Women in decision making bodies summary essec wil january 2015

Synthesis of the EP Report with a focus on Gender and Business and elements of comparison coming from recent surveys‐ VDB et SC‐ESSEC

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January 21st 2015

Viviane de Beaufort and Sarah Compani

Introduction

● Breaking stereotypes and gender segregation broadcasted by the media

● Gender budgeting

● Economic independence and the position of women on the labor market of the EU

● Women in economic decision making bodies

WOMEN IN DECISION-MAKING BODIES

Viviane de Beaufort is Professor at the ESSEC, where she is also Co-Director of the law faculty and Co-Directorof the European Centre Law and Economics. She holds a Doctorate in European Community Law from Paris I-La Sorbonne. Viviane de Beaufort is the author of several publications and conferences on European topics and among them Corporate Law, Corporate Governance and Public Governance. She is actively involved in European Public Affairs, being an integral member of several Think-Tanks, as well as an experienced and respected lobbyist, notably specializing in the areas of Competition law and Corporate Governance Issues. As the Academic director of Women-ESSEC Programmes (including “Women, Be European Board Ready”), she is committed to the progression of Women, Gender and diversity Issues. Viviane is a member of the Global Board Ready Women LinkedIn database. a memeber of WIL,etc. Considered as an expert in the fields of Corporate Governance and Gender Issues, she is continuously engaged in academic research on these issues. @vdbeaufort Sarah Compani is Essec student, Master’s degree in Business Law of University Paris II- ASSAS, Involved as volunteer in the Law and Gender research programme CEDE-ESSEC and in the Gender Equality programme at ESSEC “Grande Ecole”


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- Article 8 TFEU: (horizontal sex equality clause) “In all its activities, the Union shall aim to eliminate inequalities and to promote equality, between men and women in all the Union’s activities”.

- Article 157 § 1 TFEU: “Each Member State shall ensure that the principle of equal pay for male and female workers for equal work or work of equal value is applied”.

Gender Mainstreaming: public policy concept of assessing the different implications for women and men of any planned policy action, including legislation and programs, in all areas and levels.

Eurobarometer – Women in decision making positions, European Commission, 18/09/2011

- Near 90% of EU population believes women, given equal competence, should be equally given positions of leadership in private companies. - People think the best way to achieve a balanced representation of women and men on company boards is by: > self-regulation (companies setting their own target) ; > binding legal measures (when qualification is taken into account and one gender is not automatically favored); => 80% of EU population and 90% of French population would accept binding legal measures > soft law (corporate governance codes and charters). => In the EU, there is no clear majority on whether these measures should be taken at a European or National scale. ≠ In France, people support EU measures (53%) especially young people. - Most people believe 50% men 50% women in boards (in a window of 5 years for publicly listed companies) is a realistic target for gender equality (49% in France, 43% in Europe). Monetary fines, no public procurement grants and annulation of the decision taken by the board should be the most common sanctions.

A new strategy for gender equality post 2015, European Parliament, 10/2014

LEGAL BASIS OF GENDER EQUALITY - Treaty of Rome (equality is a founding principle of the EU) - Antidiscrimination directives - Equality bodies - Nominations in corporate board enter in the CJEU competences. MEANS OF ACTION Good practices, soft laws, financial support, influence the political sphere of MS (ex. ↑ number of women candidates at EU elections), provide expertise support on gender equality and data collection (ex. European Institute for Gender Equality, financing of expert networks etc.) RECOMMANDATIONS - Programs, training and support to promote equality - Reinforce the European Institute for Gender Equality, provide tools to monitor and assess progress (ex. Gender Equality Index), develop good practice across the EU Member States - Ensure simplicity of monitoring and assessing tools I/ Breaking stereotypes and gender segregation broadcasted by the media



