You are here

When Quotas Aren’t an Option


When Quotas Aren’t an Option

Alternatives to Finding Qualified Women for Corporate Boards

Gender inequalities remain in boardrooms throughout the corporate world, despite increasing evidence that diversity on corporate boards is good for business, and despite the fact that women account for over 85% of consumer expenditures and trillions of dollars in spending annually worldwide. 

Catalyst, a leading nonprofit organization dedicated to accelerating the progress of women in the workplace, reports only 19.2% of the directors in S&P 500 companies were women in 2015. Closer to home, the Boston Club’s 2015 Massachusetts Census of Women Corporate Directors, which I co-authored with my Bentley colleague Susan Adams, and Toni Wolfman at Smith College, shows 16.1% of directors of the 100 largest public companies in the state are women. Moreover, 22 of these companies continue to operate with all-male boards. (We did show, however, that larger companies on average have higher percentages of women directors than do their smaller counterparts.)  

Historically, most corporate directors were active CEOs or presidents.  However, this pattern is changing. The 2015 Spencer Stuart Board Index shows, for instance, only 22% of all new directors appointed to the boards of the S&P 500 companies were active CEOs, presidents or COOs.  Another 19% of the newly appointed directors that year were retired CEOs, presidents or COOs. Other backgrounds and areas of expertise increasingly in demand for corporate directors include:  financial, information technology, digital and social media, risk assessment, international and marketing. Thus, the pool of qualified board candidates has expanded and now includes many women. 

A board’s excuse that “We couldn’t find any qualified women” should trigger the question “Where have you looked?” 


How to increase the number of women in corporate board rooms, with and without quotas.



Do Quotas Work?

Several countries across the globe have decided not to wait decades for gender parity in boardrooms to emerge from current trends.  Norway, for instance, was the first country to adopt a mandatory quota for its corporate boards back in 2003 when just 6.8% of corporate directors were women. As reported by BoardEx, by 2015, 35.1% of the boards of companies in the OBX Index of the Oslo Stock Exchange were women. Other countries with mandatory corporate board quotas (and their respective percentages of women corporate directors in 2015) include: France (32.5%), Belgium (28.5%), the Netherlands (23.7%), Denmark (21.7%) and Germany (21.3%). 

Mandatory gender quotas are controversial. This is due, in part, to a short timeline provided to companies for reaching specified targets, and, as in the case of Norway, penalties that include company de-listings and dissolutions for failure to reach the goal. As a result, some boards added women directors who were much younger and less experienced than the male directors.  It is not surprising that backlash followed.

Some countries have opted, instead, to adopt voluntary measures to diversify their corporate boards. The UK has been a leader in this regard choosing in 2010 to pursue a voluntary business-led approach.  The results are impressive: The percent of women directors on the FTSE 100 rose from 12.5% to 26.1% between 2011 and 2015. The average age of the new female directors was 55.5 years old—not much below that for the male directors (58.9 years), and these new directors came with a wealth of business and leadership experience. 45 percent of the new female directors came from outside the UK.  Further, while 21 of the FTSE 100 companies had all-male boards in 2011, less than five years later that number was zero. For the FTSE 350, 550 new women board appointments were made in that period, and the number of companies with all-male boards fell from 152 to just 15 by 2015. [See “Improving the Gender Balance on British Boards.”]

New Alternatives

There has been little, if any, support for mandatory quotas in the United States. Some states, however, have taken steps to quicken the pace of change in corporate boardrooms. In Massachusetts, for example, State Treasurer Stephen Grossman lead the charge in 2011, convincing the Pension Reserves Investment Management (PRIM) board to vote against any proposed slate of director nominees at companies with only white male boards in which the state had invested funds. State Treasurer Deborah Goldberg subsequently raised the stakes in 2015, getting the PRIM board to agree to vote against all director nominees at companies with boards with less than 25% women and minorities. 

The Massachusetts Legislature has followed up with a resolution that calls on companies, private and public, doing business in the state to adopt policies and practices to increase gender diversity on their boards and in senior management positions; to publicly disclose the gender composition of their boards; and to meet specific targets based on board size by 2018. (Senate Resolution No. 1007)  California led the way in 2013 with a similar resolution, and several other states are now in the process of introducing one.


What MA is doing to improve gender diversity on boards, sr. management positions



In addition to state actions, some institutional investors such as MFS and Trillium Asset Management now have policies in place whereby they will vote against any slate of board members if there are no current or proposed women directors.

It is too soon to tell what the impacts of such steps in Massachusetts and in the United States will be on increasing the number and share of women on corporate boards.  They, do, however, represent progress and are sending the message that “business as usual” and boards consisting only of white men are no longer acceptable by increasing numbers of policymakers and investors.

In Massachusetts alone, many opportunities for placing women on boards will present themselves over the next few years.  In 2015 more than 20% of the independent directors in the 100 MA Census companies were 70 years of age or older; 96% of them were men.  Since most boards have a retirement age of 72 or 75, this means 155 board seats will become vacant in these companies by 2020.

We’re about to see an unprecedented opportunity for increasing the number of women on corporate boards.  Let’s see if we learn from the UK and other role models and bring about real change in boardrooms here in the US.

Patricia M. Flynn

Professor Patricia M. Flynn, PhD, is Trustee Professor of Economics and Management at Bentley University, where she served as Dean of the Graduate School of Business from 1992 to 2002. Her research and teaching focus on corporate governance, technology-based economic development and women in business. She serves as co-chair of the Working Group on Gender Equality for the United Nation’s Principles for Responsible Management Education (PRME), and is currently a director of Columbia Funds, with assets under management of about $130 billion. Pat serves on the boards of the Innovation Institute at the MA Technology Collaborative and the MA Taxpayers Foundation. She is also a member of the MA Business Roundtable, the National Association of Corporate Directors/New England (NACD/NE) Advisory Council, and the Governance Committee of New England Baptist Hospital.  In 2016 Pat became the first recipient of the annual Patricia M. Flynn Distinguished Women Leader in Business Education Award presented by the Women Administrators in Management Education at AACBS-International.  


by Kristen Walsh March 25, 2019

Brandon Samba '20 overcame his family's financial struggles and now helps kids learn financial skills to break the cycle of poverty.