Forcing companies to address the under-representation of women on boards through quotas is missing a key opportunity and will only enhance careers for the few and not the many, according to a former chief executive of IKEA.
Simona Scarpaleggia also believes that organisations that set voluntary targets and demonstrate a genuine commitment to address gender under-representation throughout the entire business – and not just the board – will make a difference that is more meaningful and significant than simply filling a quota.
Responding to the new EU Directive to impose mandatory quotas on companies to ensure women have at least 40% of seats on corporate boards, Simona – speaking as a Board Director of EDGE Strategy – says the new Directive, though laudable, fails to address what would have been a more worthy challenge – to achieve gender balance and redress under-representation throughout the entire workforce.
“While women on boards are to be encouraged, and act as role models for future talent, taking care of the pipeline of talent at every level is arguably more important, and by definition will see more women on boards over time as part of a natural process,” she says.
Simona believes that while quotas are generally a good thing, they also create problems: “They are an effective safeguarding mechanism,” she continues, “and because they are disruptive, they can help kick-start or accelerate a process that might otherwise have stalled because of a human tendency to fear change.
“But there are challenges in how quotas are perceived. Obliging an organization to make change is not the same as taking voluntary action because being compliant is very different to being committed. Setting clear targets to reach gender equity in terms of representation, pay equity, and inclusiveness, embedding it into the company strategy, and measuring the results, is better achieved voluntarily than by force.
“It shows that the organization is truly committed to change; it has more meaning and significance, especially when success is celebrated by the entire workforce. And, of course, if organizations set and reach their workplace equity targets, quotas effectively become redundant.”
Simona says it is also important that any promotions are based on merit, and not simply because a face ‘fits’: “Expanding the talent pool, and increasing gender equity, simply means that a promotion, when it comes, will have been truly earned,” she adds.
Ten years in the making, while the focus is on women the actual wording of the Directive states that 40% of non-executive director posts, or 33% of all director posts, should go to the ‘under-represented’ gender. The legislation is known colloquially as the ‘Women on Boards’ Directive and states that in cases where candidates are equally qualified for a post, priority should go to the candidate of the under-represented gender, and companies must demonstrate full compliance by 30 June 2026.
The percentage of women on boards in EU companies in 2010 was 12%. In 2021, this had risen to 35% (according to European Women on Boards – EWOB research). In the US, the figures were 16% and 29% respectively (Moody’s Investors Service).