Article 3

2019-07-16 Simona Cuomo

More Women on Boards of Directors: Why Has Nothing Changed for the Others?

It's time to take stock of the results of the Golfo-Mosca law (Law 120/2011), that introduced gender quotas in the Boards of Directors of listed and publicly-controlled companies, dictating that at least one-third of members of the corporate bodies must belong to the less-represented sex. The provisions of the law applied to the three renewals of BoDs after August 2012 (a period usually equal to nine years), and at the end of 2018 it ceased being active for 34 listed companies. Numerous statistics and monitoring show its undoubtedly positive effects.

First, the percentage of women board members increased from 7 percent in 2010 to 36 percent in 2018, with almost all companies having at least one woman on the BoD. Secondly, the characteristics of BoDs have changed; in particular, there has been a drop in the average age of board members, diversity has increased in terms of age and professional background, and the average level of education has increased. Other studies even stress that the female presence has a positive effect on some financial indicators, provided that at least two women are present on the board, that is, that each board needs to reach the so-called "critical mass".

Despite these encouraging numbers, the increase of women in top management positions has not led to a visible improvement of Italy's positioning in the Global Gender Gap Report for 2018. Although Italy has risen by twelve positions in the general ranking, going from 82nd to 70th, the result for the labor market finds Italy 118th out of 149 countries. This figure is confirmed by other statistics that show how in 2017 female participation in the labor force was 55.9 percent, compared to 68 percent at the European level;  the percentage of women in managerial positions was 29% versus 36% at the European level; and the percentage of women who are senior executives is 9% versus 17% at the European level.

Do female quotas on boards of directors only affect the tip of the iceberg of the gender gap? Why is the greater presence of women on BoDs unable to create cascading effects on the organization? It is necessary to reinterpret the meaning of the Golfo-Mosca law by re-elaborating the meaning behind "affirmative action." To do this it is important to seek and recognize the effects of the law beyond the improvement in numerical terms. Greater female representation should allow for diversification of the debate, and of the issues brought to the attention of the BoD, thus guaranteeing that degree of divergence and innovation that "diversity" entails. In this regard, the importance of diversity of viewpoints and skills as a key to improve the quality of board decisions was affirmed in the 2011 Green Book of the European Commission. Other measures followed in this direction (Action Plan, 2012; Directive 2013/36/EU; Directive 2014/95/EU), and were partially implemented in our national legal system as well (Legislative Decree No. 254 of 30 December 2016).

The new rules on non-financial information invite listed companies to provide reporting on governance, diversification policies followed in the composition of governance, management, and control bodies - in terms of age and gender - and to illustrate the training and professional paths followed by the members. Board diversity is thus a necessary premise for the better functioning of corporate bodies. But if the numerical composition changes and the debate and range of issues brought to the board's attention are not expanded, if no cascading effects are visible on the organization, than de facto, nothing has changed. A sign in this direction is seen in the increase of female interlocking (i.e. the percentage of female directors who sit on multiple boards) similar to the "old boy network" that has always characterized the composition of BoDs.

Is it a problem of numbers, i.e. are there too few women to bring issues relating to people strategy and thus of the gender gap to the attention of the board? Is it a problem of skills, since perhaps most of the women chosen have characteristics similar to those of the majority of male board members, and thus are not particularly sensitive to these issues? Is it a problem of roles, since in essence the question of quotas has regarded only non-executive positions? Is it necessary to extend the law to introduce the same rules for committees within the board, that represent key decision-making centers in corporate governance? Is it plausible that these effects have not yet appeared, but it is only a question of time? Is it a problem of legitimization of women board members, who being a minority chosen due to a legal obligation have a hard time introducing divergent arguments into the debate?

Addressing these questions in the debate in public and academic circles also means reminding the women who have entered the boards that the law that brought them to power was passed thanks in part to the support of a broad women's movement. It was 2009 when many women acted to support the inclusion of other women in BoDs, with the optimistic view that such a step was key to guaranteeing the more general issue would be addressed, that of the people strategy which is linked to the gender issue and the dominant model of leadership, to benefit all other male and female workers.