Women in business Gender quotas make an impact in the boardroom

Germany’s gender representation law is starting to bite, with significantly more women on company boards than three years ago. But senior management remains overwhelmingly male.
You see? And no more fines.

Ceramics manufacturer Villeroy & Boch has been around since 1748, but it recently faced a very contemporary problem. The company was forced to leave a position on its supervisory board vacant for several months, because it was unable to find a qualified female candidate.

Franziska Giffey, Germany's minister of family affairs, said Villeroy & Boch’s problem was good news, a sign that the country’ mandatory quotas on women’s representation were working. “Old boys clubs in management are unfair and unmodern,” said Ms. Giffey, whose brief includes equality and women’s issues.

Monika Schulz-Strelow, head of FiDAR, a group campaigning to see more women in the boardroom, also welcomed the news. “That vacant seat showed that the law has more teeth than we thought,” she said. Firms without women at the top were risking damage to their corporate image, she added.

G S10 more woman

Since 2016, German law requires a minimum quota for women on companies’ supervisory boards. At all publicly listed companies, and those with workers’ participation in corporate governance, at least 30 percent of boardroom positions must be filled by women.

Report or pay up

Companies must also set and publicly report their own targets for women’s participation in the boardroom and senior management. The results are monitored by the government. Failure to report gender statistics could lead to a fine of up to €10 million ($11.7 million) or 5 percent of annual revenue.

On the whole, the business community is not a fan of legally enforced equality measures. Iris Plöger, a senior figure at the Confederation of German Industry (BDI), told Handelsblatt that legal quotas and deadlines were counter-productive. For one thing, companies may be reluctant to appoint a woman to their board because of the difficulty of eventually finding another to replace her.

But supporters of quotas say they have made a real difference in accelerating change. Ms. Giffey points out that, among companies affected by the law, the proportion of women in the boardroom has risen from 25 percent to 31 percent in the past three years.

That success has led some to call for new quotas focusing on women in senior management. Here, progress has been stubbornly slow. Among Germany’s top 200 companies, measured by annual revenue, just 8 percent of senior managers are women.

Explain yourselves, companies

Ms. Giffey’s ministry is working on new legislation to force companies with no women in senior positions to publicly explain why. “Companies that don’t follow the rules should be hit with sanctions,” she told Handelsblatt, adding that fines on non-reporting should be enforced.

For the BDI, this goes too far. They argue against focusing on quotas for “elites,” suggesting instead that attention be paid to conditions for women lower on the managerial ladder. It says companies should seek out “new ways of doing business” – including digital communications, flexible working hours and part-time working – to encourage more qualified women to emerge through the hierarchy.

This means Villeroy & Boch is not out of the woods yet. After several months, it eventually found a qualified woman to serve on its advisory board. But its senior management team is still 100 percent male.

Heike Anger is an editor for economics and politics at Handelsblatt. Brían Hanrahan adapted this article into English for Handelsblatt Global. To contact the author: [email protected]