The contested question of quotas

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Peter Brabeck’s speech was the epitome of balance and progressive corporate thinking. In a world of flatter company hierarchies and co-operative networks, women, “with their different attitudes and intelligence, are significantly contributing to creating a new corporate mindset for the 21st century”, the chief executive of Nestlé told the Women’s Forum earlier this month.

But if Mr Brabeck thought his lunchtime address on “Leadership for responsible business” would be enough to win over his 800-strong audience, most of them women, he was mistaken.

The first question from the floor was from Christine Ockrent, the well-known French television journalist. She asked how many women were on Nestlé’s main board, and how many on its executive committee? Two on the main board, and, on the executive committee . . . none, came the response, to jeers from the audience.

The question went to the heart of one of the most heated debates of this year’s forum, an annual conference aimed at promoting women’s vision of the economy and society. How can companies encourage diversity in senior management? Specifically, as the title of one forum session put it: are quotas the answer?

The clear response to the second question, from female and male chief executives, was no. “I don’t think you’d like to be here as part of a quota, but because you are great professionals,” Mr Brabeck told his audience as he attempted, with limited success, to explain the dearth of senior women executives at Nestlé. “I think it [quotas] is almost discrimination.”

Or, as Anne Lauvergeon, chief executive of Areva, the French nuclear energy company, said in the opening session of the Forum: “I find [quotas] humiliating.”

And yet the clear inference from a lot of the debate during the three-day conference was that, without more aggressive action to encourage women, it would be difficult to reach the “tipping point” after which women’s presence in the executive suite or the boardroom would become the norm rather than the exception.

Solutions fell into three main categories:

Formal targets. Carlos Ghosn, chief executive of carmakers Renault and Nissan, said that, if introduced with care, a gradually increasing target for women in top jobs could advance diversity in companies until they became “a fair representation of society”.

He said: “You can’t just do it by telling people you have to and why you have to do it. You have to establish milestones, by saying ‘In the next three years we should be at least 4 per cent, in the next five years, we need to be at least 8 per cent’.

“You don’t want to push the number too high because then people push women too far – beyond their training – and you have a lot of failures and people say ‘I told you – it doesn’t work’,” Mr Ghosn added.

Tweaking hiring policy. Ms Lauvergeon pursues a policy of hiring or promoting women over men where two candidates of different gender are equally qualified.

The ratio of men to women at her company is 80:20. It is difficult to redress the balance, she concedes, in part because of the male domination of the energy industry – but she also says the imbalance will persist because like inevitably hires like.

“We recruit thousands of people,” Ms Lauvergeon said. “These people are for the most part recruited by white males; a white male recruits a white male.”

Monitoring and measurement. Sometimes the chief executive flagging up a
problem is enough to change behaviour. Ms Lauvergeon noted that the 80:20 status quo turned into a 40:60 ratio in favour of women recruits when she started to actively monitor hiring.

Sam DiPiazza, chief executive of PwC, says the best way to alter the global accountancy firm’s “white male” tradition was to “put a spotlight on the issue”. He made it clear that the lack of women leaders in a couple of major regions was a “business challenge” and 18 months later, well-qualified women were appointed to top roles.

But there is also a strong case for detailed measurement of progress. Pat Russo – soon to be head of Alcatel Lucent, the Franco-American telecoms group – says the measurement techniques at Lucent Technologies “hold people accountable for ensuring that people have a diverse system”.

Jean-Paul Bailly, chairman of La Poste, the French postal service operator, suggests: “You have to measure things and make reports, so people understand there is a real pressure on this issue.”

For many campaigners, setting diversity as a corporate mission is not enough. “Some companies say they have a charter and don’t discriminate and are in favour of equality – as if just saying this means it will happen,” says Nicole Notat, a former top French trade unionist and now chief executive of Vigeo, which rates companies on social responsibility. “They are surprised, and sometimes angry and disappointed, to discover it doesn’t.”

Didier Lombard, chief executive of France Telecom, compared his top female executives to the grands crus of Burgundy, often produced from vines at the top of the hill that have had to struggle to survive. But many proponents of positive measures to promote women believe that relying on natural selection alone is likely to achieve very little, very slowly. According to one piece of research cited at the conference, it will take another six and a half centuries for women to gain parity with men in Italian boardrooms at current rates of progress.

Contrary to the opinion of the chief executives themselves, the audience in one session of the conference came down by a margin of seven to three in favour of quotas.

The desirability of more diverse executive teams is not in doubt. “My experience was, as a woman in business, that every time I was around in a room with people who came from different backgrounds and experiences, you came out with a better answer than if you sat around the table with people who looked like you and had the same experiences,” Ms Russo told the forum.

Yet, as Mr Brabeck discovered, the question of precisely how to get from here to there remains a tough one to answer.

Norwegians lead the way to equality

The debate about quotas has intensified in Europe with Norway’s introduction of a requirement that women must comprise 40 per cent of the boards of listed companies by 2008, writes Alison Maitland.

The requirement has already led to a big increase in women’s representation on the boards of the biggest Norwegian companies, winning over some sceptics such as Hilde Myrberg, one of two women on the seven-strong executive board of the industrial conglomerate Orkla.

“Many businesswomen like myself have been ambivalent [on] the idea of quotas in principle,” she says. “Some see them as the only way forward. I have been hesitant about adopting them fully. But we like the fact that the threat of quotas has made improvements. They have some positive effects.”

Ms Myrberg says the argument that there are not enough qualified women to fill so many directorships so quickly has not been borne out. Companies have identified suitable women by looking outside their traditional recruitment pools. “It’s not that much of an issue any longer,” she says.

The progress of women in Norway, and Scandinavia more generally, stands in contrast with virtual stagnation in many other parts of Europe.

A survey for the European Professional Women’s Network in June found the percentage of women on top Norwegian boards had jumped from 22 per cent to 29 per cent in two years, while the average for the biggest companies in western Europe had hovered at about 8 per cent.

Some European experts believe progress in Scandinavia is partly due to long-standing policies making it easier for women to pursue careers while bringing up a family.

On the other hand, women have made strides in the US, where “work-life balance” is minimal compared with parts of Europe. A survey published at the Women’s Forum found twice as many women on the governing bodies of the 100 biggest North American companies as on their European equivalents. However, the North American numbers are still below Norway’s.

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