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Stereotypes are the source of gender inequalities. SOURCES OF STEREOTYPES - Chronic underrepresentation of women in professional and expert roles in news programs and documentaries - Proliferation of sexualized female images in advertising: the European Commission suggests to create a European Media Control Group with a department dedicated to gender equality - Absence of women in decision making bodies of the media sector - Preconceived ideas that men belong to the professional sphere and women to the domestic sphere IMPACTS - Limitation of women’s choices and opportunities - Limitation of economic growth and achievement of the Single Market strategies - Obstacle to the EU anti-discrimination policy agenda MEANS OF ACTION - Hard Law at EU level = risk of single market disruption, ex. a ban in member state A of a magazine advertising sexually violent images of women produced in member state B can be a barrier to free movement of magazines + freedom of speech

II/ Gender budgeting

A new strategy for gender equality post 2015, European Parliament, 10/2014 OBSTACLES TO GENDER BUDGETING - No consensus between the 3 EU institutions to decide how to integrate gender equality in the processes of Horizon 2020 - No Gender Equality Pillar in Europe 2020 - Economic crisis with limited budget = The European Parliament suggests dealing with those questions in the frame of the European Financial Stability Facility

III. Economic independence and the position of women on the labor market of the EU


DG Entreprise - 17/10/2012 http://ec.europa.eu/enterprise/magazine/articles/smes-entrepreneurship/article_11046_fr.htm

SOURCES OF ECONOMIC INEQUALITIES - Overrepresentation of women in low-paid jobs and gender stereotyped jobs, ex. domestic and care work + part-time, low added-value or temporary jobs - Lack of integration into the formal economy - Unequal burden of unpaid care work - Unequal access to full and productive employment and decent work - Persistence of discriminatory attitudes, norms, stereotypes - Insufficient social protection and insurance coverage for women - Unequal access to resources and assets. - Child rearing (=> wage penalty) - Low rate of female entrepreneurship


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- Broken work (less than 15 years) - Lack of clarity in the definition of work of equal value - Procedural obstacles to reach the top of the hierarchy IMPACT FOR WOMEN AND FOR THE STATE - Women incur a direct cost from gender economic inequalities: > Remuneration inequality = 16,5% > Pension inequalities = 39%

- Society incurs an opportunity cost from gender economic inequalities: women’s entrepreneurship potential is a source of economic growth and new jobs, largely underexploited. => Women only represent 30% of entrepreneurs and 1 innovative company newly created over 10 is managed by a woman. => A survey led by the European Commission states that if women’s employment rate were equal to men’s, our growth potential would be increased by 20 to 40%

MEANS OF ACTION - Make transparent pay systems mandatory. - Adopt a « pink new deal » : a general plan of investment in social infrastructure (schools, universities, kinder gardens, care for the elderly) to foster economic growth, allowing women to work and thus boost productivity of the country, improve parental leave system, equal social care for part-time workers, work safety, development of female entrepreneurship - Adopt parental leave policies and care services to reduce employment gap = use benchmarking, ex. non-transferable paternity-leave in all MS (father’s involvement in care activities enhances gender equality).

European Commission hence launched Women’s Entrepreneurship Network and Mentors to encourage women become Entrepreneurs by providing them practical advice (see http://www.laboratoiredelegalite.org/spip.php?rubrique55 ). Ex. help women obtain financing = Artemis Tourmazi, one of the ambassador of the Entrepreuneurship program and CEO of a cooperative bank created in 2000, grants investment credits up to 100 000 € with flexible reimbursement plans, with grace periods up to 2 years, 4% interests rates and access to funds before 48 hours.

IV/ Women in economic decision making bodies 1- Gender Quotas as a tool to integrate women in decision making bodies


“Women on boards: Sharing a Rigorous Vision of the Functioning of Boards, Demanding a New Model of Corporate Governance”, Journal of Research in Gender Studies, Volume 4(1), 2014 pp. 101-140, ISSN: 2164-0262, by Viviane de Beaufort and Lucy Summers. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2333536


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Gender Quotas: Form of positive action aimed at redressing gender imbalance through mechanisms establishing a target (minimum percentage) to be reached.

