Germany Makes History with Quota for Women in Senior Management

Germany introduced a mandatory quota for women in senior management in the country’s listed companies, the first instance of a country requiring women in top executive leadership. The governing coalition agreed that Management Boards with more than three members must include at least one woman. In addition, the agreement dictates that state-owned companies (companies in which the government holds a majority stake) must have women holding at least 30% of seats on the Supervisory Board. (Germany is one of few countries with two-tiered boards unlike the unitary boards in place in most economies.)

Franziska Giffey, Germany’s Minister for Family Affairs, Senior Citizens, Women and Youth, described the decision as a “historic breakthrough” and said, “We are putting an end to women-free boardrooms at large companies.”

Women currently only make up 12.8% of Management Boards of the DAX30, the companies in Germany's blue-chip index, according to a recent survey by the AllBright Foundation. The number of women in these executive roles declined from 29 to 23 over the past year, highlighting the failure of companies' voluntary initiatives and the need for more aggressive measures. (The Guardian, "Germany agrees to 'historic' mandatory boardroom quota for women," November 22, 2020)

This current legislation follows a quota passed in 2015 requiring listed companies to have at least 30% women on their Supervisory Boards while recommending voluntary targets for female participation in management positions. While the mandate for women on Supervisory Boards succeeded (currently at 36.3% women directors), the voluntary commitment for companies to add women to their Management Board largely failed. "Change doesn't happen without pressure," states Irene Natividad, Chair of Corporate Women Directors International, "and quotas mean that pressure comes from a law."