Global Board Gender Diversity Momentum
Germany Cabinet Approves Draft Law Requiring Women On Executive Boards of Large Public Companies
In October 2020, the AllBright Foundation reported that Germany lags the U.S., France, the U.K., Poland and Sweden in the ratio of women on executive boards at leading companies. Their study cites that in U.S. companies, 28.6% of the executive boards of the 30 largest publicly traded companies are women. Germany’s count is significantly less, with 12.8% women represented on boards among only four of Germany's largest 30 listed companies.
That is about to change.
Germany's cabinet approved a draft law that will require stock exchange-listed companies with executive boards with more than three members to have at least one woman and one man on their boards. This pending law would apply to about 70 companies. “About 30 currently have no women at all on their management boards” motes the Justice Ministry.
The draft law is on the way for a vote by the Bundestag, Germany's parliament.
The legislation contains a provision intended to improve the effectiveness of a 2015 law that requires leading companies' supervisory boards — which are generally chosen by shareholders and don't have executive powers — to have at least 30% of their positions occupied by women.
The new law would extend the 30% requirement to companies in which the federal government is the majority shareholder. That includes Deutsche Bahn, the German railway company. In addition, executive boards - responsible for managing the company - that have more than two members will be required to have at least one woman. These measures would affect about 90 companies.
Franziska Giffey, Federal Minister for Family Affairs, Senior Citizens, Women and Youth called the law a "milestone" that would ensure there will no longer be women-free boardrooms in these large companies. “The law would make Germany better prepared for the future and more able to capitalize on its potential. We have seen for years, not many changes are made voluntarily, and progress is very slow," Giffey stated.
Some German professionals see this move as a way to catch up and “correct” the perception people have about leadership in Germany. “The perception of Germany is that, because we've had a female chancellor for the last 15 years, Germany is very progressive in that matter, but actually it is not," noted Janina Kugel, equality advocate and past Siemens executive.
Board Directors’ 2021 New Year’s Resolution:
Stretch!!!
Never before have we faced the challenge to stretch our intellectual muscle to be a better board directors. The complexities and surprises with which we contend are around every corner. Just to name a few:
- The Post-COVID environment dramatically changed conditions for us all;
- Adjustments with digital transformation, especially when MicKinsey notes 70% of companies attempting changes have failed;
- The call to action for diversity equity and inclusion; and
- Social and political upheavals and unrest.
Even if we look at these individually, it is not enough. They are intertwined and need to be understood for their influences on each other and organizational performance.
As directors, we can never be wise enough. While we can work to be better futurists, it is time to enhance our roles and contributions in strategic thinking. To clarify, this does not mean working on management’s strategic plan. It means thinking about the potential and evolution of the long-term value of our organizations.
We are working with clients by bringing directors and management together to think more like Yoda and Chess Masters to both project with longer horizons and understand the complex consequences of consequences so to propose smart ways to direct and proceed.
Here is a general flow for the discussions to tackle when together.
For more information about our work with boards on strategic thinking, contact us.
We find bringing good minds together produces better ideation and quality of thought. We encourage all directors to create a time to do just that in 2021. If you would benefit from independent facilitation, we are happy to help.
Here are a few words from Christina Toretti, Board Chair of S&T Bank, who recently successfully brought her board and management team together for strategic thinking.
https://boardwise.biz/video/Christine.mp4
Let’s all stretch and make a difference.
