Imagine you’re one of the 13 men on this all-male board of a large company and are told five of you must go to be replaced by women. Unlikely? Not in Norway, where they’re enforcing a law that 40% of directors must be female. By Yvonne Roberts
Thursday March 6, 2008
The often male world of company directors. Photograph: Alamy
Rolf Dammann, the co-owner of a Norwegian bank, recently had his skiing holiday interrupted by some unwelcome news. The government had published a list of 12 companies accused of breaking the law by failing to appoint women to 40% of their non-executive board directorships. His company, Netfonds Holding ASA, was one of the dirty dozen – attracting international attention.
“I work in a man’s world. I don’t come across many women and that’s the challenge,” Dammann says. “The law says a non-executive director has to be experienced, and experience is difficult to find in women in my sector. People have had to sack board members they’ve worked with and trusted for 20 or 30 years, and replace them with someone unknown. That’s hard.”
This month, Norway set a new global record. It now has, at 40%, the highest proportion of female non-executive directors in the world, an achievement engineered by the introduction of a compulsory quota. Two years ago, after several years of voluntary compliance had failed to lead to a sufficient number of female board members, 463 “ASAs” – publicly listed companies over a certain size – were told to change the composition of their boards or risk dissolution.
“A woman comes in, a man goes out. That’s how the quota works; that’s the law,” says Kjell Erik Øie, deputy minister of children and equality, in the centre-left “Red-Green” coalition government in Oslo. “Very seldom do men let go of power easily. But when you start using the half of the talent you have previously ignored, then everybody gains.”
In 2002, only 7.1% of non-executive directors of ASAs were female. When they introduced the 40% quota, the government had expected a widespread rebellion, but by the final deadline for compliance – February 22 this year – only a handful of companies had failed to meet it. Most ASA boards have acquired between two and four new women in the past several months. It is not exactly an army on the march, but it is a step in the right direction and has allowed Norway to buck an international trend; in Britain, women fill only 14.5% of non-executive board positions and one in four of the FTSE 100 boards still has no women at all. The number of women holding executive directorships in FTSE 100 companies actually fell last year to the lowest level for nine years, according to research by Cranfield business school. And the picture is similar all over Europe. Only 2% of boardroom posts in Italy are held by women, and in Spain the figure is 4%.
According to the Norwegian government, the quota is not simply a strike for equality; it makes sound economic sense, too. Last year, Goldman Sachs, the global investment company, published a paper in which it outlined the economic reasons for reducing gender inequality and using female talent fully. Not only would this increase growth, the paper said, it would “play a key role in addressing the twin problems of population ageing and pension stability”.
So what is stopping companies from appointing women to their boards? Catalyst, an influential New York thinktank, has published a list of the barriers to female advancement to board level. Top of the list is women’s lack of management experience, closely followed by women’s exclusion from informal networks; stereotypes about women’s abilities; a lack of role models; a failure of male leadership; family responsibilities; and naivety when it comes to company politics.
Imagine then, given these hurdles, that at one stroke British CEOs were required by law to sack at least two men, if not more, from their boards and replace them with women whom they presumably believed to be inexperienced, unproven, possibly not fully committed and … well, female? How on earth did the Norwegians manage it?
In Norway, unlike in the UK, the law does allow for such affirmative action. Attitudes are different as a result: it is interesting that when avid Cameron suggested last weekend that he would operate a quota of women cabinet members, the former Conservative minister Ann Widdecombe said she would be “grossly insulted” to be given a frontbench job on those terms.
However, even in Norway the quota went ahead only after years of ferocious debate and some resistance. As one male non-executive director who has survived the recent cull of boards put it, “What I and a lot of people don’t understand is why it is seen as good for business to swap seasoned players for lip gloss?”
But such scepticism was not as widespread as one might expect. Ansgar Gabrielsen, 52, a Conservative trade and industry minister, and former businessman, is the unlikely champion of the quota. In 2002, in the then centre-coalition government, he publicly proposed a 40% quota on publicly listed boards without consulting cabinet colleagues. The law would be enacted in three years, he announced, only if companies failed to comply. The challenge was huge. Out of the 611 affected companies, 470 had not a single female board member.
