FT Editorial on Women Directors of Norway

Northern lights

Published: June 15 2009 19:52 | Last updated: June 15 2009 19:52

Since last year, Norwegian listed companies have been under a legal obligation to ensure 40 per cent board representation for each gender. France and other states are considering copying the quota. It is still early but results reported by the FT on Monday seem promising.

Norway’s legislation had two unrelated motivations. One was the perception that low female representation on boards was caused not by women’s choices but by an unfair lack of access. The second was the idea that more diverse boards exhibit less group-think and conformism – to the benefit of companies and society at large.

Norway’s policy has obviously addressed the first of these concerns: 44 per cent of directors in listed companies are now women, whereas in unlisted companies, not subject to the law, fewer than 20 per cent are. The second is harder to assess but supporters say that women – unconstrained by the conventions of traditionally male boardrooms – are less inhibited from asking questions.

Welcome as such outcomes would be, they must not obscure problems the reform does not solve. Access to directorships is now as good for women as for men – but for a rather non-diverse group of women: upper-middle class, with the education, attitudes and network prized by nomination committees. In other words, a similar group to that from which male directors are drawn.

Some benefits of diversity may also be transient. If gender balance leads to freer discussion, it may be because it shakes up boards and women directors are often new to the task. Once the high female ratio loses its novelty, women directors may prove just as convention-prone as men.

An important lesson of Norway’s experiment is that even radical adjustment need not be as hard as is often thought. Opponents predicted not enough qualified women would be found. But in practice, the problem seems no worse for women than for men: for both groups Norway offers such a limited pool that multiple directorships are common.

Business leaders are forced to discover talent previously ignored. That is a good thing: too many boards do not do their job well. Enlightened companies will use diversity to improve performance. But to avoid corporate identity politics, they should ultimately try to make quotas unnecessary. Aiming for diverse boards can help recruit the best heads. That, not diversity for its own sake, is the point of quotas, whether legally imposed or self-adopted.