Only one in eight directors of top British firms are women. Can we learn from Norway where companies must give females 40 per cent of board positions, or risk being shut down? Or should merit triumph over gender quotas?

When Gordon Brown promised tough action to get more women into the boardroom earlier this year he may have had an eye on European countries that are already taking steps to change the status quo. The Labour government wrote to the Financial Reporting Council to request including a principle in the revised corporate governance code to force companies to explain what they were doing to place more women in boardrooms. Brown was adamant he wanted to see dramatic change.

Claims that things are improving for women in the UK are hardly backed up by facts. A report on the gender gap in employment from the World Economic Forum (WEF), which looked at 20 countries, ranked the UK seventh, with women making up just 40 per cent of the workforce.

The Female FTSE report, published by the International Centre for Women Leaders at the Cranfield School of Management, states that the proportion of female directors in top UK boardrooms rose only slightly from 11.7 per cent in 2008 to 12.2 per cent in 2009. Among FTSE-100 companies only five women are chief executives and the number of women holding FTSE-100 directorships remains static at 113, while one in four of FTSE-100 boards are made up of men exclusively.

"We have only increased the number of women on boards by five per cent in the last decade, so it will take several more decades to get anywhere near parity and that is such a waste of talent," says Ruth Sealy, senior research fellow and deputy director at the International Centre for Women Leaders. "What is clear is that British women don't lack ambition, they don't lack experience and they don't lack skills or qualifications."

Sealy thinks there is a substantial unconscious bias in recruitment. "The higher up you get in an organisation, the more subjective the promotion processes become, and when you allow too much subjectivity you are more likely to see people hiring in their own image," she says, noting the 2003 Higgs Review, which looked at boadroom appointments and found that more than half of directors had acquired positions through people they knew. One suggestion emerging from the Female FTSE report is that directorships in the private sector ought to be advertised to try to boost transparency.

In 2003, Norway's then trade and industry minister, Ansgar Gabrielsen, became tired of lack of progress and introduced gender quotas, requiring boards of publicly listed companies to consist of at least 40 per cent women. The legislation was written into the Public Limited Companies Act rather than the Gender Equality Act (Gabrielsen said the legislation was not about sexual equality). "Diversity is a value in itself and that is what creates wealth," he explained, giving companies until January 2008 to comply or face dissolution. Most of Norway's largest companies are covered by the legislation, which has dramatically changed the picture. In 2003, women made up only seven per cent of boards, but today female representation stands at 44 per cent.

Siri Fürst, a partner in the Considium management consulting group, says the quotas are necessary. "I think most people wanted to see more women on boards or in positions of power," she says. "It was calculated that it would take 150 years for progress to happen naturally and we can't wait for that. It had to be forced. It is the only way if you want to achieve something like this.

"The main discussion was about whether it is right to force progress on people and a lot of people didn't like it because they thought they should be able to pick their candidates on merit and not be restricted by gender or other regulation, but today no one believes the quality of the work on boards has decreased."

Many businesses suggested there wouldn't be enough competent women to take the places. Women, on the other hand, said they didn't want to be appointed to fill a quota rather than win a place on merit. But Vibeke Heidenreich, a research fellow at the Institute for Social Research in Oslo, says the legislation is no longer a big issue. "Most people have got used to it and it is maybe just politicians who discuss the ideological principles behind it," she argues.

Norway is not alone. Spain uses a similar approach, though based on recommendation rather than legislation. Companies with more than 250 staff are required to develop a gender equality plan and new laws recommend a proportionate number of women on boards. The number of female directors in the largest listed companies has risen by almost a third. Australia is putting in place a "comply or explain" system and France, the latest to propose gender quotas, wants to go even further than Norway, imposing by 2015 50 per cent quotas on boards of companies listed on the Paris Stock Exchange.

Sealy thinks the UK would react similarly to Norway if quotas were announced. "It is a highly emotive issue because it immediately challenges all our notions of what we call meritocracy, which is a wonderful ideal but when you do the research you quickly realise that we don't live in a meritocratic society," she says.

"If you ask any senior woman if they believe in quotas or targets I guarantee they will say no because it offends our sensibilities about how we believe a system should be, but once you start talking it through the response is more likely to be 'I don't like the idea and I wish we didn't have to, but I don't see how else it is going to change'."

She says that role models are hugely important. "If you don't see there is a future for you in your organisation and life involves a fair amount of banging your head against a brick wall... women just say 'why am I doing this? There has to be a better way'." So there has been a huge increase in female entrepreneurs, which is great for them but seriously bad news for the big organisations they are leaving."

