The Norwegian ‘big stick’: women on boards

As in Australia, Norwegian companies historically have failed to see the economic benefits of embracing diversity, corporate social responsibility and gender equality. But in marked contrast to Australia, a politically courageous Norwegian Government faced with the prospect of waiting interminably for women to be appointed to boards on a voluntary basis decided to take radical action.

In December 2003 the Norwegian Parliament amended the Public Limited Companies Act to give public limited companies five years to either ensure that women held 40 per cent of the seats of each listed company listed or risk closure. The requirement came into effect on January 1, 2008, and the government is considering extending the law to cover family-owned companies as well.

The legislation attracted extensive and vociferous criticism from business, just like children throwing tantrums when forced to do something they don't want to do.

The punishment is completely disproportionate, they cried; it is too harsh to close a company down just because it lacks one woman; it’s science fiction to think the government is going to shut down a company that employs thousands of people over this. And more eloquent but equally baseless complaints, such as that compliance with the new law would spawn tokenism.

But the complaints went unheeded and the Government called the bluff.

And the result? Statistics Norway revealed that by February 19, 2008, 39 per cent of the board representatives in public limited companies were women. 93 per cent of the 459 public limited companies had met the requirements of representation of both sexes laid down in the Public Limited Companies Act.

Thanks to the Norwegian Government's courage and success, others are following their lead. The Swedish Government is proposing that companies listed on the Stockholm Stock Exchange that do not have 40 per cent of women on their main boards by 2010 should be fined until they do, and the Spanish Parliament has passed legislation calling for 40 per cent board participation by 2015.

It may come as some surprise to learn that the quota law was the brainchild of a male former businessman and politician, Ansgar Gabrielsen. Gabrielsen's focus was less about gender equality and more about "the fact that diversity is a value in itself, that it creates wealth”.

Gabrielsen's economic views are echoed by the findings in a 2007 Catalyst study, The Bottom Line: Corporate Performance & Women's Representation on Boards, which found that the group of companies with the highest representation of women on their top management teams performed better financially than the group with the lowest female representation. Isn’t the logical corollary to this that diversification is almost mandatory if increased profits can be, and are, achieved through diverse boards and if a company’s primary responsibility is to act in the best interests of its shareholders by maximising profits?

The mantra in Australia is that women are selected on their merits. That must be complete poppycock when the latest statistics show women holding only 9 per cent of the board seats on ASX 200 companies. The men and women who agree with this “merits” argument - and it often spews from the mouths of politicians on either side of the political fence, and not just the business establishment - demonstrate their ignorance not only of the causes and consequences of gender stereotyping, but of the extent to which it is entrenched.

In many places where there is a more even start between the sexes - in schools and in universities, for instance - boys and girls and men and women challenge one another intellectually and both sexes demonstrate talent. Gender is much less of an issue there because the structure in which people operate is less tolerant of a culture of inequality. However, many fail to see that in work and business men and women may be starting from different positions when it comes to career advancement. Gender stereotyping research confirms why that is the case and what needs to be done to address it.

Government mandated board diversification does not involve reverse discrimination in favour of females, whether collectively or as individuals; rather, it operates by demolishing the inherent structural inequality that handicaps them in the first place.

This year the Rudd Labor Government will receive the findings of the 2008 EOWA Australian Census of Women in Leadership. It is also required to submit its combined 6th and 7th report to the UN Convention Eliminating Discrimination Against Women Committee. If the findings show little or no progress, and if the Rudd Government is about “getting the job done”, as it says it is, can we expect the Rudd Government to follow Norway's lead?