Women on Boards – Thoughts about the Leadership Positions Act

The legal basis in Germany for women on supervisory boards is the Act on the Equal Participation of Women and Men in Leadership Positions in the Private and Public Sector, commonly known as the FüPoG (Leadership Positions Act).

Key Provisions of the Leadership Positions Act 

The law was first enacted in 2015 and was further strengthened in 2021 by the FüPoG II. The key provisions include:

Gender Quota on Supervisory Boards:

• For publicly listed and co-determined companies, a minimum quota of 30% women on supervisory boards applies.
• If this quota is not achieved, the seats allocated to the underrepresented gender must remain vacant (known as the “empty chair” rule).

Minimum Participation in Executive Boards (FüPoG II):

•  Since the FüPoG II, publicly listed and co-determined companies with executive boards of more than three members must have at least one woman on the board.
•  Companies subject to these regulations are required to report on the achievement of their gender targets and the measures they are taking to promote gender equality in leadership positions.

Target Setting Regulations:

• Companies that are either publicly listed or co-determined must set target figures for the proportion of women in leadership positions (e.g., on the executive board or in the first and second management levels). These targets must be regularly reviewed and publicly reported.

The FüPoG aims to promote gender equality in leadership roles and ensure that women are better represented in senior positions in the private sector, especially on supervisory boards and executive boards. 

The corresponding European regulation related to gender equality in corporate leadership is known as the EU Directive on Gender Balance on Company Boards (also referred to as the Women on Boards Directive). This directive was adopted by the European Parliament and the Council in 2022.

The Purpose and Impact of the Gender Quota 

The directive requires large publicly listed companies across the European Union to ensure that at least 40% of non-executive board positions are held by women by 2026. For companies that do not meet this threshold, a target of 33% for all board positions (executive and non-executive) can be used as an alternative.

Both aim to increase female representation at senior levels of corporate governance.

The law does not impose fines, but non-compliance could result in vacant board positions, reputational harm, and legal challenges regarding transparency and governance practices. The empty chair rule was applied in a case in 2016 in Germany with a stock-listed company that failed to meet the 30% gender quota when a male candidate was nominated to fill the empty supervisory board seat, but the company had not reached the required number of female members. The nomination was deemed invalid, the seat remained vacant.

Challenges and Criticisms of Gender Quotas 

Discussions about these laws and the pink quota have been going on ever since. The main arguments against quotas and as a consequence less women in leadership and other positions are:

 1.     Meritocracy Concerns

The main criticism is that mandatory quotas may undermine meritocracy by prioritizing gender over qualifications. Opponents argue that board positions and leadership roles should be filled based on skills, experience, and competence. The same arguments are used for positions of professors in universities, for MINT and non-MINT leadership roles, in lower positions, and everywhere women are to be prioritized to reach gender parity.

 2.   Tokensim

There is a concern that the pink quota may result in appointing women to leadership positions primarily to comply with the quota instead of valorization of their skills and contributions. This can reduce the perceived legitimacy of women in these roles and reinforce negative stereotypes.

 3.   Negative Impact on Workplace Dynamics

Some critics argue that mandatory quotas could lead to resentment among employees, especially men who may feel they are being unfairly passed over for promotion in favor of women meeting the quota. This can create tension and hinder workplace cohesion.

 4.  Limited Focus on Broader Equality Issues

Quotas may focus on numerical representation rather than addressing the root causes of gender inequality, such as unconscious bias, lack of mentorship, and work-life balance issues. They argue that without broader systemic change, quotas might not lead to real, long-term improvements for women in the workplace.

 5.   Symbolic rather than Substantive Change

Some people perceive the pink quota as a symbolic gesture that fails to address deeper cultural and structural barriers to women´s advancement. They see quotas as a “quick fix” that may not lead to genuine empowerment and more inclusive cultures.

 6.   Enforcement and Flexibility

How rigidly may quotas be enforced, especially in industries with a historically low representation of women? In some cases, companies may struggle to meet the quota due to a limited pool of female candidates. How practical are quotas at that point?

 7.   Potential Backlash

Imposing quotas can trigger a backlash, both from within companies and the broader public. There may be resistance from those who feel quotas are an artificial imposition on corporate decision-making. Some believe quotas rather reinforce gender divisions than eliminate them.  

 8.   Focus on Top Levels, Not Pipeline

Gender quotas and the FüPosG focus on top leadership positions as supervisory boards. They do not help develop the talent pipeline at lower and middle management levels. Without addressing the broader issue of women´s career progression, quotas at the top may be difficult to fulfill and they may not lead to sustainable change.

