If there is one German banker who isn’t taking gender equality seriously, it is Josef Ackermann.
The Deutsche Bank AG chief executive officer is in hot water over flippant remarks he made about women serving on bank management boards. Now some German ministers are calling for mandatory quotas to be introduced, forcing companies to appoint women to top positions.
If it happens, it will be following a trend across Europe. Norway has quotas. So does Spain. France is introducing them. In the U.K., the coalition government has set up a commission run by a former chairman of Standard Chartered Plc, Mervyn Davis, to look at ways of getting more women on to company boards.
Everyone believes that a company’s directors should reflect the diversity of the societies where they do business, and that equal opportunities should be offered to everyone.
But it is a big step to set mandatory quotas. It focuses too much attention on a few senior jobs; it deflects attention from the progress that has already been made; it risks creating a small army of token women directors; and it will distract European companies from competing with the U.S. and Asia.
Ackermann’s remarks were certainly crass. Earlier this month, he said Deutsche Bank’s management board would be “more colorful and prettier” with a woman on it. Most of us would think that comments like that are about as acceptable as pinching the intern’s bottom or sending the only woman in the room out to fetch some coffee. It’s not the kind of behavior you should be able to get away with anymore.
Germany may have the most powerful female politician in the world in Chancellor Angela Merkel, but it hardly has a great record when it comes to equality of the sexes. Perhaps because it has so much male-dominated heavy industry, women haven’t made as much progress in business as in other countries. Germany was ranked 13th in the World Economic Forum’s 2010 Global Gender Gap report. Back in 2006, it was in fifth place.
There are still obstacles for women climbing to the top of corporations, and that is probably truer in Germany than it is in most developed economies. Even so, it should be left to companies to decide who sits on their boards. Here’s why.
First, it is a mistake to focus too much on the top jobs. Very few of us, whether we are male or female, are ever going to be asked to join the board of Deutsche Bank. What counts is how women are doing in the broader labor market. And, as it happens, they are doing really well. They are better educated, the new jobs being created are often more suited to them, and they are rapidly closing the pay gap with men.
In the U.K., the difference between male and female full-time earnings shrank to 10.2 percent in 2010, the lowest on record, the Office for National Statistics said. In professional jobs, the gap is almost gone. In the 22-29 age group, the average woman in full-time work earns more than the average man.
A post-industrial economy that requires social skills more than brute strength; higher education levels; and a willingness to work flexibly is better suited to women than men. Obsessing about a few high-profile board-level jobs obscures the bigger picture. In reality, the challenge for society may well be what to do with a lot of increasingly unemployable men rather than opening up senior executive jobs for women.
Second, it takes time. Take a look at “Mad Men,” the television series set in an early 1960s advertising agency. Most of us watch the non-stop, casual sexism with astonishment. It’s only half a century since women were completely excluded from senior executive jobs. The workplace has become far more equal since then ― and it still is.
According to the Paris-based European Professional Women’s Network, the proportion of females on the boards of top European companies rose to 12 percent in 2010 from 8 percent in 2004. At that rate, it predicts we will hit parity in 16 years.
Third, quotas create tokenism. We all know what will happen once you demand that every listed company of a certain size has to have, say, two female directors. You will create a small pool of very well-paid women who keep getting appointed to lots of boards. That’s great for them ― they’ll be paid a lot of money for going to a few meetings. It will be fine for headhunters and compliance consultants ― they will charge big fees to find the people and make sure the quota is met. But it is hard to see what good it does for anyone outside that charmed circle.
Finally, what Europe really needs to do is compete globally. The region’s economy remains stuck in the doldrums, struggling to stay competitive with the U.S. and emerging economies. Why impose more rules on company boards when what businesses really need to do is figure out how to compete in a far tougher world than they used to?
Women can run companies just as well as men can. Nobody disputes that. But similarly no one would argue that we live in a far more equal society than our parents did. More rules are unnecessary and will distract companies from their real job.
By Matthew Lynn
Matthew Lynn is a Bloomberg News columnist and the author of “Bust,” a book on the Greek debt crisis. The opinions expressed are his own. ― Ed.