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What are gender quotas?
Gender quotas are measures that are put in place to ensure that a certain percentage of positions in an organisation or decision-making body are held by members of a particular gender.
These quotas are often implemented in an effort to promote gender equality and increase the representation of women in fields or industries where they are underrepresented.
Gender quotas can be used in a variety of contexts, including in government, politics, education, and the workplace. They can take many different forms, such as minimum representation requirements, reserved seats, and affirmative action policies.
Gender quotas began within governance bodies, such as legislatures, councils and committees, but we see them increasingly in the corporate world nowadays.
As they remain the subject of significant debate, it’s a good idea to understand why they exist and how your company might fit in.
How does a gender quota work in a business?
It requires a minimum number of candidates from a particular gender background when making recruitment decisions.
As quotas came from a desire to address the traditional power structures dominated by male candidates, the “minimum number” will almost always refer to women.
Why have quotas been put in place?
Many in politics and business still consider the corporate world skewed more favourably towards male participants. They see quotas as a way to correct that imbalance.
In business, some of the rationale behind quotas is the political example they have already set. Quotas have been introduced for legislative bodies in several countries, sometimes for the chambers themselves, sometimes for the lists of candidates eligible to run.
The corporate world has looked at this development with keen eyes and wondered if it can be replicated, especially with more senior bodies like board and executive management, which remain dominated by older men.
Why are gender quotas criticised?
Critics give multiple reasons for opposing gender quotas.
Their main arguments, however, we can summarise the principles of fairness and merit. They claim that quotas enforce the idea of selecting candidates based on their gender, not their qualifications.
This debate continues to rage, although it’s stronger in some countries than others.
How do gender quotas apply to corporate governance?
Historically, they didn’t at all. Now, it’s an entirely different story.
In practice
Companies should be very wary of the role gender diversity plays in modern business.
Increasingly, you’ll find that many investors, lawmakers, and other stakeholders want to see companies broaden their governance horizons to incorporate different viewpoints.
In other words, the image of an older, exclusively male board or executive team isn’t likely to impress. It is more likely to consist of members who think and act the same, which could leave them vulnerable to certain risks.
Because of this, companies are increasingly expected to develop a robust policy on gender diversity and, if they set themselves quota, methods for achieving it.
The law
At the top levels of governance, laws could already be in place mandating some kind of gender quota; it just depends on the country.
Take the EU, for example. In 2022, it agreed on a new directive requiring that 40% of all non-executive director positions be held by women from 2026 on.
Women should hold 33% of all director positions within the same timeframe.
The law is a significant step towards giving legal weight to gender quotas, and if your company is based within the 27-member bloc, it may represent a considerable challenge ahead.
If not, keep an eye on the politics in your jurisdiction and whether similar measures may be coming soon.
