By NICOLA CLARK
http://www.nytimes.com/2010/01/28/wo...=1&_r=1&scp=17
OSLO — Arni Hole remembers the shock wave that went through Norway’s business community in 2002 when the country’s trade and industry minister, Ansgar Gabrielsen, proposed a law requiring that 40 percent of all company board members be women.

“There were, literally, screams,” said Ms. Hole, director general of the Equality Ministry. “It was a real shock treatment.”

Even in this staunchly egalitarian society — 80 percent of Norwegian women work outside the home, and half the current government’s ministers are female — the idea seemed radical, if not for its goal, then for the sheer magnitude of change it would require.

Back then, Norwegian women held less than 7 percent of private-sector board seats; just under 5 percent of chief executives were women. After months of heated debate, the measure was approved by a significant majority in Parliament, giving state-owned companies until 2006 to comply and publicly listed companies until 2008.

Many prominent business leaders dismissed the 2003 law as a political stunt and argued that Norway, with just 4.8 million people, did not have enough experienced women to meet the quota. One chief executive of a software company told the business newspaper Dagens Naeringsliv that companies would have to recruit “escort girls” to meet the target.

Nearly eight years on, the share of female directors at the roughly 400 companies affected is above 40 percent, while women fill more than a quarter of the board seats at the 65 largest privately held companies. To many feminists, this is the boldest move anywhere to breach one of the most durable barriers to gender equality.

Indeed, the world has noticed: Spain and the Netherlands have passed similar laws, with a 2015 deadline for compliance. The French Senate will soon debate a bill phasing in a female quota by 2016, after the National Assembly approved the measure last week. Belgium, Britain, Germany and Sweden are considering legislation.

But as the dust has settled, researchers are grappling with some frustrating facts: Bringing large numbers of women into Norway’s boardrooms has done little — yet — to improve either the professional caliber of the boards or to enhance corporate performance. In fact, early evidence from a little-noticed study by the University of Michigan suggests that the immediate effect has been negative on both counts. And the sixfold increase in women as directors has not yet brought any real rise in the number of women as chief executives.

In the past 50 years, women have gained ever more prominence in politics and society. A decade into the 21st century, however, their corporate power remains slight — although women represent half or more of the work force in many countries.

In the European Union, 9.7 percent of the board members at the top 300 companies were women in 2008, versus 8 percent in 2004, according to the European Professional Women’s Network. In the United States, roughly 15 percent of the board members of the Fortune 500 companies are women, while at the top of Asian companies, women remain scarce: In China and India, they hold roughly 5 percent of board seats, in Japan, just 1.4 percent.

Traditional tendencies die hard. The higher up the corporate ladder, the greater the perceived risk associated with choosing managers who are not “homogenous,” said Hilde Tonne, an executive vice president and head of communications at Telenor, a global telecommunications company based in Oslo. “Diversity is not as easy as you move up.”

When the Norwegian government first made its case for the quota, the number of women on boards had been growing by less than 1 percent a year for a decade. It would have taken 200 years, Ms. Hole said, to reach 40 percent. The quota was sold to Norway’s business community as a way to gain greater social equity and competitive edge: “Profit is made by employing the best people, regardless of gender,” she said.

Ms. Tonne has observed the male-female issue from several vantage points. With a master’s degree in engineering, she started out in Norway’s male-dominated oil and natural gas business. Now 44, she got her first management job at 30 and remembers having only a few other female colleagues at the time.

“Fifteen years ago, there was a certain perception that the only woman in the room was the secretary,” she said.

Rising through middle management, she encountered more women. Once in senior management, however, “there was more solitude.”

Some say that even in female-friendly Norway, women are still not thrusting forward for leadership posts.

“Power is not something that is given, it is something that you have to take,” said Benja Stig-Fagerland, a Danish economist who in 2003 helped lead an effort by the Confederation of Norwegian Enterprise, the country’s main business lobby, to find female leaders.

“I don’t think I’ve ever heard a female oversell her capabilities,” she said.

Basic arguments for quotas in Norway were that more women would rise to the top, and that tapping into underused female talent would create shareholder value, said Marit Hoel, director of the Center for Corporate Diversity in Oslo. “But if you look at where real economic power sharing is needed,” she said, it is at the executive-committee level. “That is what we were trying to speed up — but unfortunately that hasn’t happened yet.”

To date, little research has been published in Norway on the quota’s short-term impact. But the unheralded University of Michigan study, published in September, found that the sharp increase in women as directors significantly reduced the average amount of senior executive-level experience on the boards at 130 of the biggest Norwegian companies.

Since 2002, women named to board seats have been, on average, seven years younger than the men they replaced. They are more likely to have an M.B.A. degree, but come from middle management, not the executive suite.

“It’s not that women are worse performers on boards, but rather that the supply of women candidates is not the same as the supply of men,” said Amy Dittmar, professor of finance at Michigan’s Ross School of Business and a co-author of the study. “It’s disappointing that that’s the case in this day and age, but it seems to show that the glass ceiling is still in place.”

Some see potential risks in sacrificing experience for the sake of social equity.

“When you suddenly replace 30 percent to 40 percent of your board with inexperienced people, it is easier for those new members to be manipulated — that’s just common sense,” said Ruilf Rustad, a professional investor who has been chairman of at least 20 listed companies over the past 10 years.

Although he has worked with female board members for decades, he finds many of the women who have been brought on board since the quota to be unqualified.

As a newcomer “it’s not always easy to see what’s going on in a board,” he said, adding that women who rise to boards too soon risk damaging their careers if they fail to perform.