There is a lag between women’s career and diplomas, See appendix 2

TYPOLOGY OF GQ

Hard quotas: strong sanctions make the quota compulsory (ex. cancellation of the electoral list or a decision if the quota is not implemented) Soft quotas: voluntary or without sanctions quotas. First generation quotas: volunteer and legal quotas Second generation quotas: quotas in public institutions decision-making bodies + in corporate boards: need strong sanctions to be efficient, See appendix 1. Social quotas : (min percentage in executive organs of institutions with a public service or social mission)

Example Copé-Zimmermann Law: hard quota target of 20% women on boards by 2014 and 40% by 2017. => Targets 2,000 companies: - companies of > 500 employees - companies of turnover or total asset > 50M € (since Law of 4 august 2014 companies of 250 employees => Provides 2 sanctions: - invalidity of any appointment in violation of the law - no remuneration of the Directors until the board meets the quota

STRENGTHS OF GQ - Introduces women in sectors reserved for men - Provides role models to youngers - Breaks the idea that leadership is masculine - Allows female interest to be taken into account during decisions - Highlights the bias in jobs selection process (discrimination in nomination, promotion and recruitment process) - Creates a dynamic in the EU: in 2013, women’s participation in boards has reached 17,8% (see appendix 5) - Breaks the vicious circle of women at shared services functions => 9/10 States where women are well represented in politics use quotas (see appendix 1).

- Bring diversity and professionalization of boards (by breaking the mirror effect of appointing “one of the boys”) = fresh eyes - Limits the imposter effect (women systematically rely on skills, hard work and competence for their career progression and do not ask for high positions = no role models) - France has reached 20% women among non-executive directors of listed companies and targets 40% in 2020. - France now ranks 4th in the world percentage of female directors. + ½ of French boards have min. 3 women, See appendix 7. - The highest percentage point changes in the past 5 years have been attributed to countries in industrialized Europe and the Nordic countries (GMI ratings 2013) = where quotas were implemented. Half of the boards in the Nordic countries have now at least 3 women holding mandates, due to the implementation of the 40% quota target by 2014. Example Norway has reached 40,3% women on boards in 2010.

WEAKNESSES OF GENDER QUOTAS 1) Efficiency of quotas is subordinated to (a) strong sanctions (b) complementary measures because of structural gender inequalities => Cancellation of electoral lists, “comply or explain” system = political power tends to relocate to institutions where LEQ are not applied, gendered rituals (late and long hours meetings, gender segregation of portfolios), over-surveillance of women’s performance y party colleagues…

- Quotas increased women’s participation in boards BUT their access to decision making bodies stagnates. => The percentage of women in executive committees (top management) has increase by +1,9% between 2008 and 2013. See appendix 8. - Quotas encourage tokenism (no real change in other areas = senior positions, gender pay gap etc.), ex. Norway, India etc. - A lot of disparities in the implementation of quotas (region, state and sector) tackle their efficiency.


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2) Legal obstacles to positive discrimination: (a) quotas seem contrary to the equal treatment principle BUT FR and the UK adopted legal measures since 2000 not overruled by the CJEU (b) CJEU imposes restrictive conditions (since the Treaty of Amsterdam introducing the concept of gender mainstreaming (article 3) and assigning the promotion of gender equality task to the Community) 1/ there are fewer women than men in the relevant post 2/ both female and male candidates are equally qualified 3/ the application of each male candidate is subject to an individual assessment using non discriminating criteria 4/ priority is not automatic and unconditional (Oliveira and Gondek, 2014)

- The risk of replacing a competent person with someone who is less competent” is an argument that is often heard! But women are recruited on the same methods and criteria as men so the argument is unfounded. - Quotas can also become a cause of stigmatization. A position is given for the privilege of one’s gender. - Quotas cannot be reached because the number of women with the required characteristics is too low. => More and more people consider quotas as a necessary evil.

2- Diversity in the top management

Credit Suisse Report, 09/2014 - How diverse top management teams are? links with performance !

