Quota in disguise: The Dutch statutory target for women on boards

Based on current representation data, the Dutch government is likely to extend its gender targets for women on company boards to December 2019. The bill which applies for 4,900 companies is currently discussed with relevant bodies in the Netherlands. It aims at having at least 30% men and 30% women on executive and supervisory boards.

Another Minister says that she is not in favour of quota while she is using the language of quota to make her point. Jet Bussemaker, the Dutch Minister for Education, culture and science, also in charge of equality and – as they sometimes say – emancipation, found two important allies to pursue her objectives for a gender-balanced distribution of board positions. Together with Security and Justice Minister, Ard van der Steur, she presented a proposal to the cabinet, which was approved. The suggested bill would extend the statutory target that expired 1 January 2016 to the end of 2019. It regulates that companies that fail to have at least 30% of women and at least 30% of men on their management and supervisory boards must outline reasons in their (public) annual reports. The Dutch government calls this legal principle ‘comply or explain’.

Her second ally is President of the employers’ organization VNO-NCW. Together with him, the Minister sent a letter to nearly 700 Commissioners calling upon them to actively search for and propose potential female candidates for top positions. Based on 1,000 nominations, Bussemaker considers her initiative an evident success. On the other hand, she called the improvement made by companies between 2012 and 2015 progress at a ‘snail’s pace’, concluding that it was now ‘five minutes before midnight’. It is this language and the isolated focus on top executive numbers that put reasonable doubt over her proclaimed motivation to do justice to the potential of female talent in The Netherlands and to avoid many untapped talent. “If you want to ensure business benefits are generated from gender and other diversity, you need to see the whole picture and make sure the changes are fully accepted by the stakeholders involved or affected,” Diversity expert, Michael Stuber, comments.

The latest report from the government’s own corporate monitoring committee shows no stock exchange listed company met the 30% target (for women) by September 2015. Of all companies that fall under the target, 14% had at least 30% women on their executive boards and 18% met the target in terms of their supervisory boards. However, 75% of executive and 63% of non-executive boards had no women. But, in the course of the first half of 2015, 70% of newly appointed supervisory board members were female. Bussemaker was only quoted on the absolute numbers calling them “extremely disappointing”.

According to Diversity expert. Michael Stuber, who has analysed the legal, organisational and cultural dynamics around quota, targets and other metrics in Europe and the U.S., this example shows the prevailing gap between the political perspective and the business dynamics. “Politics talks about rights and representation, while business focuses on pipeline and potential,” he comments. He has rigorously analysed the different forms of biases that had led to disproportionate promotions and hence representation – not only for women. Stuber insists that a more consistent regulation and monitoring of (mainly HR) processes, (leadership) procedures and (management or corporate) cultures creates more progress that is also more sustainable. “The harsh language and simplified focus on representation in top positions has not helped much in our journey towards more diversity across the board,” he adds. The remark hints towards the situation of other societal groups which is never even acknowledged let alone discussed.

The intention to extend the statutory target for gender balance on Dutch company boards was announced in a letter that the education minister sent to parliament in November 2015, referring to the results of the Business Monitor 2012-2015 presented by the ‘Talent to the Top’ Monitoring Commission. In the meantime, the cabinet has agreed to submit the bill to the Council of State for an advisory opinion. The bill and the advisory opinion will be published when they are presented to the House of Representatives. It foresees that in the spring of 2017, another review will take place. The journey ahead will be ambitious as the current percentages for women on boards are around 10% (8.9 % for Directors on Executive Boards, 11.2 % for Commissioners on supervisory boards).