle for global gender equality and diversity.

The world's first law for women on boards has failed. It was at best a civic experiment to promote gender equality, with the hope that it will spread throughout the Norwegian labour market. However, ten years after the law was adopted, the results are at best meagre.

The companies that were forced to meet the requirement of 40 per cent women representation has not had the expected impact to increase the proportion of female senior executives or women on boards of other companies that were not forced to have 40% women representation. It was further expected to have a broader impact on the labor market, in general, to promote gender equality. However, that does not seem to be the case.

Improvement without force
EU Commission has also dabbled with the gender diversity idea and perhaps does not have the required backing in the current commission. Following a strong backing by the European Parliament in November 2013 (IP/13/1118), the Commission's draft Directive aiming for a share of 40% of female non-executive members on the boards of listed companies is currently under discussion among the EU's Justice Ministers.

The latest European Commission figures show that the average share of women on the boards of the largest publicly listed companies across the EU has now reached 20.2% (October 2014). This represents an increase of more than eight percentage points since October 2010 when the European Commission first put the issue of women on boards high on the political agenda.

European comparison
Several surveys prove that the development or promotion of top female executives remains the same, with or without the quota, as senior management looks at some qualifications and requirements. Shareholders, on the other hand, will always place the right person with the right skill, desired for the company in the current circumstances and the board composition.

The gender pay gap is a complex issue caused by multiple factors, which go far beyond the question of equal remuneration for equal work. This has for long been an explicit expression of existing inequalities between genders and the need to address the obstacles women and minorities face when entering and staying in the labour market.

Gender equality on pay
The gender and diversity pay gap is the difference between the average gross hourly wage of women and the average total hourly wage of men in the European Union. It is shown as a percentage of men's earnings and represents the difference between the average gross hourly earnings of male and female employees across the EU economy.

If the achievement of gender and diversity equality continues to be an issue, the following questions must be addressed without introducing any form of quota, which essentially beats the purpose. Between the EU Member States, there is a vast difference in female director representation. It ranges from less than five percent in some countries to more than thirty percent in others. The latest statistics can be found at the site of the European Commission's database on women and men in decision-making.

Management in supervisory positions are overwhelmingly held by men (In the EU, less than 3% are female are CEO's as a whole).
Avoid segregation in education and the labour market. Some jobs are predominantly carried out by women
Address the pay discrimination issues as it is illegal in all EU countries, but continues to contribute to the gender pay gap.
The 'gender pension gap' shows that on average across the EU, women's pensions are 39% lower than men's.
On the labour market, this leads to more than 1 in 3 women reducing their paid hours to part-time while only 1 in 10 men does the same.
Women tend to interrupt their careers more often than men. This has an impact on their hourly pay, their future earnings and pensions.

There seems to be a need for data to prove that the gender or diversity issue has an impact on decision-making or that the corporate community or the results suffers due to lack of diversity, particularly in the area of gender diversity.

The 2010 global gender report from The World Economic Forum did document that countries with better gender equality have a faster growing, more competitive economies. Can the same be true for the global corporate world?