List reasons as to why it is a good and bad idea to set quotas for women on CEO boards.  Provide analysis as to why the amount of women on the board could make for potentially better corporate...

List reasons as to why it is a good and bad idea to set quotas for women on CEO boards.  Provide analysis as to why the amount of women on the board could make for potentially better corporate govern-age components, resulting in more money in the end. Relate the idea of quotas to key aspects of corporate governance.

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Ashley Kannan eNotes educator| Certified Educator

Many nations around the world have established quotas that apply to women representation on corporate boards and in positions of management.  In doing so, the emphasis on quotas carries with it some perceived advantages.  One distinct advantage in adopting quotas is the natural increase of women presence in areas of corporate power.  The Status Quo does not reflect effective corporate governance:  

Women are the majority of all graduates almost everywhere in the developed world, but make up a smaller share of the workforce the further up the corporate ladder they go.

Delving further into these statistics reflect that ensuring quotas would lead to better people and more qualified individuals moving into a position to impact business initiatives: "The educational level of female board members is higher than that of male directors, with 92% of women having a least one university degree compared with at 87% of men."  With more women studying in the field of management, they would enter the corporate setting with a background needed to navigate the specific challenges that boardrooms face.  

Proponents of quotas argue that it increases effective corporate governance if the majority of higher education graduates are in the positions of power to apply knowledge gained in their studies.  Businesses are notoriously slow to enact change and the network of "golden trousers" has become the standard in business cultures.  To change this, quotas have been embraced by many governments as a way to facilitate change.  Yet, in doing so, it reflects good corporate governance because the people with graduate degrees and work are being placed in positions where they can influence practices with their knowledge base.  In this light, quotas would be seen as beneficial.

Timing has to be another element to grasp in the recent push for quotas.  The Norwegian quota advocacy started in 2008.  At that time, worldwide economic challenges were being felt.  Businesses were experiencing slowdown on a global level.  The push for women in positions of corporate governance coincided with a need where innovative approaches to commerce were needed.  Globalization had experienced its first widescale period of contraction.  Given how the global network of businesses were interrelated, interlocking with one another, slowdown in one nation meant similar patterns in other nations.  For example, when American businesses experienced contraction, it had ripple effects in nations such as China and India.  This widescale challenge meant that newer voices that could guide businesses were needed. Given how the academic training of women on the university level focused on management- specific courses of study, ensuring that these students would be able to apply their own skill set to the experiences of global economic challenges was critical. Proponents of quotas are able to point to how governmental action was needed because globalized business slowdown is an economic and political issue, as well.  

Finally, proponents of quotas make the argument that diversity is a net benefit for business.  Corporate profit making avenues are increased when there are more diverse voices in the position of power.  These advocates suggest that diversity enables greater voices to be heard in both the boardroom and in how products and services are delivered to the consumers.  When boardrooms are more diverse, greater voices will be incorporated, making businesses more responsive to consumer needs.  This ensures vitality for businesses, enabling them to tap into markets that were previously unavailable because they did not understand them.  The argument here is that a boardroom dominated by men might not speak to the interests of women as well as a boardroom that has somewhat better balance between both men and women on it.  Thus, it is argued that corporate governance and profit making avenues are both increased through the quota standard.

Naturally, there are voices of resistance to the quota system.  The loudest come from the very idea articulated above.  Government sanctioned quotas are external interventions that tamper with the practices of businesses. Essentially, business advocates that are not enthusiastic of the idea that government intervention is mandating corporate action.  In some nations, the external penalties of either self- reporting or government fines for not reaching the 40% quota is seen as encroachment.  The disruption to the way in which companies do business and function is one of the major elements against a quota system.

From a business culture standpoint, some argue that the quota system may do more harm than good.  Harvard academic Roy Y.J .Chua has argued that the imposition of quotas may result in an “intercultural anxiety” or even conflict in the culture of an organization.  Chua asserts that settings which seek to establish diversity for its own sake could result in “ambient cultural disharmony."  From such a position, good corporate governance is threatened. The fear of cultural disharmony and culture wars playing out in business settings disrupt the flow of commerce and business profit schematics. Creativity is stifled in an arena where disharmony and tension exists.  For those who are against the quota system, this becomes a very strong and compelling argument to reject it.  The 40% quota cannot be embraced if it is going to threaten profit making avenues by disrupting and bringing more anxiety to the culture of the corporation.

krishna-agrawala | Student

I see one and only one reason for setting up quotas for women on CEO boards as a bad idea. The objective of quotas for women on board is promoting interests of women as a class rather than business.

If appointment of a woman on board is considered to be in the interest of an organization, the organization will appoint that particular person on the Board even without the compulsion of a quota.

In contrast, appointment of a woman only because of compulsion of quota implies that the appointment is not justified on the consideration of only the good of organization.