Businesses need both carrot and stick to accelerate progress on gender equity 

Women now make up a majority of college graduates and masters graduates but still only account for 15% of Fortune 500 company CEOs, so a combination of carrot and stick is needed to achieve faster progress towards gender equity in business leadership roles, panelists at an IMD/SIX Group event on government gender policy agreed. A change in corporate culture and the style of business leadership is also required, they said. The event was the second in a series of three IMD/SIX webinars on equity, inclusion and diversity. 

While incentives or praise may be helpful in encouraging those who take the lead in moves on gender equity, participants said progress will be too slow unless businesses are forced to take action by legislation or regulatory requirements. “You need both the carrot and the stick, but without the stick you will get nowhere,” said Magali Anderson, Chief Sustainability and Innovation Officer at Holcim. “The problem of using the carrot without the stick is that it gives millions of opportunities to find millions of excuses. I’m a great believer in the stick because it avoids the chicken-and-egg question of who makes the first move.”  

Sylvie Durrer, Director of the Swiss Federal Office for Gender Equity, said it is a pity that companies must be obliged to take action, because gender equity should be an automatic part of good governance, but progress is not fast enough at any level in Switzerland, so an element of compulsion is necessary. 

Panelists cited several examples of policies that had yielded positive results. Norway led the way with a 2005 law imposing a minimum 40% quota of both genders on corporate boards, as part of a wider package that includes generous family leave policies and measures that encourage female labour force participation. 

France’s 2011 Copé-Zimmerman law introduced a law requiring 40% female board membership in 2011 and while some critics voiced concerns that it would not be possible to find enough candidates, women now make up 42%-43% of board members and a law is now coming in that will require executive committees to also have 40% female members, said Anderson. She also recalled that oilfield services company Schlumberger introduced a 30% female target when recruiting for engineering jobs as far back as 1994, to ensure that it had enough women making their way up the company’s career ladder. Governments usually set quotas whereas businesses usually set targets. 

Switzerland has only recently introduced a requirement for 30% female representation on boards and 20% in management teams, and while this is not particularly ambitious, it is significant that the goal covers management as well as board members, said Durrer. 

Jos Dijsselhof, CEO of SIX, said it has been clearly established that a diverse workforce leads to better outcomes, so it is in companies’ interests to improve gender equity, but a change in corporate culture is sometimes needed to make headway. Resistance may come from people who doubt whether more diversity really leads to better outcomes or from men looking to protect their turf, he said. “You need to break through that, and that is why you need a stick, and when people see the resulting improvements in the quality of discussions and decisions, then things will accelerate.” 

Businesses may also need to make changes to some of their processes if they want to achieve greater diversity, he said. “We’ve done a lot of work on our recruitment processes. We’ve looked at these from multiple viewpoints, and asked if we are using the right language, for example: Are we using power language that appeals to men or language that appeals more to women?”  

As the baby boomer generation reaches retirement age, this could create openings for women to take over senior roles, but businesses must have a pipeline of female talent coming through to take up these opportunities, he said. 

And this requires a change of culture in many companies, said Durrer. Women face discrimination during their childbearing years and often drop out of the labour market as a result, she said. This could be countered if businesses treated women well during maternity leave, by ensuring that they continue to benefit from pay rises and promotion opportunities, if fathers were forced to take paternity leave, and if women and men took a truly equal role in childrearing and other family duties, said Anderson. Women are also more likely to advance at work if businesses embrace a new style of leadership, away from one where leaders are expected to display strength and certainty to a more inclusive approach in which leaders are not expected to have all the answers, panelists said. 

But the most important solution to the gender imbalance in businesses is an adequate supply of affordable childcare facilities, which should be seen a core part of a country’s infrastructure, according to Durrer. This is particularly a problem in Switzerland, where a childcare place can cost 25% of the average salary, she said. “We need to change the narrative. Too many people see childcare facilities as a help for women or families, but we need to see it as part of the infrastructure of the country and the economy, because just as we need trains, airports and hospitals, our society cannot function well without childcare facilities.”