Discussion: Legislated Gender Diversity

[Today the PPGR has the pleasure of bringing you a discussion between two students from the University of Toronto’s Master of Public Policy program. Margaret Cappa’s article is followed by a response from Tina Sriskandarajah]

We made small talk.

“What do you do? Where’d you go to school?” asked the lawyer beside me.

“Oh, well I’m still a student, here at U of T,” I said.

Suits, briefcases and the passing of businesses cards surrounded me. Some important people were in the room, I soon gathered, and I think it was safe to say I was the only one with a ponytail and backpack.

Before the holiday break, I attended a Rotman School of Management event called, “Should Gender Diversity on Boards be Law?” It drew about 120 people, almost entirely from the Toronto business and professional community, as well as some Norwegian guest speakers. Norway has pioneered the gender diversity debate and leads the West in ensuring women and men are fairly represented on corporate boards.

“This is not a feminist issues, it’s a business issue. It’s to make the best companies,” said Else Berit Eikeland, Norway’s Ambassador to Canada.

In 2003, Norway passed legislation stating that 40 per cent of executive management board members in companies listed on the country’s stock exchange had to be women. Companies were given until 2008 to meet the legislation, and if they failed to comply they faced hard penalties, including exclusion from the stock exchange and dissolution. There was definite pushback in Norway though. In fact, 140 of the 501 largest publicly traded companies actually re-registered themselves to be excluded from the legislation, and yes, some men did have to be “let go” to ensure 40 per cent of their board was female.

The anecdotal evidence has been encouraging thus far. Liv Monica Stubholt, the CEO of one of Norway’s largest companies, said the dialogue around the board table is much more vivid and women seem to be less afraid than men to ask questions. Women aren’t better than men in any way, she said, they just go about business and leadership differently.

But Norway isn’t the only one trying to break the glass ceiling. France and Spain recently passed legislation similar to Norway’s. The French have six years to comply and the Spanish have until 2015. The Netherlands is looking into bringing a 30 per cent gender equity law, and Germany’s Chancellor Angela Merkel has made noise about instilling a quota system.

Canada has taken no significant stand on the issue of gender equity. According to The Globe and Mail, 41 per cent of Canadian corporate boards have no women at all.

One province though, Québec, is starting to make that glass ceiling permeable with legislation outlining that Crown boards must be 50 per cent female by 2011. And of course, poor Liberal Senator Celine Hervieux-Payette introduced a private member’s bill in the name of gender-parity on federally controlled companies in June 2009, but movement through the bill-to-law process hasn’t been its forte.

For gender legislation to make it, both men and women have to champion it. The Norwegian minister who brought forth their gender legislation was a man. And it’s not that a man has to bring forth the legislation, or any legislation at all, but gender diversity is something that must be valued and championed by all. It is a business issue, not a feminist issue. Women bring special and unique qualities to conversations, and we are different from men. Not better, different.

So why is Canada lagging in the area of gender diversity? Perhaps it’s a lack of male support for a seemingly feminist issue, or maybe the majority of people don’t see a lack of gender diversity as an issue at all.

But, I do know that back at the Rotman event, the suits I was talking to were women. The passing business cards went between one set of polished fingers to another. The lawyer who asked where I went to school was a female partner at a major Toronto firm.

And of the 120 present in that grand room, 14 were men.

– By Margaret Cappa

Little Manjula and Jennifer may dream of being corporate executives one day, but what happens to those dreams as Manjula and Jennifer grow up, enter the workforce, and sit at their first boardroom meeting? The lack of women — and diversity more broadly – in leadership positions across Canadian public and private institutions is a problem. Only 13 per cent of director positions within Canada’s top500 public and private companies are held by women, up a meager 1 per cent from 2005. With figures like these, even an optimist would say change is not on the horizon.

Enter gender-parity quota system.

To address the almost standstill progress, some suggest implementing a gender quota system. Inspired by legislation enacted in Norway, a quota system in Canada would mandate major Canadian companies to achieve certain percentages (e.g., 40 per cent women on corporate boards). The legislation would have teeth; companies that fail to comply would face punitive measures, such as removal from the TSX. Advocates of gender legislation say the results in Norway have been remarkable – the majority of companies in Norway have complied, with few exceptions.

There is no denying that a legislated quota system would increase the representation of women on corporate boards and force open what can still be described as informal and exclusive hiring practices. But at what costs? Could we effectively transport the success of a gender quota system from Norway to Canada without losing our values and heads in the process? I argue that in Canada, on both an ethical and practical front, gender quotas would do more harm than good.

There are two ethical problems with a gender quota system. First, it reduces the notion of diversity to a game of numbers. Yes, companies may meet the legally enforced ratio of women executives, but if corporate culture and respect towards women does not change then we will be “hitting the target, but missing the point.” Second, quotas set a pernicious cocktail of sentiments into play: resentment by qualified male candidates that get overlooked to achieve gender targets, and frustration by successful female candidates as their accomplishments are reduced to gender quota beneficiaries. Quotas are not meant to compromise quality. But the perception that gender trumps merit undermines any progress a gender quota system seeks to accomplish.

Beatrix Dart, associate dean, executive degree programs and executive director for Rotman’s Initiativefor Women in Business, says that the largest obstacles faced by companies from increasing gender diversity is a lack of women in senior positions that can be groomed into board members. This is the second fundamental problem with a quota system: it fails to address the substantive issues that underlie Canada’s current executive gender gap. If we want more women to be on corporate boards, we need to encourage women to pursue these positions (supported through their academic and career choices), and foster a culture that enables women to pursue both careers and families, without significantly more compromises than their male counterparts.

If not a quota system, then what?

If we want women to advance to top executive positions, they need to possess qualifications that businesses desire. Currently in Canada, although women make up 60% of university degrees and diplomas awarded they compromise only 30-35% of MBA enrollment. Even in the non-profit sector, where women make up 75% of the workforce, they possess fewer professional/graduate degrees than their male counterparts and make up a minority of top executive positions. Encouraging women to pursue professional degrees also breaks down (or at least makes a dent in) the “old boys’ club.” The interaction that occurs during graduate school lays the foundation for the networks and connections needed to achieve a seat on corporate boards. Increasing the number of women that pursue professional degrees will change the landscape of Canadian corporate culture, not just the outcome.

To advocate bringing Norway’s gender legislation to Canada and tout its potential for success without an examination of their respective family support structures is misleading at best. How is having children regarded in Canada? In my (albeit anecdotal experience) having children has a bigger impact on a woman’s career than it does on a man’s. To encourage men to partake more in child rearing, Norway has four weeks of parental leave available exclusively for fathers, in addition to the 48 weeks available to both parents. No comparable support structure exists strictly for fathers in Canada.On a day-to-day basis, although the gap is closing, women spend almost two more hours per day on unpaid household work according to 2005 Statistics Canada data. The fact is that although women are full participants in the Canadian labour market, the balance of household obligations has not changed proportionately. Both women and men need to make choices and compromises to equal the playing field at home and work if we are to empower women to pursue career ambitions.

There are numerous ways that Canadian companies can encourage the number of women on corporate boards without resorting to the draconian measures of a quota system. Whether it is done through mentorship programs or revamping informal hiring processes to be more accessible, private and public companies need to take a lead on improving gender representation while maintaining a meritocracy.

Canada needs greater representation of women on corporate boards. A quota system is not the answer. Although it may take longer, merit-based initiatives that encourage greater representation of women in executive positions is the only fair and sensible approach. This way, as little Manjula and Jennifer grow up, even if they don’t work for female executives, they can aspire to become ones – and they’ll know their hard work will get them there.

– By Tina Sriskandarajah

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