James Ferguson illustration of Michel Ferrary and Ruth Sealy
© James Ferguson

In the fifth instalment of an occasional series featuring two experts debating a hot topic for students, Ruth Sealy, senior lecturer in organisational psychology at City University, in the UK, and Michel Ferrary, professor of management at Skema Business School in France and University of Geneva in Switzerland, share their views on the need for quotas to improve gender equality on company boards.

Read their comments in a live Q&A, which took place on Thursday, 18th June 2015.

Ruth Sealy

Ruth Sealy: In 2010, with the threat of EU gender boardroom quotas growing ever louder, the previous UK government commissioned a review into women on boards.

Headed up by Lord Mervyn Davies, this group took a long hard look at the reality of why women continue to be woefully under-represented in our most senior roles. Realising the complexity of the issue, of how biases and barriers were operating at multiple levels, the committee took a voluntary-led business approach to change and set a stretch target of 25 per cent of female directors across the FTSE 100 companies. Four years on, we are on the verge of hitting that target. So the strategy of non-quota intervention has worked. Hurrah, we all cry.

But what is the difference between the voluntary business-led approach, with a target and a threat, and an actual quota? All of the stakeholders engaged agree that without the intervention of this target such significant changes would not have occurred.

There are three widely-expressed arguments against quotas. First, they offend our sense of meritocracy. But we do not live in a meritocracy, all the data proves this. How we define merit is socially constructed and gendered.

Second, women will not be seen as legitimate. Two common responses from women are “I want to get there on my own merit”, and “I don’t want to be the token woman”.

Third, it does not actually change anything.

Some argue that we have had a hollow victory setting targets as the increase is mostly in non-executive roles, and the figure for executive directorships is still woefully small at eight per cent. However, the target achieved what it set out to achieve.

So how should we define success? Should it be a descriptive change (numbers) or a substantive change (culture)? Although a very small increase, the percentage of female executive directors is on the rise for the first time in five years. In addition, business cultures are changing: it is no longer socially acceptable for a Plc to accept the status quo.

Consider how many of the largest companies are now using publicly declared targets for their senior management levels.

Lloyds pledged that 40 per cent of its top 8,000 staff will be female by 2020; Royal Bank of Scotland says a third of its top 600 senior management in the same period; and most of the largest law firms now have targets of 30 per cent for partnership levels. This was all but unthinkable a few years ago.

So for now, we do not need quotas in the UK, but only if we continue to set and achieve substantive targets across all levels in all of our organisations.

Michael Ferrary

Michel Ferrary: It is commonly believed that markets are efficient and so the most talented workers would be naturally promoted to leadership positions. Nobel laureate Gary Becker even stated that discrimination would be eradicated by the competitive forces of the market.

Trusting this rhetorical argument, some people — notably some successful women — refuse any quotas of women in leadership positions. However, reality points out that the labour market is not so efficient in promoting gender equality. For decades, as many women as men graduate from the best universities but only a few reach managerial positions.

France illustrates how quotas can change this. In 2007, among its 40 largest companies, the CAC40, women represented 8.5 per cent of boards of directors and 8 per cent of executive committees. In 2014, they were 30.3 per cent of the boards of directors and 10.3 per cent of executive committees. The change is not due to any natural competitive mechanism of the labour market. The change is due to a law passed in 2011 that forced large companies to have 20 per cent of female directors in 2014 and 40 per cent in 2017.

Policy makers have to impose quotas for two reasons. First, to change existing representations of the working world. There is no conspiracy by Machiavellian men to discriminate against women. There are only unconscious habits inherited from the past and a natural human tendency to team up with similar people, especially when facing risk and uncertainty. Preserving their social comfort zone drives male leaders to recruit men in leadership positions. Diversity and the contribution of gender equality have to be learnt.

Meanwhile, ambition has to be promoted among women. The presence of a few successful female leaders hides what could be considered an unconscious tendency among women to restrain their ambition. It is a function of policy makers to put people into learning situations and force them to change their habits and beliefs.

Second, quotas might contribute to the collective welfare. Nobody doubts that women are as efficient as men. After all, the companies of the CAC40 did not go bankrupt by tripling their percentage of female directors in less than seven years. These companies have never been as profitable as they are today.

What the competitive forces did not do — promoting women to leadership positions — has to be done by the law. Quotas help to change unconscious barriers and allow companies to learn diversity. In a decade or two, when gender equality has been established, quotas could then be removed.

Letter in response to this article:

Gender quotas have not spread beyond banks / From Annalisa Burello

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