Frauenquote or Not?
A key challenge for our clients in 2016 is achieving greater diversity – in particular at the leadership level. Fidelio was therefore pleased to launch the year with an impassioned, lively and frank debate on the effectiveness of quotas. Our key speakers were Lady Barbara Judge, Chairman of the Institute of Directors, and Edelgard Bulmahn, Vice President of the German Bundestag. The conclusions were bold and there was a clear consensus for change. Greater effectiveness and diversity at Board and Executive level can only be achieved by adopting a radically different approach. And it is this fresh thinking that underpins every aspect of Fidelio’s Board and Executive Search practice, as well as our “A Seat at the Table” programme for senior female executives.
The Panel
In January 2016, Fidelio was pleased to co-host a seminar entitled “Die Frauenquote—and other routes to board diversity” with Nabarro LLP, the German-British Chamber of Industry & Commerce and the German-British Forum.
Our keynote speakers were joined by an illustrious panel comprising: Carl-Peter Forster, who sits on a number of engineering Boards including Volvo Cars Corporation, Geely Automobile Holdings, the London Taxi Company, IMI plc and Rexam plc; Dr Marion Helmes, Vice Chairman of the Supervisory Board of ProSiebenSat 1, Non-Executive Director of NXP Semiconductors; Elisabeth Lady Stheeman, Supervisory Board Member of Aareal Bank AG, Supervisory Board Member of TLG Immobilien AG; Daniela Weber-Rey, Chief Governance Officer at Deutsche Bank AG.
The audience included FTSE 100 Chairmen, UK and German Directors, major investors and Chairmen of charities that are key agencies for change, as well as curious journalists. The discourse was exceptionally candid and based on first-hand experience of hard business challenges. This combination of insight surely provides a crucible for change.
The key highlights of the debate are available from Nabarro LLP and Fidelio upon request.
The Backdrop
The “Frauenquote” theme is highly topical. Germany’s quota stipulating 30% female representation at Supervisory Board level for the largest listed companies came into effect at the beginning of 2016, affecting approximately 108 companies. The legally-binding quota is accompanied by a series of requirements compelling large and mid-sized companies to also set internal targets for female representation at their top management levels.
The UK has chosen a different path. The 2010 Davies Report set out a voluntary target of 25% female representation on FTSE 100 Boards in 2015. With corporates, Search firms and investors coming together, and the government clearly prepared to take more forceful measures if necessary, the target was met – just. Now, under the recommendations of the 2015 Davies Review, the UK is striving for 33% female representation on FTSE 350 Boards by 2020. The enormous challenge at the Executive layer is recognised.
Quota or No Quota
The firm belief in the UK is that a quota to promote gender diversity at the Board level would be a mistake. However a poll taken at the beginning of the debate showed that 32% of participants were in favour of a quota. Several prominent female directors on the panel and in the audience set out a remarkably similar position on quotas: if asked 10 years ago they would have been opposed to a quota but, having witnessed the slow rate of change, they now see the need for formal intervention under specific circumstances, for example, including a limiting ‘sunset clause’.
It is known that I believe in quotas. I don’t like the idea in theory, but in fact I like the result. I believe sometimes you have to kick the ball in order for it to go in the right direction
Lady Barbara Judge (Financial Times, 2015)
Culture
The strength of Germany’s major companies with their technical and engineering prowess was acknowledged. But Germany has also been slower to embrace gender diversity at a senior corporate level than many economies. Cultural conservatism was identified as a major challenge, and frequent reference was made to “Kinder, Küche, Kirche” (‘children, kitchen, church’). The emphasis on good parenting translates too readily into criticism of the working mother. The concept of the “Rabenmutter” or ‘raven mother’ is peculiarly German. Several of the women who had defied these cultural pressures to reach the Boardroom spoke of the influence of their own working mothers. The majority had also progressed their careers by working outside Germany, in the US or the UK for example, where there was greater tolerance of combining career and motherhood.
The Will for Change
Guests and speakers spoke openly of how hard they had worked to succeed to the Boardroom. This included long hours, being good at one’s job and a willingness to accept difficult assignments. Some of these assignments meant personal sacrifice. The need to “lean in” was recognised. But concern was expressed that this was easier for an elite that could afford childcare. Clearly there is much that companies and the government can do to support employees at all levels who are juggling family and work commitments. The sharing of childcare between partners was welcomed.
