From "the Factory of Ideas" (Archive)
Berna TOKSOY REDMAN, Senior Chief, TÜSİAD Social Policy Department
In comparison to men; women are still made to cope with many factors we term as “glass ceiling” and which prevent them from advancing in professional life. The underrepresentation of women in senior management is also an issue debated very seriously in Europe and taking measures in order to change the status quo is one of the important items on the agenda for the highest European Union bodies.
The objective of this article is to provide information about the prevalent picture both in the European Union and in Turkey and to share the up-to-date developments taking place.
A) Current Situation and Developments in the EU
One of the 5 priorities of the Women’s Charter(1) document prepared by the European Commission is the representation of women in decision making mechanisms(2) . In spite of the fact that women’s participation in employment is around 60% in the EU countries, women are still not sufficiently represented in senior management positions and in boardrooms.
According to a report(3) drawn up by the European Commission in 2010, only 3% of the chairs of board of the large public companies are women. On the other hand, the rate of women in boardrooms has increased from 9% in 2003 to 13.7%(4) according to January 2012 data. If this rate of increase, i.e. 0.5 on an annual basis, should continue; women need to wait for a period of 50 years in order to reach a representation level of 40% in the boardroom.
An initiative has been launched in the year 2011 by the European Commission to draw attention to this situation and to speed up the process for increasing the number of women in corporate boardrooms of the EU countries on a voluntary basis. The Commission’s objective is to increase the number of women members in boardrooms to 30% by 2015 and 40% by 2020. This is an initiative also supported by the European Parliament. Up till now 24 companies have signed commitment letters stating that they will achieve this goal within the scheduled calendar(5) .
A consultation process has been launched on 5 March 2012 with the initiative of Viviane Reding, the European Commissioner for Justice, regarding what kind of measures need to be taken in order to increase the representation of women in the corporate boardrooms of the EU. The process that has the member countries, employers’ organisations, trade unions, companies and related NGO’s at its target is planned to be concluded on 28 May 2012. It is expected for the Commission to embark upon an initiative with regard to the relevant countries on this issue within one year following this date.
Policies and Strategies Implemented in the EU on Increasing Women’s Representation in Senior Management(6)
Conducted researches indicate that companies in which women are represented effectively in senior management see an increase in their corporate and financial performance, in the quality of the decisions taken and in ethical behaviour. Moreover, attention has been drawn in research to the fact that a great majority of consumer decisions are taken by women and hence an emphasis has been made on the importance of women’s presence in corporate management in terms of a more accurate perception of the market, a better accommodation of customer needs and offering better quality products and services.
In the ongoing debates among the EU countries, it is also remarked that although 60% of university graduates are women, the change in this situation to the disadvantage of women when it comes to climbing the career ladder is actually problematic in terms of human capital and benefit to society. It is at the same time underlined that developing and generalising mechanisms which will reveal women’s potential is significant with regards to women, half of the population, contributing much more to themselves, to their environments and the society at large. Beyond all of these; attention is also drawn to the fact that the effective representation of women in senior management is a sine qua non of equality, democracy and justice.
The policies and strategies implemented in the EU countries for increasing women’s representation in senior management are compiled under four headlines: ‘corporate policies’, ‘cross company and sector initiatives’, ‘industry self-regulation’ and ‘legal regulations established by governments and voluntary based initiatives’.
1) Good Practices in Corporate Policies
Companies that demonstrate successful examples in this field have, with the purpose of increasing women’s representation in senior management, formed a holistic business strategy compatible with the diversity strategy. The aforesaid business strategy, prepared with an understanding based on recruiting, developing and keeping women talents in the company, is built taking into consideration the employees’, especially the women employees’, periodical preferences, career developments and the need of a balance between their professional and personal lives. The most important pillar of the strategy in question is to set measurable targets, follow up the progress, support the process through feedback and ownership of the senior management.
Unpaid leave or other forms of flexible working arrangements such as part time work on a temporary basis, working from home as an option in light of all the technological developments, forming a corporate mentality that is output oriented rather than rewarding long working hours or being physically present in the company all stand out as good practices.
