April 21, 2017 / Table Talk

“Die Frauenquote” – A Year On: An Update on Diversity in the UK and German Corporates

On 4th April 2017 Fidelio was delighted to co-host a seminar “‘Die Frauenquote’ – a Year on. An Update on Diversity in UK and German Corporates” in conjunction with the German-British Chamber of Commerce, the German British Forum and Nabarro LLP.

As a Board Development and Executive Search firm, Fidelio champions the business case for diversity in our work building highly effective Boards and leadership teams. To this end we were delighted to welcome a senior panel of Chairmen, Board Directors and for the first time a leading investor to explore what works, what more needs to be done, and how we can continue to move the dial on the critical issue of diversity.

Our speakers on the evening were:

  • Sir Philip Hampton – Chair of the Hampton-Alexander Review; Chairman of GlaxoSmithKline plc; and Senior Independent Non-Executive Director of Anglo American plc.
  • John Allan– Chair, Tesco plc, Barratt Developments plc and London First. He is also a Non-Executive Director of Worldpay Group plc, and former roles include CFO of Deutsche Post
  • Elisabeth Lady Stheeman– Supervisory Board Member of Aareal Bank AG; Supervisory Board Member of TLG Immobilien AG; Senior Advisor, Bank of England/Prudential Regulation Authority
  • Dr Hans-Christoph Hirt– Executive Director and Co-Head, Hermes EOS
  • Patricia Godfrey – Chair, German British Chamber of Industry & Commerce; Partner, Head of International, Nabarro LLP
  • Monika Schulz-Strelow – President, FidAR (contributed via an interview)
  • Gillian Karran-Cumberlege, Partner, Fidelio Partners; Independent Non-Executive Director, Jaguar Land Rover India (Moderator).

We were also joined on the evening by an audience of ca. sixty Chairmen, Executive and Non-Executive Directors and advisors from Germany and the UK to explore the issue. A broad range of sectors were represented including property, automotive, bio-technology, industrial and financial services, as well as professional services, and non-profit.

Sir Philip Hampton, Chair, Hampton-Alexander Review provided the keynote speech, updating the audience on what has been achieved to date in the UK, as well as the objectives of the Hampton-Alexander Review. This was followed by an update on progress in Germany by Patricia Godfrey, Chair of the German-British Chamber of Industry & Commerce, incorporating an interview with Monika Schulz-Strelow, President, FidAR. (FidAR is a non-profit, non-partisan iniative in Germany formed in 2005 by senior women in business, science and politics to increase the number of women on German Supervisory Boards, and was a major driving force behind the introduction of the “Frauenquote” legislation in 2016.)

 

Key themes to emerge were as follows:

  • The UK – Our panellists agreed that progress towards Boardroom diversity had been made, with the current percentage of female representation 27% in the FTSE 100. In order to continue to move the dial on diversity in corporates, 2016 saw the establishment of the Hampton-Alexander Review, which builds on the recommendations set out in the Davies Review. This importantly cascades the new target for 33% female representation at Board level to all FTSE 350 Boards, as well as extending the focus to Executive level. The Review sets a combined target for 33% across FTSE 100 Executive Directors and their direct reports – a cohort of 7787, whose current combined female representation stands at 26%.
  • Germany – The legally binding “Frauenquote” came into force in January 2016; setting a fixed 30% Supervisory Board quota, applicable to 106 major German companies, supported by the “empty seat” rule, whereby companies below the quota must fill seats with women, or leave them open. Binding targets apply for a further group of listed or codetermined companies, who must set diversity targets for Supervisory Board, Management Board and first and second management levels, and publish figures in annual report. This has led to an increase of women on Supervisory Boards – now 27.5% across the 100 largest listed companies. However there are still roadblocks to overcome. Smaller companies have the opportunity to set legally binding targets at the current level – resulting in the so-called zero quota.
  • The Business Case for Diversity – The panel was unanimous that there is a clear business case for greater diversity in the Boardroom and Executive Committee. Much has been written about the value of diverse perspective in decision-making and the overall outperformance of companies with diverse leadership teams. Dr Hans-Christoph Hirt was clear as an investor with a strong governance perspective, there is also an important ethical dimension to increasing diversity in corporates.
  • Executive Diversity – Representation at the Executive level remains stubbornly low. Our panel and audience focused a major portion of the debate on how to strengthen the Executive pipeline. Speakers emphasised that corporates should focus on reviewing ‘leaky’ sections of the pipeline, determining the cause, and putting in place measures to foster and retain female talent.
  • Moving the Dial – We asked each of our panel which single area they would focus on to move the dial on diversity. They stressed the importance of culture, leadership, broadening talent pools, developing female talent, and the critical role of investors.

 

Conclusion

Fidelio was delighted to welcome a senior panel of Chairmen, Directors and Investors on 4th April to “‘Die Frauenquote’ – a Year on. An Update on Diversity in UK and German Corporates”, as well as a senior audience from the UK and Germany to explore what more can be done to move the dial on diversity.

This panel discussion provided an excellent forum to review progress that has been made to date; clearly diversity initiatives in both markets have delivered an increase in the percentage of female Non-Executive Directors and Supervisory Board members, and the business case for diversity is being communicated more visibly.

But there is also impatience at the pace of change and frustration at companies that are failing to adopt more ambitious targets. The importance of maintaining this momentum, while broadening the debate to focus on developing the female Executive pipeline emerged as a major theme. In the UK, the Hampton-Alexander Review sets a new 33% target for female representation at the Executive and direct report level. In both markets, strengthening the pipeline will require a combination of development initiatives, mentoring, reviewing hiring process and broadening talent pools.

Building on progress to date, and continuing to move the dial at both Board and Executive level is not an insurmountable task, but our panellists were clear that in order to achieve this business leaders must demonstrate commitment to ambitious targets, maintain a focus on the business rationale, while recognising the social justice arguments.

There is also a call to action for investors, who have an important role to play in driving the issue through dialogue with Chairs and company leadership. Investors wield tremendous influence and as Hermes demonstrated there is the opportunity for shareholders to collaborate with the companies they invest in to achieve considerably greater diversity while also enhancing performance.

Fidelio is committed to promoting diversity within both the German and UK markets and this panel discussion has made an important contribution to the debate. It has brought together business leaders from both markets, provided praise where praise is due, as well as highlighting where more needs to be done.  Importantly this second Frauenquote debate in London also created a framework for sharing what works and enabling world class corporates in the UK and Germany to learn from each other in pursuit of a common goal – increasing Board and leadership effectiveness through greater diversity.

For further information about Fidelio’s contribution to diversity through Evaluation, Development and Search or to receive the full summary of this panel discussion, please contact Emily Baker at Fidelio Partners.

 

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