Gender quota: the miracle solution for more women on Mauritian boards?

It is now well known that gender diversity is an important component of corporate governance and research has proven that a number of benefits are associated with gender diversity on corporate boards.

Although diversity at the board level is growing throughout the world, women remain underrepresented. A study carried out by Crédit Suisse in 2015, found that globally, women held 14.7% of board seats. European countries are the ones currently leading the way with 46.7% in Norway, 34% in France, and 33.6% in Sweden. What these countries have in common is that they opted for radical solutions by adopting quota systems in their legislations. In those countries, non-compliance with the law entails sanctions and not surprisingly, the percentages are high. On the other hand, if we take a look at Spain, the only country where the gender quota law has been introduced without sanctions for non-compliers, the number of women on boards did not increase significantly.

Research has shown that the serious sanctions associated with the Norwegian quota law were responsible for its success. However, the Norwegian
example has its own weaknesses. Indeed, because only a small number of women in Norway possess executive experience, the situation has given rise to what is referred to as “Golden Skirts”, a situation in which women hold multiple directorships. Furthermore, the long term objective of the law in Norway was to have a better gender balance in senior management, achieved through a diffusion effect. So far, the law achieved its short term objective of increasing the number of women on boards as the diffusion effect has been very low. In 2013, only 6% of listed companies in Norway had a female CEO.

Now, let’s take a look at Mauritius, which is clearly lagging behind with only 7% of directors being women. The question is whether Mauritius can be compared to the above mentioned countries and whether we could simply implement mandatory quotas, sit and expect positive results. If and only if the law was enforced with sanctions, it would clearly have “positive” results and increase the number of women on boards.  But this will only bring short term results like in Norway, where it increased the number of women at board level, without addressing the long term objective, which is of trickling down throughout the organisation and improving gender balance at senior management level. Furthermore, the consequences could prove to be even worse as companies would find themselves in the situation where they would feel that they have to check a box, appointing a woman only because they are obliged to and not necessarily because they believe that her presence would add value to their board. Hence, mindsets and behaviors have to change first not only at the board level but also at other levels such as the management, employees and most importantly women themselves. Negative gender stereotypes ingrained within the corporate culture also need to be addressed as they hinder women’s capacities to climb the corporate ladder and break the glass ceiling.  However, studies have shown that changing mindsets and behaviors is a long process and that the more entrenched they are, the more difficult it will be to change them with mandatory measures. Therefore, the process will be long.

Overall, it is important to understand that quotas will not be the miracle solution if we truly want to achieve the long term objective, which is for companies to understand the importance and benefits arising from having gender diversity on a board and therefore to increase the gender balance at senior level.

So what can we do instead? First we should accept the limitations of a mandatory quota system. While it will surely help the short term objective, additional measures must be taken to enable it to meet its longer term objective. Policy-makers need to establish long term plans in this respect. The development of policies should focus on equal opportunity, addressing the negative stereotypes and the issue of unintentional discrimination against women. Furthermore, it is important to focus on capacity building. Training programs as well as mentoring programs could be also be developed in Mauritius. The private sector has an important role to play in this area. The working group on Women in Board Positions that stemmed from the panel discussions of the Conference on Gender Diversity in Leadership organised by the Mauritius Institute of Directors on 28th February 2017 will also have a key role to play. The working group will have to look into whether to establish quotas and how, taking into account the importance of setting up accompanying measures. It will also examine whether there are any other ways of increasing the number of women on boards.

To sum it up, implementing a compulsory quota system that is sustainable in the long term will be challenging and might prove to be counterproductive if not done well. Therefore, it will be important to implement quotas in a way that goes beyond a “check the box” approach and really adds value to the economy as a whole.