Statutory quota for women: A success story?
01 January 0001
On 1 May 2015, the Act on Equal Participation of Women and Men in Executive Positions in the Private and the Public Sectors came into force. In addition to the fixed 30% supervisory board quota, which only applies to a relatively small number of companies which are listed on the stock exchange and have supervisory boards comprising an equal number of shareholder and employee representatives, a significantly larger number of companies need to define "targets" for the proportion of women at the management level and at the first and second tier executive levels below the management level.
For this flexible female quota, the companies also needed to specify, within the statutory requirements, the date by which they intend to achieve the individual targets. In our study on the implementation of female and gender quotas, we have analysed how the DAX and MDAX companies have implemented these statutory requirements. The information was evaluated based on their published management reports and acknowledged experts have been interviewed with regard to the various requirements.
The following results deserve special mention:
- There are clear differences between DAX and MDAX companies in respect of the targets for the proportion of women on the management board: While 75.6% of the MDAX companies addressed had set a target of 0%, only 33.3% of DAX companies opted for this target.
- A target of 0% for the first tier executive level below the management board was provided for MDAX companies only, and was not available to DAX companies.
- Both the DAX and MDAX companies opted for a target of at least 5% of representation of women across the board at second tier executive level.
- The implementation of the statutory requirements has triggered considerable costs and other outlay, in particular in the case of companies with international operations. The executive levels to be defined often fail to match up to the diversity strategies for executive personnel already existing at these companies at group level. Undefined legal terms contained in the Act have caused considerable uncertainty in respect of the implementation steps required.
- In respect of the deadlines to be defined for achievement of the targets, a number of companies have opted for a shorter period than that specified by law. DAX companies utilised this leeway more often than MDAX companies.
- In view of the short deadlines, the status quo already achieved in respect of the proportion of women was often set as the target for the management board in particular.
Many companies will soon be facing the question of which new targets need to be set and how these are to be communicated to the public. Our study provides an overview of the market practice to date and thus offers support in navigating the further implementation of the Act.