At the very top of companies, gender diversity remains an elusive ideal. Despite strides toward inclusivity in recent decades, boardrooms still echo with the voices of a select few, predominantly male.

In fact, according to data from MSCI, the United States finance investment company, women held 25.8 percent of board seats in the largest publicly traded companies worldwide in 2023. This lack of diversity not only reflects systemic inequalities but also stifles innovation, limits perspectives and undermines corporate performance.

Enter gender board quotas: a bold attempt to shatter the glass ceiling that has long obstructed the ascent of women to positions of influence and decision-making. With women comprising a mere fraction of board seats worldwide, quotas emerge as a strategic intervention to accelerate progress toward gender parity at the summit of corporate power.

But the debate surrounding quotas is far from straightforward. Critics argue that quotas compromise the principles of meritocracy, suggesting that board appointments should be based solely on qualifications and experience. Yet, proponents counter that meritocracy itself is flawed when systemic biases favor one demographic over others, perpetuating a cycle of inequality.

With neither side solely convinced on the rights and wrongs of gender board quotas, one thing that can be objectively agreed on, is that they are boosting the number of women in board positions.

There has been plenty of research into this, but what I’m personally interested in is investigating the often-cited claim that female board representation, achieved through quotas, trickles down and improves gender diversity across the whole top-level of leadership in companies, not just on the corporate board.

Gender Board Quotas in India

To do so, I focused on the context of gender board quotas in India. India introduced gender board quotas over 10 years ago, mandating that certain categories of companies must have at least one female director on their board.

India is the first developing country to bring in such quotas, with developing countries like France, Norway, Italy and Belgium having already mandated that a specific proportion of women must constitute boards.

To study the impact of these gender board quotas on diversity, I analyzed data on 184 of the largest publicly listed firms in India between 2007–2017. The regulation requiring at least one female board member was announced in 2013, and enforced on all publicly listed firms from 2015.

However, what was different to previous research into gender board quotas, was not only did I study the impact of this on female appointments to the board by these firms over the select period, but I also studied the impact of this on appointments at the lower level of the senior executive team. And what I found was certainly interesting.

As expected, gender-focused quotas aimed at ensuring stronger gender balance on boards, are positively resulting in more female appointments to the board level. However, at the level of the executive suite, they are actually not having the desired effect, and there are significantly fewer women on the executive team than the board.

These quotas are great for gender balance at the board level, but unfortunately are kicking the lack of diversity down the corporate ladder.

This is likely because firms are placing such a huge emphasis on the levels of diversity at the board level due to the regulation that has been brought in, that they are virtually ignoring levels of diversity at the slightly lower leadership levels, where there is no regulatory need to boost diversity.

Are Quotas Working in Europe?

These findings are different to non-developing European countries that have implemented gender board quotas.

Studies of companies in Norway and Italy show that quotas are not having a significant positive impact on female appointments to all levels of senior management – but they’re not having a negative impact either. Conversely, in India these quotas are regressing gender balance under the board level.

One positive finding from my research is that when a woman with authority – such as an executive director – is present on a board, it significantly enhances the career advancement of women at lower levels.

This effect is likely because executive director positions are more powerful than non-executive positions on boards, and explicitly include recruitment of senior management as a job responsibility. Therefore, if women are not only sitting on boards but also have decision-making power, then we can somewhat reverse the negative effect of the quotas on recruitment of women to senior executive ranks.

The success of a policy can only be judged if regulators and companies clearly articulate the policy’s goals. So far, based on evidence from countries that have used these policies, they are effective in increasing female representation at the board level. This is an important goal itself – increasing women’s representation at the highest levels of corporate echelons.

However, if we want these policies to have broader effects such as increasing female representation in senior management, women hired through these policies should be given the influence needed to promote diversity further down the ladder. That is, either give women on boards decision-making power through executive director positions, or enable systemic shifts that allow female non-executive directors to participate in decision-making and effect change at lower levels.

These findings certainly offer food for thought for countries looking to implement similar policies, and that perhaps there should be a greater focus on women at all levels of senior management –not just on the board.

Though in the Indian context, it is still early days, and it will take longer to see the full spectrum of results from these policies, there are at least some positives to take in terms of female board member numbers. Hopefully, we will see more fruitful results at all levels in companies with time. But, in the meantime, companies should be looking for even more innovative ideas to boost gender balance across the organization, not just on the board.