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A Woman’s Place Are gender-based board quotas allowing us to break the glass ceiling? By Edison Jensen and Lynn MacDonald
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he 2023 Women in the Workplace report by multinational consulting firm McKinsey & Company reveals a historic high in women’s presence in the C-suite, with an increase from 17 to 28 percent since 2015. Despite this jump, an underrepresentation of women persists in corporate leadership positions in North American organizations, as reflected in the 276 U.S. and Canadian-based corporations cited in the report. St. Catherine University produces an annual report that looks at representation of women in 78 large, publicly traded Minnesota-based companies. According to the report, published in Twin Cities Business Magazine, women
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hold 22.7 percent of executive positions, a figure stagnant for four consecutive years and which falls below the 25 percent national average. Seventeen of the Minnesota companies have no women executives, with seven companies lacking a single woman executive officer over at least the last five years. This trend is exacerbated for BIPOC executives. BIPOC women represent only 2.2 percent of leadership roles in surveyed Minnesota companies, less than half the national average of 5 percent. Despite these challenges, potential solutions exist. Thorough review of promotion data by gender at each level and flexible work arrangements could help combat a lack of representation.
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Beyond North America, similar challenges persist in corporate governance. In Europe, where women constitute 45 percent of the labor force, only 5.1 percent of CEOs were women in 2016, and just 23.3 percent of board members in large, publicly listed companies were women. In 2003, Norway took a pioneering step to address gender disparities in corporate governance by introducing a gender-based quota, mandating 40 percent representation of each gender on the boards of public limited liability companies. While initially voluntary, lack of compliance led to its enforcement as a legal mandate in 2006. By 2008, Norwegian companies achieved significant compliance. Inspired by Norway’s success, other countries, including Belgium, France, Germany, Iceland, India, Israel, Italy, and Spain, have implemented similar reforms. The European Union (EU) further solidified this trend by passing a law in 2022 requiring corporate board gender balance by 2026. As of 2023, women constitute 33 percent of board members in the EU, with representation closer to 38 percent in countries with binding gender quotas. Economic researchers are assessing the effectiveness and merit of gender-based corporate governance quotas. University of Chicago economics professor Marianne Bertrand and her team
studied whether Norway’s 40 percent mandate successfully reduced gender disparities in the corporate sector. Their data-driven results indicate that women who secured board positions experienced individual-specific gains, although these gains did not necessarily extend to women who did not receive board positions. If discrimination or lack of networks are key factors in preventing women from reaching leadership positions, then quotas may be an important first step to disrupt those cycles. Bertrand and her team do caution that, if unqualified women end up getting appointed just to fill a quota, this could reinforce negative stereotypes. That said, their research shows evidence that the women filling board positions after the quota were consistently more qualified than their predecessors. While quotas may serve as a foundational step, they might not constitute a comprehensive solution to these challenges. A multifaceted approach is imperative to address systemic inequities and foster inclusive environments conducive to women’s advancement in corporate leadership. Edison Jensen is a master’s graduate of applied economics and Lynn MacDonald, Ph.D., is an associate professor of economics at St. Cloud State University.