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quotas for women in senior business positions

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Sneha Lees

on 17 October 2015

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Transcript of quotas for women in senior business positions

The Problem
Gender quotas around the world

Norway: 40% board quota introduced in 2006 and became fully effective in 2008.

Belgium, Iceland, Italy, the Netherlands, and Spain followed Norway with similar quotas.

Other countries – such as Malaysia and Brazil – have different gender quotas for boards.

Australia, Britain, and Sweden are thinking of
introducing gender quotas for boards.

Some countries such as Australia, Germany and the UK
are asking their companies to set voluntary boardroom
gender quotas or disclose their diversity policies.
A different quota
India introduced a political gender quota in 1993.

The quota required that every election cycle leadership positions be reserved for women in randomly selected village councils.

The results indicate that, ten years later women were more likely to stand for, and win, elected positions in councils that had reserved positions for women in the previous two elections.

Also, the experience of living in a village with a female leader on the council changed men’s biased
perception of women’s leadership abilities.
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Gender Quotas

A gender quota is a rule requiring that women make up a certain percentage of a group (for example, a board)

Gender quotas are put in place to increase the participation and representation of women in the group.
quotas for women in senior business positions
Source: http://edition.cnn.com/interactive/2012/05/specials/infographic.women.boardroom/

According to the 2014 report of the Workplace
Gender Equality Agency (WGEA), women make up
only 26.1% of key management positions (KMP)
and only 17.3% of CEO positions.

The representation of women steadily declines
when moving up the management level.
Gender composition in Australia
(WGEA 2014)
Firm Value
Gender quotas are ethically acceptable...
...aren't they?
Gender Quotas
Quotas promote fairness and equality (Adams et al., 2012).
Female employees may improve effectiveness in their groups and bring different perspectives to the table (the Higgs Review, 2003; the Tyson Report, 2003).
Women’s attitudes towards leadership positions improve positively over time.
Female directors are more stakeholder oriented than male directors (Adams, Licht, and Sagiv, 2011).
The gender wage gap for non-managerial workers decreases as the percentage of women managers increases (Cohen and Huffman, 2007).
No major problems were found in Norway after it introduced its 40% board quota. The results indicate that it did not lead to less qualified boards.
Women appointed to leadership positions through quotas are seen less qualified and competent.

Those women see themselves less qualified and competent.

If quotas prevent firms from appointing the best available candidate, then quotas may impose costs on firms (Adams et al., 2012).

Imposing binding legal constraints on firms’ choices may lead to declines in firm values if firms select their board structures to maximize value (Demsetz and Lehn, 1985).

Kanter (1977) and Westphal and Zajac (1995) suggest that more diverse boards can perform poorly because people prefer working with those who are demographically similar to themselves.
Ahern and Dittmar (2010) find that the market reacts negatively to the quota laws.

However, Adams et al. (2012) report that the stock market reaction to female director appointments on average is positive, suggesting that appointments are not motivated by tokenism.

Similarly, Nygaard (2011) finds that the market on average reacts positively to female director appointments.
There are arguments in favour and against imposing gender quotas

Looking at India’s and Norway’s quotas, one can argue that quotas are beneficial and thus acceptable as they create positive results in the long-run and do not seem to be hurting firms.
Women appointed to leadership positions through quotas are seen less qualified and competent.
- no records saying that companies choose their female employees optionally because of just wanting to reach the 40% of gender quota.
- people prefer to recruit people who are similar to themselves due to the homogeneity.
- Ie. success human executive will only choose the success one to be involved into the board membership
Women see themselves less qualified and competent.
- lack of support for the stigma of incompetence perspective lead women to feel self-stigmatization as they thought they were selected on the basis of demographics and not merit.
- not actually that these women are less qualified and competent, but incompetence perspectives influence them to feel in that way.
- therefore, should let them know why they can get into this leadership role and
how good are they.
if quotas prevent firms from appointing the best available candidate, then quotas may impose costs on firms.
- introducing a gender quota in the environment may cost high-performing women fail to enter competitions they can win,
- can let women being more willing to compete against other women
- consequences are substantial: boost in supply essentially eliminates the anticipated costs.

imposing binding legal constraints on firms’ choices may lead to declines in firm values if firms select their board structures to maximize value.
- supporters of the quota laws cite the importance of creating and maintaining
gender diverse boardrooms.
- By not doing so companies are harming themselves and their shareholders by only looking at half the available talent pool, thereby not living up to their maximum profit potential.
- therefore, actually grow firm values.

more diverse boards can perform poorly.

- board diversity presents:
1. balance composition of different backgrounds
2. value systems
3. experiences
- increases the exchange of ideas and lead to better performance
- hence, the more ideas the more creative that companies can have
“Strategic HRM (SHRM) is the part of HRM theory and research that deals with the link between the business strategy, designing high performance work systems, and adding value through HRM activities in order to obtain competitive advantage” (Pas, Peters, Eisinga, Lagro-Janssen & Doorewaard, 2011, p. 287).

SHRM systems can either result in transactional (hard) workplace relationships or relational (soft) workplace relationships (Mayson, 2015).
Strategic HRM
Transactional Approach
“...transactional HR practices are administrative in nature and compliance focused. Employees have no choice in implementing these practices, as compliance is required and regulated" (Gavino, Wayne & Edrogan, 2012, p. 668).

Relational Approach
"In contrast, relational HR practices are “specifically designed and implemented to manage and sustain relationships with employees by improving HR services and directly empowering employees” (Parry & Tyson, 2011, as cited in, Bissola & Imperatori, 2013, p. 378).

Gender quota for women in senior business positions has lots of benefits. However there are also some limitations for us to accept the gender quota. Since the stock market has a positive reaction on female working on a leadership role overall, the limitations can be solved in some ways.


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Demsetz, H. & Lehn, K. (1985). The Structure of Corporate Ownership: Causes and Consequences. The Journal of Political Economy, 93, 1155–1177.

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