Gender equality and the Firm: Lessons from Norwegian Boardrooms

1. Gender equality and the Firm: Lessons from Norwegian Boardrooms Roseanne Russell School of Law, University of Bristol • Introduction • Gender inequality within public limited companies remains persistent despite legislative attempts to address this: • The full time pay gap across the UK is 15.5%. The part time pay gap is 34.5%. • Horizontal occupational segregation clusters two thirds of women into twelve job groups, where average earnings are often low. • The glass ceiling is slow to crack: it will take 73 years at the current rate of progress for women to be equally represented in boardrooms. • Caring responsibilitiesaccount for a large part of the pay and promotion penalty. • Is it time to look beyond anti-discrimination legislation to corporate governance for a remedy? In particular, does the composition of the board make a difference to gender equality? And how do we achieve gender-diverse boards? • The UK Experience • Currently 12.5% of FTSE 100 directors are women • Davies report wants voluntary action to lead to 25% of boards comprising women by 2015 The Norwegian Experience Director 1 • Conclusion • The Norwegian experience suggests that hard law is required to boost the number of women directors. • Quotas do not, however, guarantee diversity of opinions at board level. The small number of women holding multiple directorships suggests that those who are promoted to directorships are those who fit the current orthodoxy. • The link between more women directors and greater equality within the company is not yet made out. Strong horizontal occupational segregation exists in Norway and the overall pay gap hovers around 15%. There is little suggestion that either has, yet, been affected by boardroom reforms. • Future work • The Norwegian model may reward further scrutiny over time given that these reforms have only been in place for five years. Gender diverse boards also feature in the Green Paper on the EU Corporate Governance Framework and the Financial Reporting Council has recently announced a consultation on Gender Diversity on Boards. There are, therefore, signs that the UK may be forced to move in the direction of legislating in this area. How might affirmative action be taken to capture genuine diversity of views and experiences? • Recent US work has shown a positive link between gender balanced boards and financial performance but the literature would benefit from an analysis of the link between gender balanced boards and substantive equality. • The link between concession theory and gender equality might be explored further: could it be argued that a firm’s social licence to operate rests partly on a commitment to substantive equality? Or is substantive equality ultimately unachievable against a corporate model of shareholder primacy? References DA Carter, F D’Souza,BJ Simkins and WG Simpson, ‘The Gender and Ethnic Diversity of US Boards and Board Committees and Firm Financial Performance’ (2010) 18(5) Corporate Governance: An International Review 396 Lord Davies of Abersoch, Women on boards (BIS; London, February 2011) Equality and Human Rights Commission, Sex and Power 2008, (EHRC; September 2008) at http://www.equalityhumanrights.com/uploaded_files/sex_and_power_2008_pdf.pdf. Norwegian Equal Pay Commission (2008) Summary of Official Norwegian Report 2008: 6: Gender and Pay: Facts, analyses and measures to promote equal pay Office for National Statistics, Statistical Bulletin (2010), 2010 Annual Survey of Hours and Earnings D.Perfect, Equality and Human Rights Commission Briefing Paper 2: Gender Pay Gaps 2011 C.Seierstad and T.Opsahl, ‘For the few not the many? The effects of affirmative action on presence, prominence and social capital of women directors in Norway’ (2011) 27(1) Scandinavian Journal of Management 44 C.Villiers, ‘Achieving gender balance in the boardroom: is it time for legislative action in the UK’ (2010) 30 (4) Legal Studies 533 C.Villiers, ‘Women on Boards: Report from the UK’ (2011) 8 European Company Law 94 Women and Work Commission, (2006), Shaping a Fairer Future