More women in the boardroom – but how?

Women continue to be under-represented in upper-level management. In Austria, they make up only 4.9% of the management boards of listed companies. The reasons for this are a topic of heated debate among researchers – as are possible ways to combat the problem and bring more women into top management and supervisory board positions. “We need clear goals and increased public visibility of success in reaching these goals,” says WU researcher Heike Mensi-Klarbach. In her work, she looks at the impacts of measures beyond legislative quotas and how they affect the percentage of women in executive roles.

An increasing number of European countries have imposed legislative gender quotas, including Austria, where a quota for women on supervisory boards was introduced in 2018. “When we look at the results, we can see that yes, gender quotas do increase the number of women on the boards that are directly affected by the regulation, but also that the reasons behind women’s lower participation rate – e.g. the stereotypical image of managers as men – aren’t going away,” explains Heike Mensi-Klarbach from WU’s Institute for Gender and Diversity in Organizations. “In Norway, a world pioneer in introducing gender quotas, the quotas brought more women on to advisory boards, but nothing changed in the companies’ managing boards.” Since strict legal regulations do not appear to result in a sustainable cultural shift, Mensi-Klarbach is investigating the potential long-term effectiveness of ‘softer’ initiatives, aside from legislative measures.    

Increasing the pressure: Clearly defined targets and the threat of quotas

Together with two WU colleagues, Mensi-Klarbach looked at the impacts of the recommendations on gender diversity in the Austrian Code of Corporate Governance (ÖCG-K) on the supervisory boards of listed companies, and at the role played by public discourse on the threat of a gender quota imposed by lawmakers. The results showed clearly: While the vague recommendation of the ÖCG-K guidelines that “reasonable attention” should be given to the aspect of gender diversity had no effect at all, the number of women in management positions increased significantly during the period of intense public discourse on the introduction of a legislative gender quota. “However, this change was only apparent as long as the introduction of a gender quota was a realistic scenario. When it looked like it was no longer an option, the effect was gone again,” says Mensi-Klarbach. She also investigated the effects of voluntary gender diversity targets in the supervisory boards of state-owned companies and of public reporting on the achievement of these goals. The combination of setting goals and public accountability as implemented by these state-owned companies proved to be effective: The pressure caused by setting specific goals and making them publicly visible resulted in increased nominations of women, according to the researcher.

Low awareness of the advantages of diversity

The study showed that voluntary self-regulation doesn’t work in Austria without additional pressure. According to the study’s author, this indicates that gender diversity is not regarded as an advantage and gender homogeneity is not considered to be disadvantageous, in spite of the fact that numerous studies have shown that diversity can be a strong success factor. “For ‘soft’ measures to be effective, there has to be additional pressure,” says Mensi-Klarbach. Her study demonstrates clearly that in Austria, an increase in the number of women could be achieved by setting specific targets and visible monitoring of target achievement, but also through the credible threat of a legislative quota. “Since ‘hard’ quotas often result in resistance and attempts to circumvent them, they are not effective in bringing about long-term cultural changes on their own. For this reason, effective ‘soft’ measures can be a sensible alternative.”

Further information:
Mensi-Klarbach, H., Risberg, A. (eds.) (2019) Diversity in Organizations. Concepts and Practices. 2^nd Edition. Plagrave Macmillan.

Seierstad, C., Gabaldon, P, Mensi-Klarbach, H. (eds.) (2017) Gender Diversity in the Boardroom: European Perspectives on Increasing Female Participation. Vol 1. The use of different quota regulations. Palgrave Macmillan.

Seierstad, C., Gabaldon, P, Mensi-Klarbach, H. (eds.) (2017) Gender Diversity in the Boardroom: European Perspectives on Increasing Female Participation. Vol 2.  Multiple Approaches Beyond Quotas. Palgrave Macmillan.

Mensi-Klarbach, H., Vedder G. (eds) (2017) Geflüchtete Menschen auf dem Weg in den deutschen Arbeitsmarkt. Augsburg, München: Rainer Hampp Verlag.