Avivah Wittenberg-Cox, chief executive of consulting company 20-first and author of Why Women Mean Business (with Alison Maitland) and How Women Mean Business, agrees. "Everybody is against quotas-men, women, governments and companies. Nobody likes them, but in the face of this glacial pace of change in gender balance in business it is beginning to appear that it might be one of the quickest ways to jump a step since companies don't seem to be doing it on their own," she says.

But Peninah Thomson, founder of the FTSE-100 cross-company mentoring programme and an executive coach with Praesta Partners, thinks the answer is to make sure there is a steady supply of females prepared for board level. "We have not developed a pipeline of talent coming through and we are paying the penalty for that," she says. Through her mentoring programme she matches chief executives and chairmen of FTSE-100 companies with women who aspire to board positions.

An early mentor to sign up to the programme, Sir Rob Margetts, chairman of Legal & General, believes there is a lack of women with the right range of skills and knowledge. "The problem is in the supply chain. We see a lot of very able women coming through the legal profession, finance and personnel, but they often have been forced into a specialism early in their career and a minority have had general management experience," he says. "When you come to appointing to the board you really need people who can contribute to the full range of the business. The most natural fit might be somebody with a specialism, but they will also have had general management experience, which will allow them to make contributions across the board."

The talent pipeline is a positive aspect of the Female FTSE report. The number of women on boards, executive committees and senior teams of all listed companies in the UK has risen from 1,877 to 2,281, showing that there is a growing supply of skilled females waiting to step up.

In the meantime, Thomson believes, the focus should be on voluntary measures by companies. "It would be interesting to wait and see the impact of measures companies are putting in place such as flexible working, off-site working and workplace childcare facilities," she says.

Thomson concedes that if there is no natural progress in the next two years companies will probably have to act, by introducing targets rather than quotas. "I haven't met many women senior executives who are in favour of quotas because they don't want to be part of an imposition. They want to get jobs because they are really good," she says. "Obviously they know that they are there on merit, but the public perception that they are only there because of quotas is not helpful to women's reputation."

Wittenberg-Cox thinks focusing on boards is missing the point. "I am not sure that the boardroom is particularly indicative of what is going on at any given company. Most women on boards are non-executives, which means they have not been developed, grown and promoted by a company," she says. "It bears little relation to the inside of a company so it is not a good indicator of gender balance. I'd suggest we focus on executive committees because that shows who is actually running the business."

She believes that any company that wants to be competitive must look at gender balance. "If they want to be ready for the future then I think they need to look at why they aren't gender-balanced," she says. "It should be part of a strategic review, so you look at your markets, your talent and your recruitment and, based on that, decide what makes sense for your business. If male-dominated means more power to you, choose it. I don't think businesses are meant to be about social change if they don't want to be. I don't think that is necessarily their role, but I think there are compelling reasons to adapt this issue."

Margetts, a firm opponent of quotas, says the key to change lies in developing female candidates early. "What we need to do is get women into business management roles at a younger age, so they learn the functional attributes of the business," he says. "We need to be relaxed about appointing women further down the organisation, so they get the experience, confidence and skills, go through the natural career development and end up running the show. You are looking at painfully slow timescales because that is the nature of experience, career development and gaining the confidence as well as the competence, which is such a big part of this. It is inevitable now that it will change."

Heidenreich, in Norway, believes it is still too early to assess benefits to the bottom line of companies. "There is a lot of literature on this subject, but it is still inconclusive," she says. But she argues it has not been a problem finding competent women to fill boards. "In Norway, more women than men take higher education—men have more management experience than women, but there have been few problems in recruiting competent women."

Interestingly, the Norwegian law has made an impact on companies that are not directly affected by the law. Fürst says: "These companies are not obliged to appoint women to the board, but I think they are influenced by what is happening in society. Last year, I sat on seven boards but only two were covered by the legislation."

Quotas may be unlikely to become part of the business landscape in Britain, but executive coach Thomson says  change is taking place. "Fifty per cent of my clients are women and when I started 12 years ago I had just a tiny handful of senior women, but women know they have something to offer," she explains

Wittenberg-Cox agrees. "It is an exciting time, there is a fork in the road. There are companies and leaders who get it and those who don't. The economic proof will be out in a few years. We will see who made the wiser decision and the impact it has had on its bottom line."