Board

The HR Impact of Gender Quotas on the Board of Directors

Whichever side of the line you stand on, everyone seems to agree that the new California Law requiring at least one board seat be filled by a female for publicly traded companies leaves a lot of room for debate and concern. In fact, Governor Jerry Brown wrote in his signing statement for SB 826, “I don’t minimize the potential flaws that indeed may prove fatal to its ultimate implementation.”  And, as is often the case, it is likely that other states will follow. Although California is the first to have binding regulations, Pennsylvania, Massachusetts, Illinois and Colorado, and various municipal governments, including the city councils of both Philadelphia and New York, have already passed nonbinding resolutions aimed at increasing female representation on boards.

As with many new business-related laws that take effect, HR should take preemptive steps to determine the impact this may have on their organization. The California Chamber of Commerce has argued that the new policy, “violates constitutional prohibitions against discrimination”, and “prioritizes gender over other aspects of diversity such as race or ethnicity.” When these statements are made publicly, discrimination claims tend to rise.

In light of the potential stir that may arise from the search for a female to add to a board that is already in place, the possible unseating of a current Director, or the placement of a so-called “token female” on the board,  HR may want to proactively consider the following measures as a way to step up to the table and provide added value in the process.

Provide a summary of the potential impact the search for a female Board placement could have on the company. Suggested items to be covered:

  • Reminder that placement without prior communication could create an impression that the Board is simply filling a mandated requirement with the easiest or safest option.
  • Communications early on as to what the Board is searching for including qualifications, experience, strategic vision and leadership capabilities can clarify the company goals for the position and prevent the appearance of bias.
  • Positive communication within the company during the process can create excitement as the company moves toward increased diversity, and the impact that will ultimately have on the company.
  • Clarification on who will own the placement process will prevent duplicated efforts.

Provide a proposal of how HR could assist with creating a positive outlook, such as:

  • Providing staff communications on the search, and how the company is excited to embrace this new opportunity for balance in leadership.
  • Assist with initial search efforts and screening to allow the process to move forward in a timely manner.
  • Suggest that HR could provide guidance to the Board on how to document the process and decision as protective measures against discriminatory claims after the fact.

In the long run, a more diverse and balanced Board of Directors will likely have a positive impact on business performance and company culture. Taking the initiative to shine a positive light from the start can make the process better for everyone involved.

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