"I don’t like quotas but I do like what they aim to achieve"
Women on Boards' take on the introduction of gender quotas for boards in California
California saw a rush in appointments of female NED in the last quarter of 2019, as companies took action to beat the $100k fine for all-male boards that kicks in this month. A ‘handful’ of companies have failed to comply, with a smaller number thought to have relocated to avoid the penalty. Further progress will be needed though, as the 2018 law sets out steeper fines and a more proportionate gender balance required by 2022.
Unsurprisingly, arguments have raged and legal proceedings are pending against the Californian gender quotas.
“We mustn’t forget this financial stick follows years of persuasion and positive encouragement to diversify board recruitment. And, at present, sets a very low bar with requiring just one female NED,” says Fiona Hathorn, co-founder and CEO of Women on Boards.
“What dismays me most about the Californian example is that so many companies still needed to take action to meet this minimal threshold for 2020, after years of sustained pressure. The question becomes, what can we do to encourage those organisations who appear to be refusing to pursue the benefits of diversity?”
The big question is if a quota system would be beneficial more widely, and even in the UK. Several years of concerted effort and close attention to progress has resulted in just 2 companies in the UK’s FTSE 350 having all-male boards. However, the picture is less positive in the FTSE All-Share Index where - outside the biggest 350 firms - less than 15% of directors are female.
“Persuasion is better than quotas to achieving board diversity,” says Fiona Hathorn, “particularly if those female NEDs are to make their influence felt and avoid tokenism. However, the Californian law sets ambitious targets to have a critical mass of females on the board by 2022, which could alleviate this risk. Although I don’t like quotas, I do like what they aim to achieve.”
Read more on the benefits of board diversity, and how to achieve it: