1.2. Background & Cause for Interest
1.3. Relevancefor Germany
2. Research Aim & Objectives
2.1. Methodological Approach
2.2. Research Design
2.3. Literature review
3. theoretical Framework
3.1. Transactional versus Transformational Leadership
3.2. Critical Aspects
3.3. Are there Commonalities of female and Transformational leadership styles?
3.4. Is there a Typical Female leadership style?
3.5. Better Leadership Through Women?
4. Status Quo in Germany & difficulties Women are facing
5. Legal Aid called Women's Quota
5.1. Women quota- only fighting the symptom ?
5.2. Pros & Cons of women's quota
5.3. Accompanying measure for more women in managerial positions
5.4. The right way for Germany
6. Critical approach
6.1. Future Outlook & Advantages for Companies
7. Appendix i - Transcribed Interview with Anna-Sophie
8. Appendix ii - List of Diagrams | Figures | Tables
Anglia Ruskin University
Master of Business Administration
General Management / Dual Award
Quota for women in management positions?
An analysis of the implementation of the women's quota in Germany
by Judith Zylla-Woellner
In 1949 the German constitution set down the entitlement to equality for men and women in the Federal Republic of Germany in article 3. Until the late 1950s it was up to men to decide where to live and how to utilise families' assets. Women were not permitted to decide about their participation in the labour market but had the duty to administer the household and help their husband. When Angela Merkel became chancellor of Germany in 2005, she was not only one of the most influential politicians in the world but also one of the few female leaders who managed to break through the glass ceiling.
Chancellor Merkel herself blocked Minister of Employment, Ursula von der Leyens attempt towards affirmative action. The fact of the matter is that Germany is lagging behind when it comes to women in leading positions. In 2010, only 0,9% of the leadership positions in the 100 largest German companies and 2,6% in the top 200 companies are held by women. (Holst & Wiemer, 2010) This is in stark contrast with the fact that at team-leader level in German companies, women represent 20% of staff after being almost 60% of university graduates.
This underrepresentation is especially difficult to understand since recent studies have shown a positive correlation between the proportion of women in management positions and companies' performance, which made approximately 10% more in terms of profits with a balanced gender policy (Wiemer, 2010).
As a consequence, Germany is facing a discussion on the introduction of a women's quota for management positions in German companies. Currently there is a great debate on-going concerning the pros and cons of a women's quota.
QUOTA FOR WOMEN IN MANAGEMENT POSITIONS? - An analysis of the implementation of the women's quota in Germany
"More women in leadership positions are not a mandate of misunderstood egalitarianism.
It's a requirement of socialfairness." René Obermann, CEO ofDeutsche Telekom
In 1949 the German Constitution set down the entitlement to equality for men and women in the Federal Republic of Germany in article 3. Until the late 1950s it was up to men to decide where to live and how to utilise families' assets. Women were not permitted to decide about their participation in the labour market but had the duty to administer the household and help their husband.
In 1977, paragraph 75 of the Industrial Constitutional Law finally legislated for gender equality in working life, without any gender specific regulation regarding domestic duties. (Holst & Wiemer, 2010) While women's partaking in the paid workforce is one of the most meaningful changes in the past 50 years, men nevertheless occupy 70% of top managerial positions. Traditional abilities and stereotypes still hinder women from reaching the top and encourage them to rather take up part time positions, which reconciles work and family obligations. (Rindfleish & Sheridan, 2003)
Germany, being ranked number 13 of the European countries by having 25% females in managerial positions, clarifies that it is still far from having attained equality for women in leading positions. (Kommission, 2011)
When Angela Merkel became chancellor of Germany in 2005, she was not only one of the most influential politicians in the world but also one of the few female leaders who managed to break through the glass ceiling. In 2006 she was voted the most powerful woman by Time Magazine and has held the position of Chancellor for two electoral terms now. Despite the fact that an East German woman leads Germany and there are five female ministers out of a total of sixteen, the political situation is not reflected in German businesses. The fact of the matter is that chancellor Merkel herself blocked Minister of Employment Ursula von der Leyen's attempt towards affirmative action, declaring: (...) there will be no legally mandated quota for women in Germany.”
