Quotas for a 'prettier' corporate board?
Does having a woman on a corporate board make it "prettier" and more "colorful?" Josef Ackermann apparently thinks so. The Deutsche Bank CEO ignited an outcry last week over the comment, which he made after a reporter asked him to share his thoughts about a proposed quota mandating women be represented on corporate boards. Ackermann said of the company's all-male executive board that he "hopes that someday it will be more colorful and prettier, too." The Wall Street Journal is reporting that the comment prompted "a bitter response from women across the political spectrum" in Germany.
I can certainly understand why the comment would bother some. Ackermann surely meant it as an indirect compliment, and it was given in the context of sharing the company's efforts to promote women at the company, who make up 16.5 percent of the bank's management. But against a long history of women getting ahead because of their looks--or treated as token decorations--I'm not surprised it ruffled a few feathers.
Still, Ackermann's comment overshadows the really interesting question: Should companies be forced to put women in leadership roles? It may seem like regulatory anathema to U.S. businesses, but it's not unheard of in Europe. Spain, France and the Netherlands all have quotas for women on boards. And in Norway, reports the Wall Street Journal, it's working to increase diversity: Women hold 44.2 percent of board seats there after a law was passed in 2002 stipulating supervisory boards had to include women.
There's little question that quotas would help to correct the imbalance between men and women. That a CEO of a major bank would be boasting that 16.5 percent of his senior executives are female is a testament to how behind most companies are at promoting women. While that may be a good number in the financial industry, it's also disappointing that such low numbers get high marks.
Just as affirmative action helped to recognize past discrimination wrongs, perhaps the only way to get numbers even approaching an equal gender balance is to require companies to include at least some women on their boards. Having women in senior positions would not only benefit shareholders and customers (studies show that companies with good diversity practices have higher stock returns); they would also likely lead to more leadership development for young women and, as a result, a more natural solution to the problem than quotas.
But the argument against such requirements is also strong. Germany has a two-tiered board system, with a "supervisory board" similar to U.S. boards of directors and an "executive board" composed of senior management. I can comprehend a requirement that a woman be on the company's supervisory board--these are people who don't run the company but who watch out for shareholders' best interests, and the number of potential candidates is infinite. It's hard to argue a competent female director couldn't be found for every company.
Still, regulating that a women be on the executive board seems to me to be going too far. Companies should be able to make such decisions on their own, freely selecting the people who run the company on a day-to-day basis without the interference of government rules. In selecting qualified operational executives, there is typically a smaller group of people available for the job (compared to the number available for director positions), as many companies seek internal candidates or people from other companies with highly specialized experience.
Mandating that companies put a woman among the ranks of executive officers may result in more women at the top, but it won't necessarily fix the root issue. Governments should be promoting programs that encourage young women to go into business and science, for example, and expanding protections and benefits for women returning to work after childbirth. Instead of trying to fix the outcomes, governments should be trying to fix the underlying symptoms causing the problem.
February 8, 2011; 8:58 AM ET |
Women in leadership
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