'There is no denying the effectiveness of quotas': why Europe will surpass the U.S. in changing the face of the corporate board.

• Author: Natividad, Irene
• Position: BOARD COMPOSITION

FOR THE American business community, "quota" is a dirty word. When applied to human resources, it implies a set number required without consideration of merit. Well, Europe is not running away from this word, and it is a strategy many of its countries are using to accelerate the pace of achieving a diverse board.

Why this hurry? A look at the average representation of women on the boards of European companies shows 11.7% of corporate directors being female--a percentage below that of the U.S. Fortune 500 companies at 15.2%. (1) Indeed, the majority of European countries fare worse than the U.S. in appointing women to board seats.

One country, however, is a standout. Norway's percentage of women directors is now at 40.3% in 2010, (2) the highest percentage globally. Eight years ago, only 6.8% of its directors were women. Its 'weapon' for arriving at this dramatic change is indeed a quota law enacted in 2003 that mandated at least 40% of board seats to be allocated for women within a two-year period. Companies not complying would risk dissolution. Well, none suffered this fate, and Norway not only met but also surpassed its goal by its own deadline.

The fact that Norway did it dispelled doubts as to the efficacy of quota laws in changing the numbers of women holding board seats. Spain followed with its own legislation in 2007 requiring 40% women's representation in publicly listed companies within a longer eight-year period. In March 2010 Iceland enacted its own quota law covering listed and privately owned companies. France and the Netherlands both passed similar quota laws in their lower houses recently, with France's having the better chances for passage. Belgium, Sweden, and the U.K. are considering their own versions.

Denmark (2000), Ireland (2004), Finland (2004), and Iceland (2006) already have in place quota legislation ensuring board seats for women in government-owned companies, and all have met or are nearing the targeted percentages of women directors. Germany does not have a quota law at the federal level, but the cities of Berlin and Nuremberg already have mandates of 50% and 40%, respectively, for women directors on the boards of municipal subsidiaries and companies with municipal equity. (3)

Beyond boards of directors, Germany's Deutsche Telekom made headlines when it announced a 30% quota for women in senior and middle management to be reached in five years. (4) Daimler has a similar quota at 20% but with a longer deadline...