Economy

The first companies are meeting the quota for women on boards

Deutsche Telekom had two women on the Executive Board until November 2020. (from left Telekom board members Claudia Nemat, Timotheus Höttges, Birgit Bohle, Adel Al-Saleh). There are now three.

Oliver Berg, picture alliance, Getty Images

“I am often the only woman,” said Janina Kugel in an interview with Stern on the subject of quota women. Formerly she was the chief human resources officer and multi-supervisory board member; today she is a consultant at the Boston Consulting Group. “I was called a girl when I was in my 40s,” she says. You could smile about it, but basically it was completely out of place. Kugel does not give any details. But if you back it up – she was in her mid-40s in 2015 – it is the very year in which she began as a member of the Management Board and Labor Director at Siemens. That was just six years ago.

In the meantime, large companies that are subject to mandatory stock exchange and co-determination have had to fill their supervisory boards with 30 percent women since 2016. And for a few weeks now, even more applies: For companies with more than 2000 employees, a legally binding minimum participation of a woman on the board of directors is now also required if it has more than three members. Instruments designed to help increase the proportion of women managers in companies.

But is the new statutory “board quota” enough to get more women onto board members?

The 200 companies with the highest turnover only have 12 percent women

The answer of the authors of the latest female manager barometer of the German Institute for Economic Research (DIW Berlin) is: An impulse is needed that drives parity in the board rounds – the minimum participation could provide one. Because the proportion of women on the executive board is still low: Among the 200 companies with the highest turnover in Germany, only around 101 of 878 board members were women at the end of November 2020. This corresponds to a share of twelve percent and is only a good percentage point more than in the previous year.

In 2019, the development was a little more dynamic, but now it is losing speed again, says Katharina Wrohlich, head of the DIW research group Gender Economics, which created the barometer together with Anja Kirsch from the Free University of Berlin.

“Most board meetings are still predominantly men at the table,” she says. At the 30 largest listed companies, the proportion of women on the executive boards even stagnated. After Jennifer Morgan left as co-CEO of SAP, not a single DAX 30 company is currently led by a woman.

But now the “board quota” could bring the necessary “momentum”, say the authors. It is “in any case an important signal on gender equality”. A development that was already apparent in the statutory regulation on the proportion of women on the supervisory boards: there, the proportion of women has so far increased even if the requirement of 30 percent women has already been met. In 2020, it was already around 36 percent on average.

A development that can still be observed with the new regulation on the minimum participation of women on executive boards.

Among the 200 top-selling companies

According to DIW, the minimum participation currently affects 74 companies, 30 of which have not yet implemented it. Including DAX 30 companies such as Deutsche Wohnen or Heidelberg Cement, with currently zero women on the board. Your next vacant board position will therefore soon have to be filled by a woman.

Overall, the proportion of women on the executive board among all 74 affected companies could almost double if everyone involved: Instead of 13 percent, 21 percent would be women on the executive board. But this is a pure “thought experiment”, according to the DIW. Because all other companies would have to keep their current board members throughout the year.

But DIW scientist Katharina Wrohlich already sees an “anticipation effect” in the board quota: Adidas, Fielmann or Wüstenrot would already appoint women to the board by March. “These companies would be affected by the quota and have apparently already acted accordingly,” says Wrohlich.

In addition to Adidas, other DAX companies had already announced that they would appoint a woman to the board. Bayer and E.ON announced new board members on April 1st, and Merck also wants to appoint the Spanish doctor and manager Belen Garijo as CEO of the DAX on May 1st. These companies could motivate the rest of the companies to follow suit.

But there are other reasons that speak in favor of a minimum participation: At the European level, Germany continues to do poorly in terms of the proportion of women.

Germany is below the EU average

With just 14.5 percent women on the executive boards of the largest listed companies, Germany is well below the European average of 19 percent. Only Italy, Turkey and Austria have fewer female executives. In countries like Lithuania or Norway, on the other hand, more than one in four board positions is held by a woman. Legal quotas have often been in place there for a long time.

However, the “executive board quota” could even achieve far more than a higher number of women on the executive board: “Companies must ensure that there are enough women who can qualify for executive positions through internal career opportunities,” says Wrohlich. Otherwise companies would have to lure women away from other companies in case of doubt. “This could also change personnel policy,” said Wrohlich. More female managers would be promoted by the legal requirements.

Last year, another argument emerged in the public debate on various boards of directors and supervisory boards. In an interview with FAZ, Monika Schnitzer doubted that the VW diesel scandal with women on the board would have happened. Because in a heterogeneous group, the group dynamics would have been different, criminal behavior could not have taken place without resistance, according to Schnitzer.

Advantages of various board members

In fact, an additional survey on the barometer at least confirms that gender diversity in supervisory boards can help to control board members more effectively. For this purpose, 30 women and men each with supervisory board mandates in 75 listed companies were surveyed.

A key result: interaction, discussion and decision-making clearly benefit. “Apparently women are more likely to question proposals and decisions made by the board of directors and more often to request additional information,” reports Anja Kirsch from the Free University of Berlin. In addition, there is increasing evidence in research that women are less likely to attract attention for fraudulent activities.

With a view to recurring cases of fraud by top management – as in the Wirecard case – improved discussion and decision-making in supervisory boards appears to be “extremely important”. In this sense, according to Kirsch, there is hope that the legal requirement recently passed by the Federal Cabinet for a minimum participation of women in executive boards will have more than just an impetus for equality policy.

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