It’s time to shatter the glass ceiling for good. Making better use of women’s talents is not just a matter of equality and fairness. It’s a business issue. And women mean business.
The case for getting more women on company boards has never been stronger. As national budgets in Europe get squeezed and the economy moves out of recession, human capital will be necessary to restore Europe’s competitiveness at a global level.
Women are the key. A study by Goldman Sachs found that closing the gender gap could boost the euro zone’s gross domestic product by up to 13 percent.
We can see advantages not only on the macro level. The case is just as clear in the business world. An analysis by the consulting firm McKinsey found that the operational profit of companies with the most women on boards was 56 percent higher than those with men only at the top level. That is not all. Boards with more women surpass all-male boards in auditing, risk oversight and control.
Unfortunately, the real world hasn’t caught on: Only one-in-10 board members in the European Union is a women, and only 3 percent of chief executives are female. Progress in Europe has been glacial: The share of female board members in the European Union has increased by half a percentage point a year for the last seven years. At this rate, it will take another 50 years to reach a gender balance on company boards.
We all know that equality between women and men is one of Europe’s founding principles. It goes back to 1957 when the principle of equal pay for equal work became part of the Treaty of Rome.
Some European countries understand this and are now taking the lead in boardrooms: Norway was the pioneer in 2003 by establishing 40 percent quotas for female board members. France, the birthplace of equality, passed legislation this January so that 40 percent of executive board members of the largest publicly listed companies will be female by 2017. Across the Rhine, German politicians are debating the merits of mandating change. Austria is also considering taking action.
Quotas are controversial for some people. But you cannot quibble with the results in the countries that have introduced them. In Norway, the number of women on supervisory boards rose from 25 percent in 2004 to 42 percent in 2009. Quotas can help us achieve a breakthrough. But they should be transitional and a measure of last resort.
Europe’s leaders have two ways forward. First, let the business world work out solutions. Over the coming months, the European Commission and several national governments will meet the chief executives of Europe’s largest publicly listed companies to hear proposals for self-regulatory initiatives to get more women to the highest levels of decision making. Self-regulation can work only if it is closely monitored.
If there is no credible progress, the second step is clear: Europe would need legally binding quotas that can be enforced.
The ball is now in the companies’ court. We would like to see Europe in the fast lane when it comes to women in boardrooms. Let’s set ambitious targets. By 2015, at least 30 percent of boardrooms should be female. By 2020, this should rise to 40 percent.
In an ideal world, businesses would achieve this voluntarily. But we also stand ready, starting in 2012, to intervene with regulatory pressure if necessary.
Now is the time to act. As we face the risk of slow economic and job growth following the sovereign debt crisis, we cannot afford to leave the talents of half the population behind. Some companies know that equality makes good business sense; others are slower to react.
Business leaders must decide: Will the glass ceiling come crumbling down by itself, or will a sledgehammer make the first crack?
By Jerzy Buzek, president of the European Parliament and Viviane Reding, vice president of the European Commission and E.U. justice commissioner.