Overcoming Challenges to Gender Equality 

Reading the above critics, you may perceive how deeply rooted gender inequality is. Indeed, the quota can only be seen as an initial and supporting tool. It cannot resolve and change an unbalanced situation where 50% of humanity is underrepresented and underpaid in comparison.

Yes, having to look for a woman when five out of six board positions are occupied by men may be challenging. Is it? Are we failing to find one skilled woman? The answer is often: women do not apply, and there are no women in the pipeline.

Women and Career Progression 

Possible reasons for women not applying may be:

1. They do not have the requested skills. As mentioned before, there is no study proofing this. Women are multitaskers and study alike. Some women may have the skills, others not. The same is true for men.
    
2. They prioritize on work-life balance. You need to be able to afford a work-life balance first of all. Studies researching the gender-specific requirement of work-life balance confirm that a higher percentage of women prioritize the work-life balance. These studies also state that women with caregiving responsibilities rather opt for part-time jobs and look for flexible work arrangements. This is not an option for a better, funnier, and balanced life, but the demand to properly take care of future citizens and – it is double work and effort in different surroundings. Women are more likely to assume this responsibility and renounce career steps or higher payment.
    
3. Women may not consider reaching out for an equal position as there is a lack of self-esteem in that respect. The educational focus often has been family, not career. School books in that respect are still far behind. The vicious circle starts here.
    
4. They do have to take care of children as nobody else does, as there are not sufficient pre-kinder garden spots or because the fathers pursuing a career do earn more.

Women are mostly busier than men with educating children and they often have more diverse responsibilities and duties than men. The antique role Baby boomers and GenX grew up with, supports this distribution of duties, directly or indirectly. Younger generations may start to incorporate change.

We seem to live in a culture and receive an education attempting to preserve actual structures. Fear of change, fear of giving up power and the laziness to get out of a comfort zone.

There is no scientific explanation or proof for women not being able at the same quality to work in leadership roles or MINT professions: in higher education 34% of all students accounting for MINT subjects are women. Between 20% and 25% in physics and mechanical engineering, about 17% in Germany. In the EU, percentages are higher, worldwide they are a bit lower. The stereotypes of women not being decisive or less capable of handling stress are not proven either. On the contrary, possible differences in leadership and communication styles can be seen as a plus, as a more holistic and more complete approach that will rather lead to performance and success.

I am happy to discuss roles that require physical strength, not applying the argument by inverse conclusion. 

The argument of a potential backlash

Resistance by those who feel that quotas are an artificial imposition of corporate decision-making. The actual misbalance of men and women in numbers does not represent the real-life gender distribution within humanity. To maintain this imbalance seems more artificial than to temporarily impose quotas as a tool for initializing change.

This argument may be valid to those who want to maintain the informal power circle.

The criticism of symbolic rather than substantial change

Substantial change means a fundamental alteration that affects core aspects of a situation, system, or structure. It leads to measurable and long-lasting improvement or transformation. For example, a company introducing a comprehensive diversity and inclusion program with concrete policies, training, and metrics to ensure workplace diversity.

Symbolic change is a minor alteration made to create the appearance of change without fundamentally addressing the underlying issue. It is often about sending a message.

Quotas alone will not transform underlying cultural fundamentals, but they do raise awareness, uncover supposedly unconscious biases, build momentum for change, and demonstrate the intent. By doing so they encourage women to step out. They start to shake up and question the Status Quo. They do change reality if missing the directives has real consequences.

The Occidental Cultural has historically been dominated by the power and influence of white (middle-aged) men, a well-documented historical and social fact, particularly in political, economic, and cultural spheres. This dominance is rooted in patriarchal systems that have traditionally prioritized male authority and reinforced gendered power structures.

In recent decades, however, Western culture has seen significant challenges to this dominance, with movements for gender equality, diversity, and inclusion gaining momentum. These shifts are pushing for more representative leadership that includes women, younger generations, and minority groups aiming to break the historical hold of middle-aged men and changing the cultural fundament of a scientifically, economically, and societally not justifiable inequality of women and men.

The pink quota and the German FüPosG – “the Act on Equal Participation of Women and Men in Leadership Positions” in its actual form and with the applied consequences are a gentle tool to initialize.

Necessary, fair, and sustainable change.

The above-mentioned negative impact on workplace dynamics due to the pink quota, referring to men feeling unfairly passed over for promotion, reminds us of upset children who want to decide the game on the playground.

There are more women unfairly passed over positions on all levels and the gender pay gap is still high.

Critics should embrace the gentle step of a pink quota, support equality of gender, introduce equality on all levels, and see the advantages for future functionality in organizations and society.

When the world consists of 50% men and 50% women, it should be ruled 50 / 50.

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