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Does diversity need a quota?
German companies’ supervisory boards still have too few women on them, and there’s a lack of diversity overall – an assessment pretty much everyone would agree with. Public debate – often conducted in starkly black-and-white terms – is focused on how helpful the legal quota is in this respect.
Does the debate match the reality of the corporate world? Probably not, even if no one wants to admit this in public. Even many of the top female executives who might be set to benefit from the legislation regard it with a touch of skepticism.
So let’s take a look at the real picture – and some of the clichés:
Before the quota there was already an upward trend: Long before the quota was imposed, companies were already stepping up their efforts to get more women directors on board. And for good reason. Most executive teams have already identified “greater diversity” as a key growth driver for their business. In a globalized economy and in an ever-changing business environment, companies need diverse experiences, perspectives, judgments and mindsets more than ever before. This diversity includes gender, but there are other factors, such as nationalities, age groups, etc. Which helps to explain why the proportion of female and international board members in Germany increased significantly some years ago.
Is the upward trend strong enough? No! But the fact is that board appointments cover relatively long periods and whole boards cannot simply be replaced at will. What matters for a company is appointing the right people, for the benefit of the company. This might sound banal – even like an excuse, to some ears – but it’s also about good governance, which is an indisputable necessity.
Quality matters in board appointments. There’s no lack of women with the requisite qualifications. But sticking rigidly to the traditional German template for supervisory board appointments (“manager with experience as CEO or at least executive board member in a DAX-listed company”) leads us precisely nowhere. This is where companies really need to rethink. Female managers with substantial experience can be found in top management positions in major corporations as well as in family firms – which can tend to be overlooked – in academia and in the public sector. That there are “no women candidates” for supervisory board roles is the lamest excuse I’ve heard.
Competency matters – and this applies to women, too: Competency, not gender, has to come first in every appointment. It’s not just responsibility to the company that requires this – above all the women who might be potential candidates see it exactly the same way. None of them wants to be appointed merely to fulfil a legal quota.
Where do we go from here? For all the skepticism about the quota, it’s the right way to set in motion a process that still hasn’t gained enough momentum of its own. Many people still don’t get the economic reasons that make equal representation on boards the ideal we should be aiming for. To date the strategic implications of board diversity have been neither effectively explained nor properly understood. So we still have a great deal of work to do in this respect.