But the question is, will Germany, without a quota, be able to face the shortage of skilled labour a few years from now, resulting from the already declining birth rates and the growth of the elderly generation? All these issues could cause the German economy, aligned with the German welfare, to collapse, if politicians and economy do not start working together and utilise the hidden potential offered by fine erudite women.
"No society can afford to simply ignore 50 per cent of its potential."
Karen Duve, Author
1.2. Background & Cause for Interest
The primary intention of this thesis will be to outline the situation Germany is currently facing in terms of women in top managerial positions as well as the difficulty of reunification of family and working life.
The fact of the matter is that Germany is lagging behind when it comes to women in leading positions. In 2010, only 0,9% of the leadership positions in the 100 largest German companies and 2,6% in the top 200 companies are held by women. (Holst & Wiemer, 2010) This is in stark contrast with the fact that at team-leader level in German companies' women represent 20% of staff after being almost 60% of university graduates.
This underrepresentation is especially difficult to understand since recent studies have shown a positive correlation between the proportion of women in management positions and company's performance, which made approximately 10% more in terms of profits with a balanced gender policy (Wiemer, 2010).
As a consequence, Germany is facing a discussion about the introduction of a women's quota for management positions in German companies. Some German politicians are especially keen on introducing the women quota in German companies aligned with a child-care program offered by the government. Currently there is a great debate on-going on the pros and cons of a women's quota.
Germany also finds itself under a lot of pressure by the European Union due to European Commissioner for Justice, Fundamental Rights and Citizenship Viviane Reding's assertion that the voluntary women's quotas in businesses have failed.
It is worth pointing out that there are no German companies among the 24 signatories of the voluntary agreement. The voluntary agreement stipulates that the number of women in top positions should be at 30% by 2015 and 40% by 2020. (Spiegel Online, 2012)
Germany is also facing a shortage of skilled personnel and qualified junior staff. Getting more women into qualified jobs could be one solution to the demographic challenges of the future. Therefore, this thesis will discuss the issue of the male monoculture in top management.
"An equal participation of women and men in decision-making processes is a democratic and economic necessity. In the current economic situation it is all the more important to mobilise all talents. This is not the time to waste skills and production potential because of out-dated perceptions of women's and men's roles and leadership abilities.” (European-Commission, 2010, p. 13)
„We are, at present, regarding women in leadership positions, on one level with India but behind Russia, Brazil and China." Ursula von der Leyen, Minister of Employment
1.3. Relevancefor Germany
In 2010 only 3,2 % of places on German executive boards were filled by women - male representatives took all other board seats. In comparison, seven years earlier Norway introduced a quota stipulating a minimum of 40% women in supervisory boards. This goal was achieved in 2009.
During the very same time period Germany has not significantly increased the percentage of women in supervisory board. It is striking to find Germany last with India in an international ranking regarding percentage of women in executive boards, behind Sweden, USA, UK, Norway, Russia, China, France, Spain, and Brazil. (Holst & Schimeta, 2011)
This status quo is very worrying since Germany is not in the position to not use the human capital offered through women. Due to demographic changes, Germany faces a severe shortage of skills, which will continue and will reach a peak in 2020 with a need for 29% additional academic skilled labour. A study done by McKinsey & Company predicts a decrease of the labour force in Europe by 24m by 2036, if the female labour quota does not increase. Providing European countries do implement policies to increase the female labour force; the decrease of the general labour strength is only anticipated to be minus 3m. (McKinsey, 2007) Even more striking is the fact that women, who on average achieve better grades in school and university degrees than men, receive more than half of the university entrance diplomas. (Holst E. , 2008) The Federal Statistical Office measured 51,1% female graduates in 2010. In Germany women also comprise approximately 60% of all business graduates from German universities. (Moore, 2010)
These numbers do not match women's participation in economic leading positions. Despite their high educational achievements, women have difficulty entering leadership positions and breaking the glass ceiling, especially when they try to have a family. These is why many politicians and social scientists see the necessity of more women in leading positions and consequently demand the women quota. In 2010 the German party "Die Grünen” drafted a bill suggesting a minimum percentage of 40% for gender balance executive boards. As of now, the bill was not approved and did not receive a majority in the German Bundestag. (Holst & Wiemer, 2010)
So far, no political affirmative action has been implemented nor was voluntary commitment of companies successful. Consequently the European Union is putting pressure on German companies and European Commissioner for Justice Viviane Reding is losing patience: "I am not a fan of quotas. However I like the results they bring.” (Thornton, 2012)
She asks for a voluntary commitment of companies to introduce more women to top jobs - 30 per cent until 2015 and 40 per cent until 2020. Until 2012 only 24 European Companies signed with no German company among them. (Spiegel Online, 2012)
2. Research Aim & Objectives
Getting to grasp with the initial position, the author will try to find an answer whether a binding quota for women is the right path for Germany.
