Women’s Quota - Paving a Path to Power and Diversity?

The discussion about introducing a women’s quota is highly controversial. In Germany it has mostly been rejected, in public administration as well as in industry. Many argue that a quota weakens women’s positions in the workplace rather than strengthening them. Women’s successes will be attributed solely to the quota, not to their achievements. Mostly you hearonly yes or no answers to the quota. I myself was never in favor of it.

On March 8th of this year, the world commenced the 99th International Women’s Day. India introduced a women’s quota for its parliament. - The upper house of India's parliament has approved a bill which reserves a third of the seats in the national parliament and state legislatures for women.

Deutsche Telekom Introduces a Women’s Quota

The very same week, the Deutsche Telekom announced the introduction of a 30% women’s quota for their middle management by the year 2015. Wow, I thought and wondered what their arguments will be.

Summarizing Thomas Sattelberger, member of the board of management for HR, their main reasons are:

• All measures taken so far have not brought about the change we sought for.
• The glass ceiling needs to be broken, this is what we want to achieve.
• It is a necessity with respect to fairness in society.

And René Obermann, CEO of Deutsche Telekom, clearly states: “Having more women on the top will improve our performance.” (my own translation)

Currently the Deutsche Telekom has overall roughly 11% women in leadership positions, internationally 24 %, yet in Germany itself only 18%.

The decision sparked off a lot of news coverage, even in the international press.

Let us look at the context:

Women’s Careers in Germany

According to a study published by the DIW (German Institute of Economic Research), there were only 2,5% women on boards of the top 200 largest German corporations in 2009, the only chairwoman of a German board being IKEA’s Petra Hesser. On the board of Germany’s 30 DAX corporations there is only one woman: Barbara Kux, a Swiss working for SIEMENS.

Dr. Sonja Bischoff, an economics professor at the University of Hamburg has regularly investigated the situation of women’s careers in Germany since 1986. On March 8th, Dr. Bischoff reported on her fifth round of her study “Who leads in(to the) future?”.

Her latest results show:

• the number of women in middle management has multiplied by four
• almost every 5th manager in German companies is female
• women in leadership position have risen from 4% to 18 % mainly leading in the fields of HR, finance and marketing

Another larger study published by Hoppenstedt shows that the upper levels of management (level 1 and 2) have a continuously increasing number of women: doubling from 1995 with 8,17% to 19,56% today. Yet, in larger companies this increase is less and slower from 3,2% to 5,9%, and even less with increasing size of the company.

This supports Bischoff’s results showing that a majority of women leaders are self-employed respectively entrepreneurs who can self-organize a flexible workplace.

Apart from the considerable lower average pay, Sonja Bischoff sees the greatest barrier to women’s careers still to be “prejudices against female superiors”. In her study, 24 % of the 370 women participants experienced a lack of trust in their leadership competence. She concludes, “personal experiences of discrimination are as much as they were in 1986”.

This is a very bad resume for German business.

Given these numbers, the decision by the Deutsche Telekom definitely has a signaling effect.

As a first matter of fact, a majority of girls currently finish school with better grades than male peers. Two thirds of current students in business administration are women. They are very successful right up to entering the professional world and the beginning of their careers. Why should their performance decline with age and professional experience?

As a second matter of fact, the top 100 largest corporations have 526 board positions. Only 7 are women.

This is hardly due to lower performance, maybe rather to a reluctance to compete.

A majority of German corporations are still against any quota. Yet, according to a study published by Odgers Berndtson almost half of the 49 women in the top management of Germany's top 500 corporations even favor it with some reservation.

A Diversity Outlook

In my view, the question of a quota cannot be answered with a simple yes or no any longer. With respect to dimensions of time, society, economic and international development, organizations will have to come up with a pragmatic response to questions like:

• Do we have a realistic chance of hiring and developing enough qualified and talented women in our business fields?
• What do we risk by potentially loosing higher qualified male candidates?
• Can we afford to miss out the women given the demographic developments?

And less defensively:

What do we gain – short term, midterm and long term – by implementing a quota

• a) with respect to changing career paths in the long run?
• b) with respect to increasing diversity in management?

I do believe, "diversity wins", as Tom Peters likes to say.

The quota will not win by itself. It can only be effective with corresponding measures, as e.g.:

• recruiting and developing talented women and men in support of diversity thinking,
• offering systems that sustainably improve flexible workplaces in support of family lives of all employees, women and men
• finally, develop leaders to meet the requirements of growing diversity

As with most leadership decisions, we will be able to judge the success of such measures only retrospectively.

A women's quota may not be a simple and easy path to power and diversity. But promoting women in leadership is not a simple question of pro or contra quotas any longer. There are more differentiated perspectives to the issue on the agenda today.

The media reports and the discussions I have had with various collegues and clients around the Deutsche Telekom decision made me change my mind. I believe it also show that this change is already taking place on a wider scale.

What do you think?