Norway finds mixed results from law on women in boardrooms

By Nicola Clark
International Herald Tribune / February 7, 2010

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OSLO - Arni Hole remembers the shock wave that went through Norway’s business community in 2002 when the country’s trade and industry minister, Ansgar Gabrielsen, proposed a law requiring that 40 percent of all company board members be women.

“There were, literally, screams,’’ said Hole, director general of the Equality Ministry. “It was a real shock treatment.’’

Even in this staunchly egalitarian society - 80 percent of Norwegian women work outside the home, and half the current government’s ministers are female - the idea seemed radical, if not for its goal, then for the sheer magnitude of change it would require.

Back then, Norwegian women held less than 7 percent of private-sector board seats; just under 5 percent of chief executives were women. After months of heated debate, the measure was approved by a significant majority in Parliament, giving state-owned companies until 2006 to comply and publicly listed companies until 2008.

Many prominent business leaders dismissed the 2003 law as a political stunt and argued that Norway, with just 4.8 million people, did not have enough experienced women to meet the quota.

Nearly eight years later, the share of female directors at the roughly 400 companies affected is above 40 percent, while women fill more than a quarter of the board seats at the 65 largest privately held companies. To many feminists, this is the boldest move anywhere to breach one of the most durable barriers to gender equality.

But as the dust has settled, researchers are grappling with some frustrating facts: Bringing large numbers of women into boardrooms has done little to improve either the professional caliber of the boards or to enhance corporate performance.

Early evidence from a little-noticed study by the University of Michigan suggests that the immediate effect has been negative on both counts, and there has been little increase in the number of female chief executives.

When the Norwegian government first made its case for the quota, the number of women on boards had been growing by less than 1 percent a year for a decade. The quota was sold to Norway’s business community as a way to gain greater social equity and competitive edge: “Profit is made by employing the best people, regardless of gender,’’ Hole said.

Basic arguments for quotas in Norway were that more women would rise to the top, and that tapping into underused female talent would create shareholder value, said Marit Hoel, director of the Center for Corporate Diversity in Oslo.

“But if you look at where real economic power sharing is needed,’’ she said, it is at the executive-committee level. “That is what we were trying to speed up - but unfortunately that hasn’t happened yet.’’