Gabrielsen’s reasoning at that time set the terms of the debate that followed. The quota was presented less as a gender-equality issue, and more as one driven by economic necessity. He argued that diversity creates wealth. The country could not afford to ignore female talent, he said. Norway has a low unemployment rate (now at 1.5%) and a large number of skilled and professional posts unfilled. “I could not see why, after 30 years of an equal ratio of women and men in universities and having so many women with experience, there were so few of them on boards,” he says.
But if it was Gabrielsen who set the terms of the debate in a way that made it less threatening to men, it was a woman who worked out how to make the quota achievable. In 2003, the NHO, the Norwegian equivalent of the Confederation of British Industry, decided to step up the pace of voluntary change. It headhunted 32-year-old Benja Stig Fagerland and gave her a two-year deadline to achieve a minor miracle.
Fagerland is an economist with two degrees and an MBA. She had no interest in “women’s issues” then, she says, but she had set up a network of 10 girlfriends, called Raw Material, to discuss the pros and cons of the quota. They were all in their late 20s and early 30s, in middle management, and ambitious. Raw Material attracted the attention of the media and NHO.
“We were young and fearless. We thought we could go where we pleased in terms of our careers. I didn’t believe in the quota system,” Fagerland says. “I was competitive. Every job I’d had, I’d been the youngest and the only woman. I thought it was an issue of competence and nothing to do with being female. I set out to discover the arguments for and against. And that’s when I changed my mind.
“As a young person, so many male colleagues had said to me, ‘You cannot be 1.8 metres tall [over six foot], strong and intelligent and a former model. It’s too powerful for men, too scary. Be more of a girl.’
“I told myself, ‘OK, those are the men’s rules, and so for six months I tried. It was the stupidest thing I did. Now, I tell my daughters, be yourself – but sell yourself hard.”
Once appointed by the NHO, she devised and a ran a project which she called (much to her employer’s alarm) Female Future, to mobilise female talent. First Fagerland, now 37, surveyed major CEOs. Eighty-six per cent said they wanted to use more female talent, 64% said they did not know how to find it. Each CEO contracted into the project “pearl dived” to find three rising junior female employees who then received six months intensive training from Fagerland.
Fagerland says, “I’d tell the women, ‘You bump into your CEO at a reception. He says, “Hi, who are you?” You can pick at least 10 different stories but you only have 20 seconds, so it’s very important which story you pick. You have to have ownership of your own story and say “This is me. This who I am.”‘ Power isn’t given, you have to take it. And women aren’t always good at that.”
Fagerland was working in a less hostile environment, perhaps, than she might have found elsewhere in Europe. Not only did she have the government behind her, but the media too: “It was a story that they wanted to write,” she says. “And they haven’t stopped since. They have always been very supportive.”
Female Future has since won a string of international awards. So far, 570 women across the country have gone through the training.
One in four has been offered board positions on large companies; half have board positions on smaller regional companies. A further 250 women will complete the programme at the end of this year.
In spite of the NHO’s efforts, however, by 2006 only one in four publicly listed boards in Norway had met the 40% target for non-executive female directors. It was then that the new centre-left government announced that the quota would become compulsory. The deadline for compliance was reset to December 2007 and later – at the eleventh hour – extended again by a month. The results were not published until the end of February, to give companies still more time to comply.
Business leaders argued that experienced senior women were impossible to find, especially in the oil, technology and gas industries. “I’m a responsible man,” one CEO told me in Oslo last week. “I have a duty to do the best I can for our shareholders. I’ve been forced to appoint two women whom I know are apprentices. Give them 10 years and I’d be happy to have them on the board; not now.”
Marit Hoel is the founder of the Oslo-based Centre for Corporate Diversity, which helps companies to find experienced female non-executive directors. In Norway, as a sociologist in the 1980s, she was the first person to begin counting women – or the lack of them – on boards. In response to the growing criticism that women of ability and experience were in short supply, she called a press conference. She spoke no words. Instead, she showed the photographs of 100 senior women with a brief resume of their cvs. “It was my Beckett moment,” she says. “The pictures said it all. Experienced women are out there in quantity. The problem, as elsewhere, is that they are literally not seen. Men have their own network.”
