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Wednesday
Jun272012

Diversity, Italy and the Dearth of Women in the Boardroom

Yesterday, Facebook announced that it was appointing a woman to its board.  As noted, women make up somewhere between 12-16% of the directors serving on boards of public companies.  (A study by ISS put the number at 12.7% of the top 1500 largest public companies).  It is not because there are an inadequate number of qualified candidates.  For a possible explanation, see Essay: Neutralizing the Board of Directors and the Impact on Diversity

The problem of inadequate representation of women on corporate boards is not limited to the US, but global in nature.  Some countries in Europe addressing the issue have taken a more top-down approach.  Norway now requires boards of listed companies to have at least 40% of each gender.  As a result, Norway has the highest percentage of women on boards.  

Spain and France have tried this approach.  Italy has now decided to join them.  With only around 6% of women on the boards of Italian companies, a recent law requires that the percentage be increased to one-third by 2015.  Labeled the "pink quota," the provision goes into effect in August.  Those companies that do not comply will apparently face "progressive sanctions, including fines of up to €1 million ($1.25 million)."

Such an approach would not work in the US.  This type of government intervention is viewed as excessive interference in the market.  Nonetheless, as these laws become more common and the percentage of women on boards increase in other countries, the US will increasingly appear to be a laggard.  That will put additional pressure on the businesses in this country to increase the number of women on their boards. 

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