Quotas. The key to gender equality?

Despite significant advances in #education and #workforce participation, #women remain underrepresented in #leadership positions in #politics, the public sector and #business across the globe. However we get to #gender equality - we need to ensure we have the most appropriate #policies in place and understand what works best in different environments.

The issue of #quotas has always been complex and multifaceted, influenced by culture, history and community attitudes. Perceptions around this issue vary from country to country. In many countries, policy-makers have responded by introducing gender quotas in governments and on boards. There is also continuing debate in some countries around the merits of gender quotas at corporate levels. Elsewhere people are making a strong argument for #voluntary action and reporting of the numbers of women in leadership and on boards. Male #CEOs are playing a more visible role than ever in supporting #action.

In this context I was excited to take part in a formal debate last week in London with several high-profile figures from the public sector, business and politics. We debated the pros and cons of compulsory quotas and voluntary gender #targets. The debate hosted by the Institute for Government, gave us an opportunity to consider the underlying issues and consider the evidence of what might truly work in advancing more equal gender representation. 

I was again struck by the strong evidence for how #diverse and #inclusive leadership in #corporate and #public sector environments, including gender balance, stimulates #innovation, enhances problem-solving and decision-making, and improves performance and outcomes. For instance, a 2010 McKinsey study reported that companies with the highest share of women on their boards saw a 41% higher Return on Equity compared to companies with no women on their boards. Credit Suisse in 2014 reported that companies with more than one woman on the board have returned a compound 2-4% a year premium on ROE over those that have none. 

This issue is not just relevant for business but also for the public sector which - even more so than other sectors - should be representative of society. Despite years of policies and legislation only six G20 countries have at least one third of women at the top of departmental leadership positions. The EY Worldwide Women Public Sector Leaders Index has highlighted this situation annually since 2013. 

Female representation in political leadership and parliamentary representation is not any better. In a January 2015 study, the Women in Parliaments Global Forum estimated that women occupy only 20 percent of lower-level parliamentary seats, on average, internationally. 

Studies conducted by EY, the World Economic Forum and others confirm that even just the presence of women in leadership positions impacts positively on outcomes, regardless of quotas. Specifically, women in leadership are more likely to act in a bipartisan manner, are more likely to surface new ideas and bring new issues to the table for consideration. A recent report from the London School of Economics stated that quotas represent a “minimal condition” for securing change. It declared that presence alone is not sufficient, and that gender-equitable policies need to be practiced throughout an organization to effect long-lasting change. There are also real live case studies in relation to the impact of quotas. Norway introduced a compulsory quota system in 2003, resulting in a rise from around 5% of women on boards in 2000 to 42% in 2009. Contrast that with Germany which introduced a voluntary scheme in 1999. Ten years later women accounted for only 10.6% representation on boards and 3.2% in senior management. Germany has since introduced a quota scheme similar to Norway’s. 

The prevailing view that emerged from the Institute of Government debate was that we have seen some recent progress through elevated public debate around the globe and observable improvements in certain countries. However, this progress is not yet at a systemic, societal level. What might be needed are societal targets which – depending on where you are - could be quotas or a form of voluntary targets and/or reporting, combined with policies and programs in support of diversity. It can be argued that what we are dealing with is a form of market failure that requires intervention, in the same way as we intervene in the market on other matters. Last week's London debate helped to shed light on what combination of interventions might be most effective in accelerating gender equity and removing obstacles that stand in the way of talented women. Whether quotas make sense or not also depends on whether they reflect society’s expectations in a particular country. In any case, a combination of interventions might be most effective to achieve organizational change as well as societal change. 

Whatever the means, we need to increase female leadership – now more than ever. Making workforces more diverse not only fosters innovation, but also helps to drive up quality within that workforce, increasing the pool of talent available and offering a plurality of skills, experiences and insights to meet changing needs. Society needs to access top talent to lead change and create innovative solutions in government and business for the 21st century – this is hard to do if 51% of the population continues to be under-represented. This aim needs to be supported by the right policies and programs to enable women’s active contribution in business, government and political leadership.

Uschi Schreiber,

EY Global Vice Chair Markets

@uschischreiber 

The views reflected in this article are the views of the author and do not necessarily reflect the views of the global EY organization or its member firms.