As of January 2008, the Norwegian Government required all listed companies on the Oslo stock exchange to fill 40% of their board seats with women or face dissolution. By doing so, the country became the first in the world to demand gender balance on the boards of public limited companies, thus blazing a trail for business women worldwide. When the law was first proposed in 2002, women accounted for only 6% of Norwegian board seats. Now they command 44% – the highest level in Europe – and have inspired Spain to follow with a similar 40% quota.
But it was not without a fight. Some companies balked at the idea of a quota when it was first brought up, saying it would make Norway stand out as an odd country. Some critics even feared share dumping by sceptical investors to a Government imposed gender mandate. Even the Confederation of Norwegian Enterprises, Norway’s main business and employers’ organization, opposed the idea of a quota. It left women wondering: why am I being picked?
“The level of hostility and negative statements were staggering…nobody wanted it,” said Elin Hurvenes, founder and Director of Norway’s Professional Boards Forum. “The outrage was not only about opening boardroom doors to women – it was about pushing men out the same doors. What they proposed really entailed was the single largest transfer of power since women won the right to vote in 1913.”
The revolution began in Norway’s public sector. In 1981, the country elected Gro Harlem Brundtland as its first female prime minister. In 1986, 40% of her cabinet ministers were female. Two years later, the equal status act was strengthened to require at least 40% female representation in all public committees. That provided the springboard for applying this quota from the public to the private sector.
Progress at first was slow, but companies eventually complied. Some had to scramble at the eleventh hour with rushed extraordinary general meetings over the Christmas period to meet the January 1, 2008 deadline. And then there were those who chose to avoid it altogether and changed the company from an “ASA” to an “AS”, or private limited liability company, to circumvent the quota.
In the end, no companies were dissolved. But the threat was an important means to the Government’s end: a fairer society, a more even distribution of power, and the creation of wealth in society. The quota ensured that women would have more influence in decision making processes that affect the economy in society.
Studies have also shown that diversity on the board positively affects the bottom line. A study of the US fortune 500 companies in 2007 by the US non-profit organization Catalyst proved having three or more women on the board produced above average return on shareholder equity, sales and invested capital. The report found this to be the trend across most industries, from consumer discretionary to information technology.
“Clearly, financial measures excel where most women serve on corporate boards,” said Ilene Lang, Catalyst President, in connection with the release of “The Bottom Line Report”. “We know that diversity, well managed, produces better results. And smart companies appreciate that diversifying their boards with women can lead to more independence, innovation, and good governance and maximize their company’s performance.”
Finding the Best Talent
The next challenge was to find these women. The Confederation of Norwegian Enterprises was in favour of more women in board and management, but opposed to a forced quota. It responded by creating the Female Future project in 2003 as means of changing attitudes. “We believe the owner should decide,” said Nina Solli, Female Future Project Director. “And you don’t change attitude by law.”
The programme works by recruiting companies to find the female talent within their own organizations. These women go on to attend a one-year course focusing on board competence and management and network training. Approximately half of the women who participated from 2005–2008 have been offered board positions.
“It gets them more visible and makes them more eager for these roles,” said Solli. “It’s not that they need the (board competence) certificate. They are already well qualified. This gives them more confidence in themselves.”
Hurvenes practices a different approach through her Professional Board Forum. She screens out women on an invite-only basis to meet with chairman and chief executive officers at her mock board exercises. She runs about four events per year and has invited close to 1,000 handpicked women since the forum’s inception in 2003. After the first few events, about half of the women were offered board positions.
Another challenge has been to avoid using the same woman on too many boards, according to Olaug Svarva, Managing Director of Folketrygdfondet (and its first female one). She said the quota has made nomination committees work harder, but that it has led to finding more names that were not well known. Folketrygdfondet manages the Government Pension Fund – Norway and sits on nine nomination committees out of its NOK 113 billion portfolio (as of June 30, 2008) of Nordic stock and bond investments.
“(Committees) have to look broader earlier…do more research and interviews,” Svarva said. “But we view the process as positive. It has been for the better for the boards.”
Olaug Svarva, current and first female Managing Director of Folketrygdfondet (Manager of the Government
Pension Fund – Norway).
© Source: Folketrygdfondet (www.ftf.no)
Milestones in Norwegian Women’s History
1907 Women granted limited right, on the basis of income, to vote in general elections
1913 All women allowed the right to vote in general elections
1921 Karen Platou becomes first woman elected to Parliament
1978 The Gender Equality Act is passed
1981 Gro Harlem Brundtland becomes first woman prime minister
1986 Women make up 44% of cabinet minister posts
1988 Equal Status Act is strengthened, ensuring 40% representation of both sexes in all public committees
1993 Kirsti Kolle Grøndahl becomes first woman to serve as President of Parliament
2006 Public Limited Company Act is amended to require at least 40% of each sex in the boardrooms of publicly traded companies within 2-year deadline
Source: The Equality and Anti-Discrimination Ombud (www.ldo.no)