Germany Moves Toward Requiring Women On Large Companies’ Executive Boards
As of late, Germany’s cabinet endorsed a draft law that would entail stock-exchange listed corporations with executive boards of higher than three individuals to have a definite number of women on those boards. According to a deal accepted by Angela Merkel’s Christian Democrats and their junior partner the Social Democrats, large companies with three executive members must have at least one woman on the board. Furthermore, companies, where the federal government has a stake, will require 30% of the board's members to be women. This new law would influence roughly 70 companies, few of which have no women on their executive committees.
This new law is moderately similar to a policy Germany established in 2015 that approached huge corporations to intentionally increase diversity on management boards. Nonetheless, the research found that because the system was voluntary, it neglected to obtain boardroom diversity.
Even so, this innovative compulsory policy will increase gender equality in the country’s corporate sector and might even prompt lawmakers in other countries to follow suit. Countless other countries have similar quotas, such as Norway, India, Italy, Austria and France. Research from Egon Zehnder, a management consulting company, noted that countries with quotas were more prone to have significant boardroom diversity than countries without quotas.
Nonetheless, there are certain large companies that will be upset about this new requirement. Male executives had argued that a quota expressed unwarranted interference in the internal affairs of companies and that there was a dearth of suitable female candidates for senior management roles.
According to a current survey by the Swedish-German AllBright Foundation, women currently make up only 12.8 per cent of the management boards of German companies listed on the blue-chip Dax index. What's more the survey found that German C-suites have become even more male-dominated in the past few months. It discovered that the number of women in senior executive positions in Germany fell to 23 at the start of September, from 29 a year prior.
A female quota will also be introduced for public bodies including health, pension and accident insurance funds, and the Federal Labour Office. Currently, women make up only 14 per cent of the senior leadership roles in these agencies.
Germany is providing motivated and skilled women with the opportunities they merit. This is a big accomplishment for women all over Germany which simultaneously offers a once in a lifetime opportunity for society and the companies themselves.
