European Commission approves 40% female quota

The European Commission has approved proposals for at least 40% of women on company boards by 2020. I wanted to provide some academic references that demonstrate how  more gender diversity in top management teams leads to better organizational performance, but that is not needed. The EU provides already a very nice brief overview here. They forget, however, the study of Krishnan & Park (2005) in 679 organizations of the Fortune 1000. They demonstrated  “a positive relationship between the proportion of women on TMTs and organizational performance”. Organizational performance was a 3 year average of ROA and Return on Sales (ROS). Environmental characteristics such as  munificence, dynamism, and complexity had no influence on that relation.

Oh, and before somebody says “But this is ridiculous, now they will have to promote incompetent women”, mind you that in 82% of all academic studies done between 1967 and 2000, women came out as being better transformational leaders (Eagly et al., 2003). A style recognized to lead to superior organizational performance. They score especially better on the aspect of coaching their employees. A characteristic that has gained importance the last decade (Segers et al., 2011).

And maybe one last thing. Check out the study of Kalev et al. (2006). They wondered what practices are the better practices to promote diversity in general in organizations (not only gender diversity). So, they analyzed 708 US organizations over a period of 31 years! (1971-2002). In brief this came out:

  • Least effective : manage management biases, e.g. diversity training, diversity evaluations for managers,…Unfortunately this is what organizations do most!
  • Moderately effective: reduce social isolation of women and other minority groups, e.g. network programs, mentoring programs,…
  • Most effective: create organizational responsibility for diversity, e.g. positive action plans, diversity commissions and workgroups, diversity managers,…

If organizations scored better on creating organizational responsibility, they scored better on the initiatives as well. And if positive action came from the government, it resulted in stronger effects on all other initiatives.

Any comments?

Eagly, A. H., Johannesen-Schmidt, M. C., & Van Engen, M. L. (2003) Transformational, transactional, and Laissez-Faire leadership styles: A meta-analysis comparing women and men, Psychological Bulletin, 129(4), 569-591.

Kalev, A., Dobbin, F. and Kelly, E. (2006). Best practices or best guesses? Assessing the efficacy of corporate affirmative action and diversity policies. American Sociological Review, 71, 589-617.

Krishnan, H. A., & Park, D. (2005). A few good women–on top management teams. Journal of Business Research, 58(12), 1712-1720.

Segers, J.,Vloeberghs, D., Henderickx, E.,& Inceoglu, I.(2011). Structuring and understanding the coaching industry: the coaching cube. Academy of Management Learning & Education, 2, 204-221.

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About Jesse Segers

Academic Director of The Future Leadership Initiative
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