XX Factor The Diversity Dividend

Few women managers have risen to the top levels of corporate Germany, but evidence suggests that when they do, companies and shareholders benefit.
Pushing the price: Milagros Caiña Carreiro-Andree (BMW), Kathrin Menges (Henkel) and Christine Hohmann-Dennhardt (Daimler). Sources: Bloomberg, PR, laif

The issue of how and whether to put more women on boards is a contentious one in Germany. Moves last year to introduce quotas, which would penalize companies that did not have enough women on the board, sparked outrage.

The German government has said it will introduce a law requiring 30 percent of seats on non executive supervisory boards to go to women.

The move was criticized by those who argued that companies would have to give top positions to women who may not necessarily be the best qualified people for the role.

But a quick survey of the DAX 30, the 30 biggest firms on the German stock exchange, shows that having a woman on the board is very definitely an asset.

In 12 of the 30 DAX companies at least one woman holds a seat on the management board and these companies tend to do better than the pack. Of these 12 companies, eight out-performed the market in the last five years.

Take Daimler, which has appointed Christine Hohmann-Dennhardt, a former judge on the federal constitutional court, to its board with a special responsibility for integrity and law. She is tasked with monitoring corporate governance and assuring that human rights are respected.

Since she assumed her position four years ago, on February 16, 2011, Daimler's share price has risen by 50 percent — almost 10 percentage points more than the DAX. Since 2011, Daimler has created more than 6,000 jobs at its German locations and last year posted a pre-tax profit of €10 billion ($11.2 billion), €2 billion more than in 2013.

Mixed teams achieve better results and are more likely to keep to the principles of good management than male-only teams.

Daimler has of course grown because of success in China and popular cars, but the presence of a senior woman on the board is definitely a factor.

There is a similar picture at BMW, which appointed Milagros Caiña Carreiro-Andree as head of human resources in charge of 111,000 staff in 2012. Since then, the car maker has created 7,500 jobs in Germany alone, and doubled in market value to €68 billion.

Consumer goods giant Henkel appointed Katrin Menges as head of human resources in October 2011. Since then, investors have seen their shares rise by almost 200 percent.

The debate over whether women on boards are helpful, harmful or simply irrelevant to the share price of a company is running around the world.

The success of German companies with women on the board comes as there are indications that some investors see the presence of women as a weakness. In the U.S., markets are buzzing with reports that activist investors have in recent weeks begun to target PepsiCo, Yahoo, DuPont, Mondelez, Hewlett-Packard and General Motors: U.S. companies all led by women.

The investors, which include hedge funds, deny taking aim at companies just because they are led by women, but there is also academic evidence that investors are less inclined to favor companies led by women, all other things being equal.

A study last year carried out by Rothstein Kass showed that hedge funds themselves tend to perform better if led by women. The study showed that funds majority-owned by women had outpaced the industry as a whole over the last six and half years, returning profits of 6 percent while the industry as a whole lost 1.1 percent.

Meanwhile, neuroscientist John Coates, who used to be a Wall Street trader, has carried out research that suggest women’s lower testosterone levels mean they are more likely to show a more balanced reaction in stressful situations and are less likely to run risks. Mixed teams achieve better results and are more likely to keep to the principles of good management than male-only teams.

Other global studies show that firms with rising profits and share prices are more inclined to appoint women at top levels, meaning that the presence of women on a board is a sign of success, not a cause of it.

And the situation varies by country.

Kenneth Ahern and Amy Dittmar from the University of Michigan, who examined about 250 companies in Norway, which has a legally imposed 40-percent quota for women, found that the share price of many companies fell after they hastily appointed women to meet quotas.

In this case, companies struggled to find enough experienced women to take on the top positions. The ones they did appoint were less experienced. The lesson for companies, it seems, is that they should take on women and train them all the way to the top.


Ulf Sommer reports for Handelsblatt on companies and financial markets. Handelsblatt Global Edition editor Meera Selva has covered internatiol affairs for a decade and also contributed to this story. To contact the authors: [email protected], [email protected]