“Women on boards: Sharing a Rigorous Vision of the Functioning of Boards, Demanding a New Model of Corporate Governance”, Journal of Research in Gender Studies, Volume 4(1), 2014 pp. 101-140, ISSN: 2164-0262, by Viviane de Beaufort and Lucy Summers. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2333536

WHY A GENDER ATTITUDE?

- Facts show greater diversity in boards and management are empirically associated with higher returns on equity (+28% for a CEO and +52% for Senior Management), higher price / book valuation, higher dividend payout ratios (+12,2%) and superior stock price performance (companies with at least one women on board outperform by +26% those without any). ∆ NO causal explanation = do better companies hire more women? Do women choose better companies? Do women themselves help improve the company’s performance? => NO judgment of a gender versus another = only diversity in decision-making makes such a result, ex. the presence of 1 woman within a group is a key factor influencing collective intelligence (ability of the group to make successful decisions).

- A mixed gender board increases corporate performance: it’s the range of combined skills and profiles that creates the wealth of a board = boards need to become more international, more feminine, and younger. - Women have a different leadership style: ability to listen (team player), ask questions (driver of change), channel their ego, cooperate and compromise, ensure employees well-being, feel responsible, respect for rules and ethics, risk aversion, less acquisitive + soft skills linked to emotional intelligence = added value in groups, hence increased competitiveness + transforms the board in a “team” => Women prefer to act as a team (collaborative approach) ≠ Individual player (power games). - Women look for power to act : women’s careers are not motivated by attraction of power but rather influenced by an interest in a job and/or desire to have a positive impact - For women, power implies duties, respect of ethical rules, responsibility and courage.

BARRIERS TO GENDER DIVERSITY

Individual barriers: educational choices, sector choices, pipeline availability, risk aversion disparity. Cultural biases: Perception of female commitment, Presumed Work-life balance priorities and choices, Spousal

Internal and Structural barriers: Women feel less confident than men that they will reach the top because they don’t think their company’s culture will help them. External barriers: default stereotypes that surrounds


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role and support, Double standards. Workplace disparities: Face time and flexibility, Staff rather than line role promotions, Mentoring for women rather than sponsorship (lack of efficient support network that leads quickly to the top), Promotion rates. Cranfield Business school research as many men work flexibly as women, but women do so contractually or go towards support side functions (i.e. shared services) whereas men do so unofficially and accept positions leading to boards. Accenture’s 2014 survey : men are more likely to ask for a promotion (+20%) and more likely to be granted that promotion (+15%) than women + men ask for a higher increase. Structure / Policy barriers: Lack of shared parental leave, Lack of childcare assistance, Differentiated taxation Organizations were designed for men and manufacturing. There is a linear correlation between the percentage of women in board and the “gender” of a country (see appendix 4). => Companies with at least 1 female board member : 39% in masculine countries (award competition, assertiveness) 59% in feminine countries (award cooperation, modesty) In Europe 10% of boards have 0% female directors 50% of boards have ≽ 20% women on board

leadership position => Leadership is still perceived as a masculine value while empathy and listening are associated to a feminine behavior. + When a woman reaches a position of power she becomes less liked because women are associated to bad managerial skills. Women already in positions of power are in minority. Minorities are subject to rejection or avoidance. Women may become more masculine in the way they exert power and lose their possible “feminine” qualities. => The whole functioning of boards must change: more operational instead of full financial, more Human Resources policies, consideration for the sustainability of the business

WOMEN AT TOP MANAGEMENT

1) Only 12.9% at the end of 2013 (see appendix 1) = varies from sector to sector (mining, machinery and energy have low female representation) = and country by country (require cultural change). 2) Tends to be skewed towards areas of less influence (supervision rather than direct influence) and with lower promotion opportunities. => Management power line: shared services (18,9%) > CFO, strategy & IR (17,5%) > Operations (8,5%) > CEO (3,9%) + Women’s representation is higher in “New Economy” (consulting, education, internet retail) and in “non-manual labor” companies (banks, insurance, technology)

Only a 1.9% increase in the top management in the past 6 years. A minority needs to represent at least 33,33% if it wants to play a role. In 2013, women only represent 11% of board members (GMI ratings 2013).

