Many countries have imposed quotas or targets for the proportion of women in the boardroom, including Norway, Finland, France and Spain, where boards must be 40% female. But many nations do not impose financial penalties for non-compliance, including Switzerland, which passed a law in 2018 that requires boards to be 30% female. As we know, incentives to change matter. When penalties are more severe, the speed at which gender equality is achieved increases.
There are many benefits for companies that appoint more women onto their boards. For one, post-quota female directors have more social capital than men — bigger and more valuable networks. This reflects the fact that in some countries, such as Norway and Spain, female directors are more likely to hold multiple directorships than men. Thus, women directors occupy an important role as knowledge brokers across companies. Networking is, after all, the lifeblood of business.
Yet quotas are controversial. Critics claim that they are a box-ticking exercise and can lead to people being chosen for their diversity rather than their talent. In Spain and Norway, female directors appointed after the quotas were introduced, are less likely than their pre-quota counterparts to have some of the traits that are considered to make for good directors. Post-quota appointees are, for example, younger, have less experience as chief executives, and are less likely to be business owners or entrepreneurs.