Cornerstone: Quotas For Women On Boards: A Risky Game

In Chile, only 16.6% of companies have one or more women on their boards of directors. It is a modest figure, but by no means unusual. In Latin America, both Peru and Argentina have lower representation and worldwide, believe it or not, that figure actually gets us into the Top 10 – just behind the USA. These figures comes from a 2013 survey by EY, the global conglomeration of Ernst & Young companies. The survey placed the worldwide percentage of women on corporate boards at 11%.

Women remain woefully underrepresented but, on the bright side, the global focus on promoting diversity in the workplace is one of the most satisfying developments of the past decade.

So what is working, and how can smart leaders contribute to this evolution?

More than 20 countries have set quotas, led by Norway, which established a 40% quota back in 2003 when they were at 9%. They reached their goal in 10 years but it comes with a stiff price. Failure to maintain the 40% can lead to the dissolution of the company.

A 2007 survey by McKinsey found that 89 European-listed companies with the highest proportions of women in management and on the board outperformed industry averages by 10% in ROE, 48% higher EBIT and 1.7 times the stock price growth. While the absence of women is very much a cultural issue, it is clear the argument to reverse that is an economic one.

To read the full article by Alejandra Aranda, click here.