Boardroom Revolution

Female directors bring something new to Europe's firms: smarts

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Lea Crespi for TIME

Nöelle Lenoir

Though busy and successful as an international lawyer, Noëlle Lenoir has enhanced her résumé over the past 15 years by serving as an expert on ethics for the European Commission, teaching at Columbia University's law school, serving as the French Minister of European Affairs, chairing a department at France's leading business school and deliberating on historic legal rulings as a member of France's Constitutional Council — roughly equivalent to the U.S. Supreme Court. Only in 2008 did Lenoir take on an even more élite role, when she joined the board of insurance group Generali.

Lenoir is in the vanguard of a new wave of women in the boardrooms of European corporations, which are being prodded by both legal and social pressure to add women to their boards. "People have to recognize there's something wrong with virtually all companies being presided, managed and directed by men," says Lenoir. "The exclusion of women is robbing businesses and society of a lot of talent and perspective they could be benefiting from merely by letting the other half of the population in the room."

That enduring European gender imbalance has led Norway to mandate that 40% of directorships go to women — a legal quota that other governments also are rolling out. It's not going to happen organically. A comparison of surveys indicates that women make up less than 9% of boards in France's leading firms, compared with about 12% in the U.K., 13% in Germany and 8% in Spain. E.U.-wide, women made up less than 10% of top boards in 2009. That trails the 15% figure in the U.S. — where a quota is a nonstarter — and drops to just over 9% once Norway's female board members are factored out.

Why hasn't the balance improved over the past couple of decades? That question provokes a fierce debate about women's career priorities and the cultural and social norms in any society or nation. And then there's the simple fact that men can get away with the status quo. "Men just don't see what professional or personal advantage they gain by relinquishing board or management positions of power to women, so they don't," says Caroline de la Marnierre, president of the Capitalcom consultancy in Paris, which specializes in diversity issues in business leadership.

That's exactly what led Norway to pass legislation in 2003 requiring state-owned and publicly traded companies to increase the number of women on their boards from an average of nearly 7% to at least 40% by the start of 2009 — or risk being shut down. The result: female representation on Norwegian boards sits at 44%, a number that seems to be inspiring other male-bound European nations to do likewise. Spain and the Netherlands have passed similar laws due to take effect in 2015 and 2016, respectively, and France is set to pass legislation requiring female board presence to increase incrementally to at least 40% by 2016.

The very threat of gender quotas is bound to help get things moving. "There's a massive fear in business that governments will legislate the problem if companies don't sort out the issue on their own, and that's inspiring the beginning of change in some countries," says Ruth Sealy, senior research fellow and deputy director of the International Centre for Women Leaders at England's Cranfield School of Management. She says social and cultural factors, along with traditional segregation of the sexes in various professions, explain why male domination has endured for so long — and why some countries may face a relative shortage of qualified female managers.

That's not the case in the U.S. and the U.K. "Corporate U.K. and corporate America may have been created by men for men, but today there's simply too large a pipeline of qualified women just below board and management level to shut them out anymore," Sealy says. "And in a place like the U.K., getting just 100 more women on corporate boards alone would completely change the business and cultural landscape."

That's already happened in Norway, where the 40% quota has prompted CEOs to replace ossifying board members with younger, better-educated women, says Marit Hoel, CEO and founder of the Center for Corporate Diversity, a research organization in Oslo. "And because companies had to recruit beyond their usual, male-dominated insider networks, they wound up scrutinizing women candidates more carefully than usual to get the best ones out there," she explains.

Management experts caution that it's still too early to draw any conclusions about how the female influx has worked out. One University of Michigan study of Norway's law indicated an average 20% drop in corporate-governance ratings among companies that brought in new, relatively inexperienced women. Some analysts suggest that was more a consequence of markets' viewing any changes imposed on businesses as destabilizing, rather than of any real management impact. Surveys elsewhere suggest companies with higher percentages of women in leadership roles tend to perform better and enjoy more stability than their male-dominated rivals.

Her appointment notwithstanding, Lenoir supports the pending French legislation to establish gender quotas in the boardrooms of a nation whose strict egalitarian ideology traditionally shuns affirmative action. She says such quotas will give more women the corporate opportunities she enjoys and thinks the changes that stem from them will be more clear-cut than some experts believe. "One of the ways women are different from men is that we're more inclined to factor in social responsibilities and objectives along with business objectives and bottom lines," Lenoir says. "More women will alter the myopic financier thinking now dominating boards."

Quota proponents also argue that gender balance in the boardroom is just a starting point. Companies need greater diversity than they have with the privileged, élitist, close-knit and emphatically male executive cliques now in place, argues Sealy. "We'll never know if Lehman Brothers might have avoided collapse if it had been Lehman Sisters, but a wider range of perspectives and opinions in its leadership would have made it less likely that inordinate risk and bad decisions would have been taken." Europe may get a chance to answer that line of inquiry in a couple of years, when woman are calling the shots.