Proponents argued that the effects of greater boardroom diversity were more subtle, however, and that the arrival of fresher female talent brought genuine strategic benefits.

“If you look at the typical board of a European company today, you see almost nothing but white males between the ages of 50 and 65,” said Elin Myrmel-Johansen, who at 36 is an executive vice president at Storebrand, the Norwegian financial services group. “We don’t need everybody to be the same age, from the same schools, reading the same magazines. Often younger people are better able to spot new market trends.”

Men perform better and come better prepared when there are women in the room, she said. “Women are taking the place of the mediocre men,” she added. “When you expand the universe of candidates, the existing ones have to work harder.”

Still, questions remain about whether boardroom quotas can address other hurdles to female advancement.

A 2007 McKinsey study of the largest European companies found that those with at least three women on their executive committees significantly outperformed their sector in terms of average return on equity by about 10 percent; operating profit was nearly twice as high. The study stopped short of attributing this performance to a “critical mass” of women but found that companies with pronounced gender diversity at the top tended to rank highly in terms of management quality and organization.

But economists say the link between performance and women on boards is less clear. The boards primarily monitor and advise executives and top managers, who are still overwhelmingly men.

The Michigan study found that as the boards in Norway grew younger and more inexperienced, performance declined. This occurred despite average annual gains of more than 14 percent in Oslo’s benchmark stock index during the 2001-7 study period.

Using a common market-based measure of corporate governance, known as Tobin’s Q, the study found that companies in Norway actually performed an average of 20 percent worse the year after adopting the quotas, with those companies that were required to make the most drastic changes to their boards suffering the largest negative impact. The measure, named for the late James Tobin, the 1981 Nobel laureate in economics, is a ratio of a company’s market capitalization to the replacement cost of its assets, which economists consider to be the best proxy for investor confidence in a company’s management.

Such early findings frustrate those like Ms. Stig-Faderland, who has strong feminist beliefs and runs a consulting firm to promote women as business leaders.

“Gender is not a diversity question, but a business question,” she said. “More diversity — in gender, age, in background — leads to better overall competence in the leadership team, and therefore to better strategic choices.”

The Michigan researchers acknowledge that their study represents an early snapshot of the law’s effects.

“It is still possible that the public-policy perspective is correct, that these women will gain experience and in a few years the effect will go away,” said Ms. Dittmar, who plans to update the study with new data later this year.

Meanwhile, the quota law has had other unintended consequences: The “golden skirts,” as Norway’s sought-after businesswomen are known in the media, have taken on multiple boardroom roles. An elite group of 70 women hold more than 300 board seats, according to the Center for Corporate Diversity.

Ms. Hoel, the center’s director, calls this “a warning signal.” The emergence of an “old girls’ club,” she said, largely reflected the experience gap identified by the Michigan researchers. “But we also encouraged a lot of networking among these women, and in that way it had a self-fulfilling effect,” she added.

Precisely why so few women rise to senior management is not clear. Some argue that Norway’s 46 weeks of paid maternity leave for mothers (fathers get 10 weeks) actually place those who aspire to senior management at a disadvantage. Others say women are more reluctant than men to sacrifice family time.

“For a lot of people — but I think especially women — to go the next step for just 10 percent more money is not worth it,” said Bjorn Boberg, a managing partner at Boyden Global Executive Search in Oslo.

A study published last year by two Swedish economists suggested that paid parental leave of a year or more impeded career advancement. It found that women represented 27 percent to 32 percent of managers in the Nordic countries, against 34 percent to 43 percent in Australia, Britain, Canada and the United States, where maternity leave is more limited.

For a man or a woman, “if there are interruptions, then you are likely to be derailed in your advancement,” said Magnus Henrekson, director of Stockholm’s Research Institute of Industrial Economics and co-author of the report.

“If you are a teacher or a police officer or working for a government agency, there is less of a disadvantage” to taking time off, he said. “In the business sector, you acquire firm-specific knowledge, which means a career interruption can be very costly.”

Ms. Tonne, who has two children and took a total 17 months of maternity leave, reluctantly agrees. “It’s obvious that, if you want to move into top management, you cannot be away on three successive parental leaves and expect to move up at the same pace as a man.”

Margareth Ovrum, 51, an executive vice president at Statoil, the largest Norwegian company, argued that leave was not necessarily down time, but training in multitasking.

She is a mother of three who at 32 was the first woman to run an offshore platform for Statoil. She recalled that in the late 1980s, “the only other women on the platform were nurses or caterers.” As a young mother, she left her first child with her husband — also at Statoil — and a nanny for up to four weeks at a time.

“Women who are on maternity leave are still on e-mail,” she said. “They still want to keep caught up with what’s going on.”

Mr. Boberg said that lengthy parental leaves might disadvantage women seeking promotion early in their career, but “once you have 10 to 15 years of experience, it doesn’t matter. What makes the difference is what you’ve done.”

Critics say boardroom quotas cannot address the question of why fewer women are seizing leadership opportunities. “When the law says you must have 40 percent women, of course you can get to 40 percent — that is not an achievement,” Mr. Rustad said. “An achievement would be to find a way to get women to rise above middle management. So far we don’t have an answer for that.”

Mr. Rustad and others predicted that, despite the initial adjustment costs, women’s increased visibility as directors would eventually lift many of them into top management.

Ms. Tonne, an early skeptic, is today among those convinced that the longer-term effects of legislated diversity outweigh the short-term drawbacks.

“We have excluded women for 1,000 years,” she said, with a smile. “So we have already had quotas — it’s just that they were for men.”