Hewlett Packard Enterprise Co. is giving German companies a lesson in fostering female talent as firms in Europe’s largest economy remain slow to instill diversity in boardrooms even after government-imposed quotas took effect on Jan. 1.
The Boeblingen, Germany-based subsidiary of HPE, the U.S. technology company led by Meg Whitman, scored highest among 20 companies that participated in the 2015 FKI Women’s Career Index survey. The Kronberg-based research group measured their progress in improving gender balance in the uppermost levels of management of companies based in or operating in Germany. Deutsche Telekom AG took second place with HypoVereinsbank and Intel Corp. also ranking among the top performers.
HPE’s pledge to increase the percentage of women at the highest levels of management to 20 percent by 2020 from 17 percent currently makes it a role model when it comes to implementing legislation that obliges companies to declare targets for executive boards while Chancellor Angela Merkel’s government enforces a 30 percent quota for the supervisory boards that oversee them.
“We can’t rely on quotas for the next 20 years,” said Angelika Gifford, the board member responsible for software at HPE’s German subsidiary. Nor should the purpose of increasing diversity be left to human resource managers, she said. Professional career development “is a task for the management board.”
Deutsche Telekom has aspirations to achieve levels as high as 40 percent at all levels of management, making it a frontrunner on Germany’s DAX Index of 30 biggest companies.
With the appointment of Claudia Nemat to the company’s management board in 2011, Deutsche Telekom was among the first to promote female executives to top management. Since 2014, it has run yearlong programs to train women in the skills required for participation on supervisory boards, placing 8 of those who qualified in the first program on boards at Deutsche Telekom units since completing the course in the summer of 2015.
“It makes sense to set goals and make these transparent,” said Elke Frank, senior vice-president in HR Development at the Bonn-based company. “Diversity is an integral part of business culture in the U.S. We’re only setting out on that path in Germany.”
Women are driving a jobs boom in Europe’s largest economy, where unemployment has fallen to a record low. The rapid rise in female participation in the workforce over the past 10 years meant that about 73 percent of women had a job in 2014, up 10 percentage points since 2005, data published by the German Statistics Office showed last month. With 78 percent of people aged between 20 and 64 in employment, Germany is second only to Sweden’s 80 percent in the European Union.
Yet higher participation in the labor market isn’t translating into discernible increases in corporate management. Here, Germany ranks in the middle in Europe, below countries including Norway, France and the U.K., according to a Jan. 13 report by the DIW economic research institute.
Despite the advances spurred by legislation, growth in female representation at German companies is slowing, said DIW. At the end of 2015, the share of women on executive boards of the 200 biggest companies in Germany stood at slightly more than 6 percent, an increase of less than one percentage point on the year.
While most DAX 30 companies have at least one woman on their supervisory boards, two have no female representation at all: healthcare company Fresenius Medical Care AG and its parent Fresenius SE, based in Bad Homburg.
With 22 percent of the 200 biggest German companies lacking any female supervisory board members or failing to fulfill the quota, “it is highly unlikely that the lion’s share of the remaining companies will follow these trailblazers voluntarily in the near future,” DIW said. “Germany’s companies still have a long and difficult path ahead of them in order to achieve increased representation of women on their corporate boards.”
Leaving it to companies to set their own goals for management boards diminishes the responsibility of corporations in fostering female leadership, said Barbara Lutz, FKI’s founder.
“Even the most engaged companies are only achieving a growth rate of one percent,” she said. “It’s a marathon, not a sprint.”