In these companies, the target of increasing women’s presence in senior management is directly reflected on recruitment policies and the corporate culture. In this context; minimum proportions are set for women in the candidate lists prepared for vacancies and this is taken into consideration both in the reassignments within the company and in recruitments. For example if the company is working with a private employment agency; a request is made for a candidate list to be prepared within the framework of this approach. Other good practices implemented by companies include; more transparency in the announcements and selection procedures especially regarding senior management positions, conducting awareness activities on gender equality in the corporate culture, running leadership, mentoring and coaching programmes for women employees and the establishment of corporate women networks.
A Corporate Example: Deutsche Telekom
Deutsche Telekom is the first major company to implement voluntary based women’s quota in Germany. The objective of the initiative launched in 2010, is to fill 30% of its middle and upper management jobs with women by the end of 2015. The paramount reason for the decision to implement a quota was the inefficiency of the other measures already taken. For example, in the year 2001 the leading corporations in Germany had signed an agreement in order to support equal opportunities for female and male employees alike but such an agreement did not change the low representation of women in management.
Behind Deutsche Telekom’s decision to implement a quota system such elements as; an increase in the competitiveness of companies with high women’s representation in senior management, tapping into talent of women who form more than half of the existing potential, more sustainable company policies (10.3% of Deutsche Telekom’s shares belong to shareholders who invest in sustainability and place a particular importance to gender equality), a more just system between the female and male employees and the fact that a strong corporate culture is deemed to be one of the fundamental actors of a company’s success, have all played a role.
With this understanding Deutsche Telekom’s corporate culture was rendered more transparent, beginning with the recruitment processes, the governance policies were reviewed and trainings were initiated in order to enhance gender awareness. In addition, policies to balance the professional-family life were revised and more flexible working arrangements in terms of time and location were applied, tailormade parental leave practices were developed and child care services were broadened. As an outcome of these policies; the rate of women in senior management increased from 19% in February 2010 to 23% in September 2011. Within the same period the rate of women team leaders went up from 3% to 8% and the proportion of women among the employees with high potential increased from 33% to 53%.
2) Cross Company and Sector Initiatives
This process usually introduced with the initiative of governments; companies are encouraged, supported or rewarded to increase the number of women in their management.
Slovenia: As of 1991, “Women-Friendly Companies Award” is given to companies that have 50 and more employees and with a third of their managerial positions held by women.
Denmark: “Charter for More Women in Management”, an arrangement introduced with the initiative of the Ministry for Gender Equality is voluntary based instead of quota based. The participating companies make a commitment that they will take concrete steps in order to increase women’s representation at all levels of management. In addition the Ministry has initiated another programme regarding recommendations to increase women’s representation in the boardrooms.
The Netherlands: More than 180 public and private companies have signed the initiative launched with the aim of increasing the proportion of women in management. These companies set measurable and concrete targets to enable an assessment of their progress, implement new policies and publish a progress report on an annual basis. According to the data of the Monitoring committee; the annual increase of women in senior positions is 7.5%. This is an increase that is compatible with the target of 21.4% for 2013.
Germany: Large publicly listed German companies (DAX30) have accepted voluntary based quota applications to be implemented by the end of 2011. The probability of the government introducing more rigid regulations and the opposing criticisms of the investors have also played a role in the materialisation of this initiative.
3) Industry Self-regulation
Peer pressure, follow up of the media and the relevant stakeholders rather than legal sanctions or penalties is more prominent under this heading. Companies include obligations or recommendations regarding gender equality into their corporate governance code. If any of these codes are violated, the company then must state this in its annual activity report and account for it to its shareholders and to the public. This provides both transparency and creates an additional pressure on the companies. This is a method usually implemented by publicly listed or large companies.
Countries preferring this instrument are Germany, Austria, Belgium, the United Kingdom, Denmark, Finland, France, the Netherlands, Spain, Sweden, Luxembourg and Poland.
4) Legal regulations established by governments and voluntary based initiatives
These policies are divided into two; mandatory quota applications and voluntary based initiatives.
a) Mandatory quota applications:
Norway: The first gender quota to be initiated by a government was implemented by Norway, a non European Union country, in 1981 for administrative bodies, councils and committees appointed by the public. The practice was broadened in 2004 to include public economic enterprises and publicly listed large companies to be effective as of 2008. The proportion of women in the boardrooms of public corporations increased from 6% in 2002 to 36% in 2008. The initiative was launched not by the Ministry of Equality but by the Ministry of Economic Affairs. The motive behind the initiative was that diversity in the boardroom is an advantage for the company’s performance and that it was necessary for both women and men to utilise all their abilities in order to achieve economic growth.
