Countries around the world are increasingly using quotas to redress gender imbalance in corporate leadership. This raises an important question: Do quotas work?
The answer to this question brings to mind Harvard Business School Professor Boris Groysberg’s quote: “Diversity is about counting the numbers. Inclusiveness is about making the numbers count.”
The distinction between “diversity” and “inclusiveness” is key to answering the question about quotas. Countries such as Norway have used legislative quotas to effectively boost the number of women on corporate boards. However, the results from our recent studies suggest that quotas may not contribute to fostering inclusiveness.
In a study issued last year, our research showed that quotas did not contribute to longevity of females on corporate boards and potentially create a revolving door for female board members. The new study released for this year’s International Women’s Day shows quotas do not contribute to improving representation of women in executive roles where they can be influential and make a meaningful impact on company strategies and outcomes.
Why is this the case? Research on affirmative action provides the answer, showing that hard mandated quotas can hinder inclusiveness by generating negative attitudes and a hostile environment for target beneficiaries in two ways.
First, by signalling preferential treatment of women, quotas have been shown to reinforce an “in-group-out-group” or “us-versus-them” mentality that makes it difficult for women to socially integrate in their groups.
Second, regardless of the actual skills and capabilities of women leaders, hard quotas seem to create perceptions of compromise of merit, which suppress women’s voices in decision making and result in their marginalisation.
These factors may explain the disconnect between female board percentage and female executive team percentage when it comes to quotas.
Countries such as Norway that have enforced hard quotas are leaders in proportion of females on corporate boards. However, Norway lagged behind the likes of Colombia (28 per cent), Thailand (19 per cent) and Malaysia (18 per cent) when it came to countries with the highest percentage of females in executive teams – which lend opportunities for females to make strong and direct impact on firm strategies and outcomes. The UK (11 percent) and the US (13 per cent) lagged behind the top 10.
Our results highlight the importance of shifting the conversation from “counting numbers” to “making the numbers count” by looking at whether women receive the necessary support and infrastructure to continue on boards and make a meaningful impact by serving in executive roles.
Our results suggest that quotas may not be the answer. Rather, “soft legislation” such as director term limits and gender diversity requirements in corporate governance codes have a broader effect, beyond the board, on female representation in executive teams than “hard legislation” such as quotas that do not seem to help promote women to the executive suite.