Business

Business still has much to learn on gender equality

A quick look at the people at the top of the companies in Germany’s flagship index, the Dax, reveals a depressingly uniform picture: all 30 are dominated by older white men. While companies in countries such as in the UK, the US and Sweden have got better at recruiting their leaders among the most talented women as well as men, German corporations lag behind — despite mandatory quotas for supervisory boards. There is currently no female chief executive in the Dax 30, and women make up just 12.8 per cent of the management boards of these companies. The proportion of women in leadership roles in the US and the UK is more than double that. Germany’s government is now promising to change this.

Under a deal agreed between Angela Merkel’s Christian Democrats and their junior partner, the Social Democrats, management boards with more than three members must in future include at least one woman. The proposal has dismayed the country’s business groups. It remains unclear, as yet, what the sanctions will be if companies fail to meet the new quota. 

The use of legally-binding quotas, rather than voluntary targets, as a tool for achieving gender equality has long been controversial. What is clear is that making business as open to women as it is to men is taking painfully long. Success has often been at the board or non-executive level. Norway, which pioneered the model for mandating gender quotas for non-executive directors, has seen its numbers rise. In California, a board gender diversity law has attracted high compliance rates. In the UK, which has shied away from mandatory quotas, the top 350 companies as a whole met the government-backed target of 33 per cent female representation on boards this year. Nevertheless, women are still significantly under-represented when it comes to CEO or executive roles.

The reality is that it is easier to promote women to non-executive roles. Even when women do get appointed to executive roles, they tend to be in support-management positions such as human resources. Further progress will depend on promoting more women through the ranks; not having enough female representation at the top is a symptom as well as a cause of the lack of females progressing from lower levels. Retention is key; women are, all too often, the ones who take time out to look after children or opt for flexible working. Yet even Norway, with generous parental leave and easily-accessible childcare, continues to rank below many others in terms of the number of women in executive roles. The desire for flexible working should not be a barrier to career advancement — for women or men.

Coercion — the route now chosen by Germany — should be a last resort. Targets can be enough to help drive progress — although it is worth remembering that while Britain’s big companies initially acted to meet the gender diversity target because they preferred a voluntary goal to legislative action, the threat of the latter was constantly present. There are other, “softer”, policy tools governments can consider, including stipulating that companies bidding for state contracts should have at least one woman in a senior role. Recruitment firms should be rewarded for finding a range of female candidates. Similar actions should be used to encourage other forms of diversity.

Companies must embrace all of these things and more. Women have been hit harder than men by the downturn caused by the pandemic. It would be a pity if the progress made towards gender equality in the workplace became another victim of coronavirus.


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