Spain: The application is based on a 2007 dated legislation. Corporations and publicly listed companies employing over 250 people have to alter the membership of their boards gradually until each sex makes up at least 40% by the year 2015.
France: The quota will apply to publicly listed companies, companies that have a minimum of 500 employees or have over 50 million Euros. By the year 2015 a figure of 20% and by the year 2018 40% of boardroom positions must be taken by women. In the event of noncompliance; the appointment of individuals to the board of directors will be deemed invalid and the person appointed will not be able to take advantage of the financial benefits provided by the position.
The Netherlands: It is imperative for each of the gender to be represented by a figure of 30% at both managerial and supervision level for all companies over 250 employees. This will be in effect as of 2016. Level of compatibility with the targets and the relevant action plans must be included in the annual activity reports.
Italy: Each of the gender must be represented by one third of the boardroom and board of supervisors by the year 2015 in all the publicly listed companies and public enterprises. If the quota is not met, there will first be a warning, subsequently a penalty and at the final stage the board of directors may be dissolved.
Belgium: In all the boardrooms of publicly listed companies and public enterprises each of the gender must be represented at least by a third of the total membership. The transition period is 1 year for public enterprises and 5 years for publicly listed companies. If the requisites of the quota are not met; the members of the board of directors will be deprived of financial benefits.
b) Voluntary Based Initiatives:
The United Kingdom: The Equality Strategy was initiated by the government in 2010 on the understanding that the business world would take the lead. An assessment document was published within this framework. In this study recommendations are made to the effect that by the year 2015, at least 25% of the boardrooms of publicly listed top 100 companies (FTSE 100) will be women. Furthermore, the top 350 publicly listed companies (FTSE 350) are also encouraged to set their own targets (with the expectation that the so called targets will be higher than 25%). In addition recommendations are made to companies to share their management profiles with the public and for investors to take this into consideration while selecting or reappointing members for the board of directors.
Finland: In 2008, Finland has made amendments in its corporate governance codes and added an advisory arrangement regarding the representation of both of the sexes in the boardrooms. The proportion of women members in the boardrooms of public enterprises is 40% whereas the same proportion is around 26% in publicly listed large companies. It is stated that follow up and ownership of the media has been an important element of the success of the process.
Sweden: The proportion of women in the boardrooms of the publicly listed large companies (OMX Stockholm 30) is around 26%. The Swedish corporate governance code states that companies must make an effort on the issue of equal distribution between the sexes in terms of membership in the boardrooms. Medium and large scale enterprises must publish the gender distribution in senior management. This in turn secures a more transparent process.
B) Current Situation and Developments in Turkey:
Women’s employment is around 60% in European countries and while the World average is over 50%; this proportion is 26% in Turkey. Nevertheless in terms of participation in senior management, our country, even though far from sufficient levels, paints a more positive picture in comparison to its counterparts in Europe.
While 3% of the chairpersons of board of directors of the publicly listed companies in the EU 27 countries are women, according to a study(7) prepared by the European Commission in 2009, this number is 6% for Turkey. In a similar study(8) conducted by the World Economic Forum, representation of women CEO’s in OECD and BRIC countries have been examined. According to the conclusions of the study, the average of women CEO’s in these countries is below 5%; Finland, Norway and Turkey are the three countries that have the highest number of women CEO’s with proportions of 12% and over.
A survey study(9) titled “Women in Working Life” has been started in 2010, with the initiative of TÜSİAD Women-Men Equality Working Group, in order to compile information about the profile of the women employed in the companies either belonging to TÜSİAD members or the companies in which the members work. According to the results of the survey concluded in the beginning of 2011; 10.3% of the boardroom chairpersons of the companies participating in the survey are women. The proportion of women vice chairs to the total vice chairs is 17% and the proportion of women members of boardrooms to the total members is 19%. 13% of the general managers/CEO’s of the companies that have participated in the survey are women.
