Diversity quotas

Women Need to Storm the Citadels of Power

Letting in the women. Source: Handelsblatt.
Letting in the women.
  • Why it matters

    Why it matters

    If Germany does not manage to increase the number of women at board level, companies will lose out on expertise and skills.

  • Facts

    Facts

    • Germany’s parliament votes Friday on whether to introduce quotas for women.
    • Under proposed laws, listed comppanies would have to give half of all seats on non executive boards to companies by 2018.
    • State controlled companies would have to introduce similar quotas.
  • Audio

    Audio

  • Pdf

 

Libertarians are by nature opponents of government intervention in free enterprise. Their creed is entrepreneurial freedom is best for everyone, and quotas and regulations are poison. But what has happened in the German economy with regard to women’s participation has caused even impassioned libertarians to diverge from orthodoxy.

The male-dominated corporate world remained frozen in time. So outrageously little has been done for women’s progress that the German parliament has decided to act, and will vote Friday on a proposed law concerning a quota for women.

Part of the proposal mandates that women hold 30 percent of the seats on the supervisory boards of listed companies. Other companies will also have to take concrete steps to get more women into senior positions.

The issue of whether quotas work is up for debate. But in Germany, their introduction is certainly justified, as an emergency response to years of inactivity.

This legislation is not about wanting to increase regulation or introduce some sort of vague “good thing.” It is about something that should be a matter of course in a country that has a constitution that proclaims no one should be disadvantaged because of gender, but also has an economy dominated by men who see the corporate world as their fiefdom, as if it is a law of nature that they should be in charge.

Remember that during the first term of Gerhard Schröder’s 1998 government, made up of a coalition of the center-left SPD and the Green party, political parties and businesses agreed to a voluntary policy of promoting women to top management positions.

In Norway, there has been no instance of a lack of qualified women. Reality has proven the doubters wrong.

It had no impact. All sides simply applied sticking plasters to the wound and hoped it would go away.

It took the impassioned energy of Ursula von der Leyen, from the center-right CDU, to bring about change. She is now defense minister but when she headed up the labor ministry brought the issue of women at work to the top of the political agenda.

Now the 30-percent quota is likely to become law. It’s far from being enough, but it is a start, and will give the exhausted observer a sign that at least some progress is being made.

Everyone knows the real issue is a comprehensive family policy for which society cannot yet summon up sufficient energy. The policy would involve flexible working hours, well-organized day care for children and new role models.

In this regard, Germany lags far behind its peers. Many European countries have had laws regarding a women’s quota for a good while. Have their gross domestic products suffered for that reason? Have their companies become less competitive? Of course not. All these doom-laden scenarios the opponents of quotas warn about have simply failed to materialize.

In 2003, Norway introduced the requirement that women constitute 40 percent of management boards. The lawmakers even threatened to dissolve firms that did not comply — and this initiative came from a conservative government. Companies have had no problems meeting requirements. There has been no instance of a lack of qualified women. Reality has proven the doubters wrong.

Either women are not yet ready to storm the citadels of power, or those with a firm grasp on the control levers know how to protect their position.

Nonetheless, the hoped-for imitation effects have not occurred in Norway. Women continue to be underrepresented on the top floors of companies. Man remains man.

Two possible interpretations exist: Either women are not yet ready to storm the citadels of power, or those with a firm grasp on the control levers know how to protect their position.

Many believe, as in Germany, that there is a scarcity of talent. But why can the United States produce so many top female leaders – Ginni Rometty at IBM, Marissa Mayer at Yahoo, Meg Whitman at Hewlett-Packard – but not Germany?

The German government has put its faith in positive examples, in a lighthouse effect. That was the role assigned to Deutsche Telekom, in which the state is a major shareholder. Former chief executive officer René Obermann prescribed a women’s quota of 30 percent in leadership positions. But here as well, women are flourishing more on the board of supervisors, where there is a quota of 40 percent that is worthy of Norway.

But on the management board, Claudia Nemat is the lone woman. In general, the federal government is not good at promoting women in the companies it owns. It fails miserably with its own agenda.

In the final few meters of the long path to the new law, the issue of women in the economy has increasingly turned into a bureaucratic affair. It is a matter of legal subtleties. What is being debated is not a conservative or a progressive policy.

But we need a policy debate that shows that promoting women improves the quality of decisions in companies. Female students at universities show themselves to be more goal-oriented and high-performing than their male colleagues. Women bring other qualities to management. These are sometimes called soft skills but they can make or break an enterprise.

It is not enough to just talk about diversity. We must want it, and make it happen.

 

To contact the author: jakobs@handelsblatt.com

We hope you enjoyed this article

Make sure to sign up for our free newsletters too!