State quota offers leg up into men’s world

Switzerland is below the European average when it comes to female representation in company boardrooms Keystone

A decision by the cabinet to push for the introduction of a target rate for women in boardrooms of Swiss companies has fuelled an ongoing debate for and against gender quotas. But what impact is it likely to have?

“Target rates are more convincing than rigid quotas. It puts the pressure on but leaves time to find suitable women,” says senator Anita Fetz, who championed the move. Fetz is a pragmatist who has years of experience in organisational development and as personnel advisor.

She says companies with mixed gender boards are more innovative and more successful commercially.

The logic being that a group of similar people with similar professional and educational background find it more difficult to produce original ideas and they might tend to keep to themselves.

Fetz argues that setting a voluntary 30% rate of women boardroom members in institutions and companies with close government links by 2020 is an important step in the right direction. These bodies would also be obliged to file regular progress reports.

“It goes beyond any commitment about equal pay,” she notes.

Above all, she continues, it is important to keep pressure up.

Quotas

The cabinet has agreed in to introduce a 30% women boardroom target quota for companies with close links to the Swiss government.

The guidelines, approved last November, apply to 29 companies with a total of 264 board seats and are to be implemented by 2020.

They include the Post Office, the Swisscom telecom company, the Swiss Broadcasting Corporation, the Skyguide air traffic control, the financial and nuclear safety regulators and the Ruag armament firm.

Voters in Basel City will be the first to decide on a similar project at a cantonal level – for the boardrooms of its state bank, public transport and utilities in February.

Second best

The approach might not seem exceedingly ambitious, but it is in line with recommendations by the Organisation for Economic Co-operation and Development (OECD).

In its latest country survey on Switzerland, the organisation supports a soft approach such as voluntary targets, disclosure requirements and a so-called Comply or Explain policy – a corporate governance code, allowing companies not to comply with certain provisions, but they have to explain the reasons and provide an alternative solution.

“Boardroom quotas may not always be economically efficient and are therefore a second best option,” says Richard Dutu, economist at the Swiss desk of the OECD in Paris.

But quotas are considered useful, “as a threat and in extremis as a policy measure, if no quantifiable progress in gender equality is being achieved”.

Education

In its latest country survey the OECD concludes that women in Switzerland are in a good position to take on top posts, since they are as well educated as men, but nevertheless are still underrepresented at boardroom level.

It notes that the number of female non-executive members doubled over the previous six years from a low starting point of 5.9%, but this is still well below Europe’s Nordic countries or neighbouring France.

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The low level of government support – notably for childcare infrastructure, including nurseries, is one of several reasons for the sparse representation.

And Dutu agrees that companies can benefit from greater balance.

“There are many reasons to believe that more women on boards is beneficial, such as diversity of views on the business challenges faced by companies, or a better understanding of markets with a large female customer base,” the OECD economist points out.

The organisation’s report quotes a number of academic studies which appear to show that women are more likely to show leadership skills and that a high female board presence is associated with stronger attention to handling conflicts of interest.

Anita Fetz, Senator

Target rates are more convincing than rigid quotas. It puts the pressure on but leaves time to find suitable women.

Good mix

Fetz raises another point. Due to a perceived dislike of women for technology and lack of scientific training it might not always be easy to find suitable women for boardrooms in engineering and technology companies such as the state-owned Federal Railways, the Ruag armament firm or even the nuclear safety inspectorate.

But she believes it is a realistic aim since any good board is made up of people with different skills and backgrounds, and does not require, for instance, specialists only with engineering or nuclear science expertise, but also those with strengths in marketing, finance or political networking.

As for quotas in Switzerland, Fetz is unambiguous. She is in favour, at least in theory – and certainly as a last resort, but only if the government goals are not achieved.

“For the moment the government has done enough and further measures are simply not realistic,” she says, convinced that a company which refuses to boost the number of women in top positions is shooting itself in the foot.

Time factor

Fetz remains pragmatic not least because she sees little hope of support for quotas at the political level.

In December, parliament threw out proposals by a fellow Social Democrat calling a 40% quota for listed companies as well as a draft law aimed at tightening the cabinet decision on targets for state firms.

The senator is not sure whether the time is right to put the idea of quotas to a public ballot.

A first test will be held on February 9 when voters in canton Basel City – her own constituency – will have a say on a planned 30% gender quota for boardroom members of the public transport and the canton’s utilities and its bank.

Self-regulation

For its part, private industry does not want to be told what to do. A recent survey by the Employer’s Association found that companies prefer setting their own rules in the code of best practice for corporate governance.

Legal quotas risk undermining entrepreneurial freedom, according to Valentin Vogt, the association’s president.

“The flexibility and organisational sovereignty of companies must not be limited,” he cautions.

The poll of about 150 public companies revealed that three out of four firms which responded to the questionnaire pledged to increase the number of female board members within the next six years.

The association acknowledges that efforts are needed, despite some progress over the past few years. Switzerland is currently below average in a European comparison, with women board members making up 16% for the main listed companies and just under 8% of non-listed firms.

Last November the European Union took a first step towards a 40% gender quota for boards of corporations in about 5,000 publicly traded companies across its member states when the Commission adopted a proposal for a law.

However, the decision – which does not affect Switzerland since it is not a member – still faces a tough approval process by the European parliament and leaders of individual countries.