In Norwegian, the network is called “gutte klubben grei”, the grey men’s club. Ada Kjeseth, 58, from Bergen, knows how it operates. An economist and accountant, she was appointed in 1988 as the first woman to join the non-executive board of Norsk Hydro, now the third largest supplier of aluminium in the world. She is now on eight boards (not all publicly listed), covering interests that include insurance, property and car imports. “Since last year,” she says, smiling. “They keep knocking on my door.”
Referring to the power of the gutte klubben grei, she says, “They meet in places where only men meet. They go hunting and fishing and drinking together. People who know people are appointed. I wish the quota hadn’t been necessary, but I’m a realist. It forces men to look beyond their magic inner circle.”
Every International Women’s Day, Kjeseth adds, a friend holds a dinner for 70 women, all at the top of their respective companies. “Each year, I look around the room and I get goose bumps. Men have networked for years but don’t recognise it as networking. When we do it, they become alarmed. I don’t know why,” she adds mischievously.
Kjeseth, married with two grown-up sons, knows from personal experience about the potential pitfalls in the quota. “I was young and I had two small children when I joined my first board,” she says. “Norsk Hydro had budgets of billions and large, well-run projects. I thought, what can I bring to this? I left after two years because I knew I was inexperienced. Now I know companies and the laws that regulate them inside out. Some women who are appointed may be inexperienced but they will learn fast.”
Almost nobody I spoke to in Oslo was unequivocally in favour of the quota. “I’m very aware that an owner has the right to pick people he likes in his best interest of his board, and the quota violates that principle,” says Hoel. “I would have preferred the quota to be voluntary – but that would have meant waiting another 35 years. I’m also aware that, in companies, what is being counted, gets done.”
In Oslo, on the day of the final February deadline, the dozen ASA companies that have been “named and shamed” as failing to fulfil the quota, rapidly reduced to 10. Dammann and one other CEO explain that they had appointed two female non-execs but the change had fallen foul of red tape. Dammann appointed his two women last June, after what he says was a six-month “time-consuming” search. He is not a convert to the quota, though.
“I think people will still go to those they have trusted for years, whom they have had to remove from the board,” he says. “So there will now be a formal and informal system, and that cannot be good for accountability.”
One woman in her 50s and a veteran of non-executive boards concedes that there will be challenges ahead. “The higher you go, the more competitive the men,” she says. “It becomes harder to read the situation. They have their own code. Also, with only a couple of women on the board, we are still the outsiders. But to me it’s like a beautiful game of chess – you learn with every move.”
Dammann, like many opponents of the quota I met, is now pragmatic. “The law is passed. We are making an investment in diversity that should be good for business. I hope it pays off.”
Under the law, the remaining 10 rebel companies now theoretically face closure. “They will find the women,” Anne Margaret Blaker, political adviser to the minister of trade and industry, says. “You can be sure.”
In the UK, the pace of change continues at tortoise pace. Jacey Graham, co-author of A Woman’s Place is in the Boardroom: the Road Map, which will be published in June, says, “Nobody in the corporate world is in favour of quotas. What big companies are doing is putting targets in place at different levels within the organisation but not at board level.”
In June, the TUC and the CBI are due to publish a joint paper, Talent not Tokenism, arguing in favour of promoting diversity on a voluntary basis. The goal is the same as Norway’s, the road however may take much longer to travel. “It’s a natural instinct to recruit those who are like you,” says Marion Seguret, the CBI’s senior policy advisor. “Men need to be trained to look to the other 50% of the population.”
Back in Oslo, the irrepressible Fagerland says she plays a game with her daughters based on the Swedish fictional character Pippi Longstocking, a girl who believes in herself and is utterly unconventional. “We break all the rules. Everything is turned upside down. We wear pyjamas in the garden and eat sweets before dinner. They love it.
“I want them to constantly question why things should be as they are. In business, you can always find ways of playing the game differently and better. But first, you have to know your own level of competency and your price – and never sell yourself cheap. For your own sake, and for the sake of all those women who come after.”