Is a Legally Mandated Women's Quota a Good Idea? Changes to Germany's Working Culture Would Help Women to Advance to Leadership Positions

At German companies women remain underrepresented in upper management. ZEW labor market expert Melanie Arntz explains why a legally mandated women's quota could help to improve equality of opportunity for women.

Many companies and institutions have voluntarily committed themselves to the promotion of opportunity for women. The ECB, for example, recently launched an initiative in this area. However, the ratio of women to men in upper management remains extremely low. Why has nothing changed in the absence of pressure from legislators?

Over the last two decades progress in achieving greater equality between men and women in the labour market has slowed considerably. Wage differentials remain high, and the ratio of women to men in upper management is still extremely low. Researchers have pointed to a number of causes for this phenomenon. On the one hand, women behave differently than men in ways that reduce their chances of promotion. Studies show that women are more risk adverse and less confident, and avoid competitive battles to attain top positions. On the other hand, traditional gender roles continue to shape the careers of men and women. These gender norms appear to be quite persistent. For example, studies have shown than women pursuing a career tend to take greater responsibility for familial and household duties following the birth of their first child, and reduce their working hours accordingly. A promotional culture that lays great emphasis on one's presence at the workplace is thus of greater disadvantage to new mothers. In this way, classic gender roles in conjunction with the poor compatibility of career success with family life represent a greater barrier to women than men in the effort to climb the corporate ladder. Yet the working culture that is responsible for this phenomenon is a product in part of the attitudes held by mainly male upper managers.

To what extent would it help or hurt to have a legal mandate concerning the ratio of women in upper management positions?

The advocates of a women's quota hope to change the dynamics just discussed. The idea is that a higher share of women in upper management positions would have a positive role-model effect, encouraging other women to strive for top positions. It is also argued that a women's quota could help to establish a working culture that accepts detours on the road to the top, thus improving the compatibility of work and family life. However, whether or not a women's quota will actually improve career opportunities will depend crucially on whether women who benefit are perceived as inferior substitutes for male colleagues. For when it comes to the recruitment of top managers, the pool of available female talent is in fact smaller. The rapid adoption of a high and binding women's quota could thus be injurious to the effort to establish women in leadership positions. Yet in any event, an alternate working culture is essential for the effort to improve the ratio of female managers. And in this connection, we should not be merely concerned with extending more career opportunities to females. Instead, we need a working culture in which men who take more than two months of parental leave still have the same career opportunities. Only then will women advance more readily to upper management positions.

Have other counties introduced women's quotas? And have they been successful?

Norway, Spain, Iceland, Finland, and France all require 40% of supervisory board members to be female. Recent scientific studies have focused predominantly on Norway, where this quota has almost been fulfilled. These studies show that the female supervisory board members appointed since the quota was put into effect have a higher level of educational attainment than their recently appointed male counterparts, yet possess less management experience. According to one study, the implementation of the quota has been associated with lower profit levels and stock valuations for the impacted firms. This may be an indication that the supervisory boards previously in place were profit maximizing. On the other hand, male supervisory board members have stated that not much has changed qualitatively since the introduction of the women's quota. The evidence in this connection is thus mixed. At the same time, studies have shown that female supervisory board members change the 'decision-making culture' of a firm. A survey of Norwegian supervisory board members indicates that women bring new perspectives to the decision-making process, and help to encourage greater dialogue. In order to bring about change, it thus appears desirable to increase the ratio of women in upper management positions. However, the mixed evidence on the positive and negative effects of introducing a legally mandated women's quota tells us that such policy tools should be implemented with caution.