Fresh Thinking
So far, so good. Identifying obstacles is important but what are the initiatives that will make tangible progress toward Board diversity?
1. Targets do matter.
What is measured is tackled. Already the data that is being accumulated into why many women leave the workplace or cease to aspire to the top roles is re-shaping our understanding of gender diversity and how to achieve it. In an industry known for its male dominance, General Motors (GM) has for many years systematically built up female participation at each level of the organisation in a structured manner. A couple of decades on, GM now boasts a female CEO.
2. Enough good women.
It is a common refrain, particularly in engineering and manufacturing companies that there are not enough good women. Our panel comprised a male engineer, but also two female lawyers by training and two women with a finance background. At both Board and Executive level a range of skills are required including finance, strategy, regulation and sector expertise.
As Fidelio has argued before, and will continue to argue, there are many qualified and talented women from a range of professional and business backgrounds; it is important to know where to look.
3. Reframing the question.
We are not, however, sidestepping the very real concern that there are not enough (female) engineers. Edelgard Bulmahn spoke of attracting much larger numbers of girls to study mechanical engineering when the course was combined with environmental studies.
But there is still a macro-economic question that needs to be addressed. Both Germany and the UK are facing a critical technical skills shortage. The quota that absolutely needs to be acknowledged is the clear need for sourcing large numbers of engineers to drive our economic growth. A significantly greater proportion of female engineers has to be part of the answer.
4. Focus on the Executive.
Consensus exists that strengthening the Executive layer should be our priority, although Fidelio also maintains that Boards vote and therefore we should not neglect female representation at the most senior level. Increasing diversity at the senior executive level is proving a challenge, not least because of blind spots.
The day after the Frauenquote debate, Gillian Karran-Cumberlege, co-founder of Fidelio, spoke at a conference in Germany to ca.100 finance and IR professionals who form part of the pipeline for future Board Directors in Germany. There is surprising evidence that in this profession, which boasts a number of prominent women, a gender pay gap exists and the bulk of senior roles are male. When asked whether this was significant, 67% of the audience voted that gender diversity was not an issue for the IR profession.
Change your thoughts and you change your world
Norman Vincent Peale (1898-1993)
Fidelio’s Response to the Diversity Challenge
Fidelio is delighted to play an active role on behalf of clients and in public to increase diversity in the senior levels of companies and organisations. Beyond Fidelio’s very active advocacy, our role is two-fold:
1. Board and Executive Search: at the beginning of the Search process, we bring clear and analytical thinking regarding the objectives of the role. What are the deliverables and what are the challenges the role must address? A rigorous, forward-looking focus that is well understood and shared by the Hiring or Nominations Committee means the Search is no longer confined to a narrow pool of candidates.
Fidelio’s proven senior and international network permits us to reach out to talented executives, who are frequently not on the radar screen but who very closely match the candidate brief.
2. Development – “A Seat at the Table”: corporate and business school research has demonstrated that talented women can face a number of often hidden obstacles en route to the top table and at the top table. Fidelio has developed an acclaimed programme focussed on providing senior female executives with every opportunity to succeed. We focus on:
i. Understanding the complexity of shareholder and stakeholder expectations for the leadership team
ii. A firm grasp of governance, including formal and informal power structures
iii. Presence and authority; personal impact; the ability to influence
iv. Reinforcing networks; networks of support and networks of reciprocity
v. Resilience under extreme pressure
Fresh thinking, gritty determination and access to a diverse and talented senior network are what is needed to make progress in achieving greater diversity at the top of leading companies and organisations. Fidelio is proud to make this contribution.
FIDELIO HIGH NOTES
Fidelio – Executive Search and Development
- Fidelio’s Board Practice is committed to building the layer of Senior Female Executives. We hold our second “A Seat at the Table” Programme on 15th-16th March 2016 at Leeds Castle. For more information, please contact Luke Main.
- Fidelio is working with Boards and Communications Directors on the skills required to handle reputational risk at the executive committee and Board level.
- Fidelio’s Finance Search Practice focuses on the CFO Cabinet.
- Fidelio to host a Board Breakfast on “the Future of the High Street” with Peter Williams, Non-Executive Chairman of Boohoo.com plc, former CEO of Selfridges plc and Senior Independent Director of ASOS plc on 5th April 2016.
To discuss your Executive Search and Development requirements, please contact us at info@fideliopartners.com