Term limits for directors and gender diversity rules in corporate governance codes help improve female representation in top executive roles, but quotas make no real difference, finds a new global study from Cambridge Judge Business School and the 30% Club unveiled for this week's International Women’s Day (Tuesday).
The study of companies from 42 countries over a decade (2004-2013) found that Colombia (28 per cent) had the highest percentage of female top executives, followed by Finland and Thailand (each 19 per cent), while Japan and Qatar were the lowest ranked (each one per cent). The UK (11 per cent), US (13 per cent) and Canada (14 per cent) finished below the top ten.
“Most research and debate has focused on the proportion of women on corporate boards, which is an important topic but not the final word on women’s role in business.” said Sucheta Nadkarni, Sinyi Professor of Chinese Management at Cambridge Judge and who led the new study along with Research Fellow Dr Elaine Yen Nee Oon and Dr Jenny Chu, University Lecturer in Accounting. “This new study looks at female representation in senior management roles, which is critical in evaluating the role women play in shaping corporate strategies and outcomes.”
The results suggest that “soft legislation” such as director term limits and gender diversity requirements in corporate governance codes have a broader effect, beyond the board, on female representation in executive teams than “hard legislation” such as quotas that do not seem to promote a significantly higher percentage of women in executive teams.
The study focuses on women in the very top executive roles, on the executive or management boards of companies as disclosed by their annual reports. The study examined companies in the Forbes Global 2000 list, limiting the maximum number of companies in any single country to 150 and excluding countries with fewer than seven companies. This resulted in a sample of 1,071 companies from 42 countries from six continents and 56 industries, which were studied in each year of the 10 year period.
“What the research clearly shows is that director term limits and gender diversity requirements in corporate governance codes help boost the number of women in senior management teams,” said Brenda Trenowden, chair of the 30% Club and Head of Financial Institutions Europe at ANZ, the Australia-based banking group.
“It also shows that legislative quotas at board level do not work to redress gender imbalance in senior executive teams – this is a ‘research reality’ that we welcome in so far as it serves to dispel the myth that quotas have a positive trickle-down effect. Diverse talent pipelines are essential to high-performing businesses and the 30% Club will continue to campaign for sustainable business-led change in driving progress on that front.”
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