TCS Daily

Norway to Treat a Lady

By Lene Johansen - May 17, 2005 12:00 AM

Norwegian corporations will have to make significant changes to their governing boards or face liquidation by the hands of the Norwegian state. Sound scary? Wait for the really scary part: By July 1 of this year, the law mandates that companies must have a governing board made up of at least 40 percent women.

While affirmative action was widely used in the public sector in Norway during the 70s and 80s, collectivist feminists had less success in the private sector. But in 2003, the country's parliament passed the law requiring all publicly traded companies to have at least 40 percent women on the governing boards by July 1.

The Confederation of Norwegian Business and Industry recently released a headcount showing that only 20 percent of its members have reached the required threshold of female representation. It is safe to assume that the remaining 80 percent will not be able to get above the minimum within the next two months. The beneficent Norwegian government will grant these misguided companies a two-year stay to correct their erroneous ways.

Politically, the Norwegian government will not have the guts, or the financial freedom, to liquidate companies such as Telenor, Statoil, or Norsk Hydro. Either the threat of the law is a sham, or we will see one of several scenarios play out over the next few years.

Norway is, contrary to popular belief, a very corrupt country. Friends in high places exchange favors and bend administrative practices without actually breaking any laws. The problem with this form of corruption is that you need friends in high places, of which the larger companies have plenty. Smaller companies without political pull will be liquidated if they don't fill the quota; larger companies will be left alone.

The other, more likely scenario will follow the crooked pathways of market solutions in badly regulated environments; a market for placing female board members will emerge to help companies comply with the regulation. What will this do to the already embattled Norwegian private sector?

The primary group of people who will benefit from a situation where companies are rushing to find qualified people are women with established political careers, the ones who pushed the law through in the first place. These women belong to what is called the 68-generation in Norway, they have careers in the Labor party, strong ties to the labor unions and embraced collectivist feminism as part of their political credo. They are the women who hold political office in Norway today.

Short of becoming a cabinet member or moving on to the international political scene, these women have exhausted most of the career enhancement opportunities available to them at this point. The primary value they will have for a private company is political pull.

During the late 1990s there was a revival of feminist ideas among younger Norwegian women, who are in their early 30s today. This movement rejected equal opportunity measures and collectivist credos of victim-hood. These women looked at feminism as an empowering ideology, and the movement fueled moves to establish networks of professional women, which drew the ire of established organizations and powerbrokers.

The young feminists consider equal opportunity regulation to be a limitation. Regardless of their political views, they want recognition based on merit, rather than gender. The collectivist feminists claim that equal opportunity regulation will benefit the younger generation of women; but the younger generation thinks it will force them to work even harder to prove that they actually deserved the jobs and positions they got.

The requirement to have women on corporate boards will weaken corporate governance in Norway. A large number of women will be put on boards without the skills needed to be good governors. This will marginalize both skilled and unskilled female board members, because the good ones have to work even harder to prove that they are equipped for the job. The collectivist feminists have given successful women another burden to carry when they passed the equal opportunity regulation of corporate governance.

Weaker corporate boards may also pave the way for corporate misconduct scandals. Strong boards do not necessarily prevent misconduct, but they are a vital check on deceitful executive officers. This is important because of the prevalent corruption in Norway, even in the private sector. The primary business paper in Norway has spent most of the winter uncovering an extensive corruption problem among Norwegian food retailers.

It is already hard to start companies in Norway, and even harder to start successful ones. This law has made it even harder. The only people who will benefit from this regulation are the female career politicians from the labor unions and the Labor party.

The older generation of feminists in Norway has forgotten that the greatest harm can come from the best intentions. They may think they are helping the younger generation of women by opening up the corporate career path for us -- and fostering better corporate governance through "female values" -- they have actually done the opposite.


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