The issue of women in senior management debated in the European Union countries is gradually being brought to the agenda in Turkey also. The principle of, “at least one female board member” has been brought forth with the “Communiqué Amending the Communiqué Concerning the Determination and Implementation of Corporate Management Principles” prepared by the Capital Markets Board of Turkey and published in the Official Gazette dated 11 February 2012. The regulation in question does not entail a mandatory application but is more of an advisory nature in accordance with the principle of, “Comply or Explain”. The regulation embraces an understanding very similar to the “Voluntary based initiatives model instituted by governments” applied in Europe and also mentioned above. The regulation enables the company policies to be more transparent and at the same time aims to change the current picture to the advantage of women through peer and public pressure.
Another initiative regarding gender equality has been launched by the Ministry of Labour and Social Security. Within the scope of the “Twinning Project on the Development of Gender Equality in Working Life” conducted by the Directorate General of Employment, Ministry of Labour and Social Security, “Gender Equality in Working Life Award” has been given in March 2012 to the workplaces that have set forth examples of good practice on gender equality. The initiative, that can be defined within the framework of the “Cross Company and Sector Initiatives” model which has started to become widespread in European countries, has three different categories for small, medium and large scaled workplaces. Two companies both owned by TÜSİAD members have won the awards for the large and medium scaled companies (Boyner Holding and Suteks respectively). The award was given taking into consideration such criteria as; ‘information on gender equality’, ‘commitments aimed at developing gender equality and training of managers’, ‘anti-discrimination mechanisms’, ‘recruitment, career planning and promotion process’, ‘reconciliation of private and professional life’ and ‘equal wage’.
Even though these are all positive developments; there is a need in Turkey for policies that will accelerate the process regarding women’s participation in employment. While Turkey’s 2023 target for women’s participation to the labour force is 35%, women’s employment target of the European Union, which we hope to become a member of, is 75% for the year 2020. Efforts only focusing on increasing women’s representation in senior management, without taking into consideration that almost only one in four women are employed, are bound to have a limited effect. It is necessary for policies on the reconciliation of private and professional life to be introduced in addition to maintaining the policies on widespreading education that have been continuing with an increasing momentum throughout the recent years. Factors such as the lack of institutionalisation in care services and preschool education not as yet being mandatory in all the provinces combining with the traditional role distributions in the family all lead to women either not being able to enter the labour force at all or having to withdraw from a professional life. In most circumstances even if a woman does return to working life after a long interval, she is not able to reach positions in her career that she would like. Generalising institutional care services will not only facilitate the women staying in working life but will also contribute to improving equal opportunities between women and men.
Last year TÜSİAD produced a film about the participation of women in working life. The theme of the film was; “We Cannot Fly to the Future With One Wing”. The message trying to be conveyed in the film was; “if you do not make use of half of your potential then you will have to walk to reach your targets even though you have the capacity to fly”. Aiming to become one of the world’s greatest economies by the year 2023, it does not seem possible for Turkey to reach this goal without making women partners to the process. With this understanding; the active participation of women to all spheres of social life should be evaluated within the scope of democracy and social development and likewise, all factors disrupting gender equality should be perceived as a social problem.
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(1) http://ec.europa.eu/commission_2010-2014/president/news/documents/pdf/20100305_1_en.pdf
(2) The other priorities are economic independence, equal pay, combatting violence and gender equality beyond the EU countries
(3) “Report on Progress on Equality between Women and Men in 2010: The gender balance in business leadership”, European Commission
(4) http://europa.eu/rapid/pressReleasesAction.do?reference=IP/12/213&format=HTML&aged=0&language=EN&guiLanguage=en
(5) The Economist, 10-16 March 2012
(6) This section has been prepared with help from the communiqué, ‘Advancing Gender-Equality in Economic Decision Making’ presented by the European Commission between 19-20 September 2011 in Brussels
(7) Women in European Politics - Time for Action, European Commission, 2009
(8) The Corporate Gender Gap Report 2010
(9) 294 companies represented by 121 TÜSİAD members have participated in the survey. The TÜSİAD members that have participated consist of 20% of the total membership and the number of companies is about 10% of the total number of companies belonging to TÜSİAD members. The total number of employees in the 294 participatory companies is 392.082 and the proportion of women employees is 32%.
"TÜSİAD Article Series"comprised of articles on current debates. The articles are prepared by TÜSİAD researchers. Opinions expressed belong solely to the author and do not represent the views of TÜSİAD."