Siemens Warming to Quotas Underscores Germany’s Gender Gap

Five years after pledging to promote more women to leadership roles without using legal quotas, Siemens AG (SIE) is fighting a losing battle.

The only two female management board members at Germany’s largest engineering company have departed after an overhaul, leaving the highest-ranking woman the sole female among 17 divisional heads, one level below top management.

“If businesses can’t manage it on their own, then we need to start thinking about whether it needs to be legislated,” Chief Executive Officer Joe Kaeser said at a networking event for female executives in Siemens’s home city of Munich in October.

His comments, the first from the head of a major German company in favor of a quota, are an admission of the lack of progress Europe’s largest economy has made in fostering female managers. Of 191 executives on the management boards of Germany’s 30 biggest companies, only 12 are women, down 20 percent from last year.

While the number of women in management roles rose to 19.1 percent at the end of 2012, a 1.3 percentage-point increase, Deutsche Lufthansa AG (LHA)’s Chief Financial Officer Simone Menne remains the only female CFO or chief executive of a company in Germany’s benchmark DAX Index.

Photographer: Guenter Schiffmann/Bloomberg

Siemens AG Chief Executive Office Joe Kaeser. Close

Siemens AG Chief Executive Office Joe Kaeser.

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Photographer: Guenter Schiffmann/Bloomberg

Siemens AG Chief Executive Office Joe Kaeser.

Calling Card

Impatient for change, Chancellor Angela Merkel’s new government is accelerating plans to require listed German companies to fill at least 30 percent of supervisory board seats with women. As part of an agreement with the Social Democratic Party in coalition talks that concluded last week, companies will have to comply by 2016, four years earlier than planned. It also plans legal quotas for management board members.

“Our biggest companies still have almost no women in their leadership,” German Labor Minister Ursula von der Leyen said in a June 26 interview. “With that sort of calling card, Germany can’t survive much longer internationally.”

Demographic change is forcing the government to examine ways to encourage more women into Germany’s shrinking workforce. The country has Europe’s oldest population. It also has the second-lowest birthrate after Monaco, with just 8.37 births per 1,000 people, according to data compiled by the U.S. Central Intelligence Agency. That places it 218th among 224 countries.

One Breadwinner

Policies that encourage mothers to stay at home and take part-time employment, a school system with irregular hours, and a culture that preserves the traditional role of the male earner inhibit women pursuing careers in Germany. Legislation would force cultural change, Henrike von Platen, head of the Business and Professional Women lobbying group, said in a interview.

Photographer: Ralph Orlowski/Bloomberg

Deutsche Lufthansa AG’s Chief Financial Officer Simone Menne. Close

Deutsche Lufthansa AG’s Chief Financial Officer Simone Menne.

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Photographer: Ralph Orlowski/Bloomberg

Deutsche Lufthansa AG’s Chief Financial Officer Simone Menne.

Germany’s rapid return to affluence after World War II -- the so-called “Wirtschaftswunder,” or economic miracle -- meant many households could afford to have only one breadwinner, a luxury unrealistic in many countries, she said. That cemented attitudes developed under the Nazi regime, when German women were awarded the “Cross of Honor of the German Mother” medal if they bore four or more children.

Only 44 percent of Germans believe that a male would make career sacrifices to enable his partner to prosper professionally, according to a study published Nov. 25 by the household goods maker Vorwerk & Co. KG.

Vicious Circle

While part-time job programs have pushed the portion of women in employment in Germany above levels in the U.K. and U.S., female pay levels lag those of men. Last year, 68 percent of German women aged 15 to 64 had jobs, compared with 60 percent in 2005, statistics from the Organization for Economic Co-operation and Development show. Yet the gender pay gap remains at 22 percent, the third-biggest in Europe, according to Eurostat data published in March.

Pay levels lag employment rates because so many women are in part-time employment, according to von Platen. Almost one in two German women work part-time, compared with 32 percent in the European Union, according to Eurostat.

“Once they’re in that position, the vicious circle is pretty much completed because they seldom get out of it,” von Platen said.

While Siemens’s Kaeser said a quota may be necessary if the situation doesn’t improve, he said he doesn’t think it’s required in this legislative period. Still, he’s a lone voice in corporate Germany, where industry groups oppose gender quotas, calling EU plans to impose a 40 percent threshold for female directors on company supervisory boards illegal.

‘Deeply Disappointed’

The European Commission adopted a draft proposal by EU Justice Commissioner Viviane Reding in November 2012 aimed at requiring supervisory boards to be at least 40 percent female by 2020. Companies may face sanctions if they fail to favor women over equally qualified men.

Reding said she was “deeply disappointed” by the slow increase in female DAX managers in a 2012 interview with Die Welt newspaper. “France is a positive example. In 2011, a quota was introduced and within a year the proportion of women in supervisory boards increased from 12 percent to 22 percent.”

France made it compulsory two years ago for large companies to have non-executive women account for at least 20 percent of board members by 2014, and 40 percent by 2017.

The departure at Siemens of supply chain head Barbara Kux in November after five years and Brigitte Ederer in September after three years as personnel chief means the most senior woman is now Britta Fuenfstueck, who heads the clinical products division. Janina Kugel joined as head of personnel strategy and executive development from Osram Licht AG (OSR) this month.

Necessary Skills

Both Kux and Ederer were appointees of former CEO Peter Loescher, whom Kaeser succeeded in August. Since Kaeser took over, Chairman Gerhard Cromme has been downsizing the board. Kux’s contract wasn’t renewed, with the company saying her work was complete. Ederer resigned.

Siemens says 16 percent of its leadership roles globally are held by women, compared with 12 percent in its home country. That meets an internal target set in 2011. The company also gave 13 million euros in extra pay in 2012 to encourage new mothers to return to work sooner than legally required. While the German government is introducing binding quotas, some of the biggest companies as well as female executives remain skeptical.

Nicola Leibinger-Kammueller, CEO of family-owned machine tools maker Trumpf GmbH & Co. KG, said in an interview that she opposes gender quotas, while adding that companies must foster women’s skills in “relevant subjects -- technology, engineering, mathematics, economics and business.”

Henkel AG, the maker of Loctite glue, says 30 percent of its managers are female and it has programs in place to accelerate the foreign postings which are a key criterion to becoming a top manager.

“We want to increase the proportion of women in leadership roles, but a binding fixed quota is not necessary,” Henkel’s personnel head Kathrin Menges said by e-mail. She said about half of the candidates in the company’s talent pool are female and that will also be reflected in Henkel’s top management, “sooner or later.”

To contact the reporter on this story: Alex Webb in Munich at awebb25@bloomberg.net

To contact the editor responsible for this story: Simon Thiel at sthiel1@bloomberg.net

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