MEANS OF ACTION

- shared parental leave in Scandinavian countries ensures women can choose to go back to work after the birth of a

Flexible work measures, virtual mobility, mentoring programs, role models campaigns, parental leave, legal quotas, CSR


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child - state provision of childcare assistance allows women to work - mandatory disclosure of diversity data, targets, initiatives and progress + gender pay-gap

measures, good governance practices, benchmarks, ethical pension funds, the media, transparency for listed companies (statement on corporate governance in their annual report) to help benchmarking = detailed and diverse statistics, progress A mixed leadership style which embraces both female and male qualities. => Professionalize leaders’ recruitment processes (bring expertise in boards by hiring people with diverse backgrounds), mandate transparency of board members appointment; provide incentives for rigorous execution of one’s mandate etc.

3- Other tools to meet gender diversity (Members States Benchmarking)

United Kingdom Adopted corporate governance code provisions in 2010 and completed in 2012 requiring listed companies to disclose their progress against current and future objectives and policies on boardroom diversity. 2011, “Lord Davies Report” revealed in 2010 women made up only 12.5% of the members of the corporate boards of FTSE 100 companies. The report proposed 10 recommendations for government and business in achieving urgent change in the proportion of women representing corporate boards, especially that FTSE 100 Boards should aim for a minimum 25% female representation on their boards by 2015. In 2012, the percentage of women on boards uplifted to 15%, after a 3 year stagnation. In 2014, UK is closer to achieving the 25% target set for 2015. It has to maintain this pace though. => The world’s eyes are on the UK to see whether or not a voluntary approach, rather than regulation, is enough of an incentive for companies to realize that women make a positive difference to board effectiveness. Germany Germany has relied on Corporate Governance codes established in 2001, encouraging to set voluntary targets. However, the percentage of women on corporate boards increased by no more than 3% in Germany from October 2010 to January 2012 (Paul Hastings, 2013). Chancellor Merkel foresees a 30% mandatory quota to be implemented in 2016. The bill requires large listed companies to fill 30% of their supervisory board seats with female nonexecutive directors and force thousands of large and midsize businesses to set binding targets for women top managers. http://www.bloomberg.com/news/2014-11-26/germany-backs-legal-quotas-for-women-on-company-boards.html => The law will bring a cultural change in Germany and modernize corporate culture according to Schwesig, who runs the family affairs ministry. => Obstacle: The German industry has a critical view of rigid quota + Only 1/3 of the 30 companies in Germany’s DAX stock index would currently meet the 30% quota suggested in the bill. http://time.com/3630800/germany-women-board-executives/ The new law will require 108 publicly-traded companies to place women in over 170 supervisory board seats. And an additional 3,500 companies with over 500 employees each will have to boost the number of women in management positions within the next two years. France France has reached its 25% goal and now targets 40% women on boards of listed companies by 2017 and 2020 for non listed one. Results on boards but : Comex : 10,6% of women in France & Codir: stagnates at 8% Main sources : Credit Suisse Report, 09/2014

Women on boards: Journal of Research in Gender Studies, Volume 4, 2014 pp. 101-140, ISSN: 2164-0262, Viviane de Beaufort and Lucy Summers :http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2333536

- How diverse top management teams are? links with performance !Eurobarometer – Women in decision making positions, European Commission, 18/09/2011


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APPENDIX 1 – Current gender quotas and disclosure requirements


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APPENDIX 2 – Trajectories of women on executive committees 30 years after graduating from university APPENDIX 3 – Women on Corporate Boards of publicly listed companies


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APPENDIX 4 – Levels of Women on Boards by Region in March 2013

APPENDIX 5 – Adoption of gender diversity Benchmarking

APPENDIX 6 – Evolution of women on boards of directors France – quota’effect


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APPENDIX 7 – Evolution of the percentage of women on Executive Committees APPENDIX 8 – Adoption of Gender Diversity Measures

Women in decision making bodies summary essec wil january 2015

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