Before dealing with the main questions, several other research questions will need to be tackled:
illustration not visible in this excerpt
The thesis will comprise of three main parts:
Firstly, the author will give an overview of transactional and transformational leadership theories, juxtaposing them and finding the relevant aspects for women in leading positions.
In the second part, the status quo of working women in Germany will be investigated. There are various studies by consulting groups and the German Department of Employment and the European Union that offer up to date data and statistics concerning this issue. Using that secondary data, the author would like to paint a realistic picture of the challenges for politics and economy. Furthermore will that chapter explore how men and women perceive the situation.
The author will also have a look at processes accompanying the women's furtherance as well as the negative impact the quota could have on economy and society. The findings of that analysis will help to answer the questions of the why there are fewer women in management positions and what measures need to be implemented to ensure that more women rise into leadership positions.
The third and final part will be a summary of the prior aspects and a more focused look at Germany. What exact measures could be introduced in Germany in order to get more women in managerial positions and is the advertised women's quota a realistic and sustainable concept for Germany.
The author will close the paper with a critical discussion of the quota and outline feasible suggestions to get more women into top positions.
These research questions and objectives will lead to the main research question tackled by the thesis:
Quota for women in management positions? - An analysis of the implementation and necessity of the women's quota in Germany following the guidance of other European countries.
The author will try to generate an ideal and theoretic compendium of methods, approaches and tools of how to get more women in leading positions. The dissertation aims to give an idea of whether political regulation is beneficial or if other measures could have the same effect being more feasible.
2.1. Methodological Approach
The basis for this master thesis will be secondary data mainly consisting of studies by the German government, the European union and consultancy firms. Moreover, the author has also reviewed the relevant scientific journals and related literature. Also recent Internet articles and reports were used, because the women quota is highly topical in Germany. This was also necessary to grasp current opinions and latest changes within the country and the European Union. The author relied on secondary data because this topic is well researched and a lot has been written about it. Moreover, secondary literature gives an excellent overview of the topic, which could have not been accomplished by personal extensive research.
Primary data collected by the author was also not an option due to time constraints of only three month for completion for the thesis. For some primary data/opinion, the author conducted one additional interview with a female managing director in Germany. The reason for choosing that interview partner for the thesis was firstly her current position as business leader of one of the top private universities in Germany. Secondly her international working experience and her comparison of working environments for women made her an interesting candidate for an interview. Lastly she is a working mother, embodying the target group this thesis is about.
The author anticipates some methodological limitations - especially concerning the data comparison. Since the data comes from different sources with various reasons for interest as well as different time frames, the international comparison of key numbers proved to be difficult. Also the analysis was challenging due to changing figures as well as missing data of key countries. Furthermore the interpretation and definition of data varied depending on the source.
Thus the suggestion of the author would be to continue and enhance international and European data collection, especially since certain countries do have the quota while others do not. It would be especially interesting to see the long-term development of such countries. Another hindrance and thus room for improvement would be a mutual definition of leadership denotation and terms.
Due to the different approaches and questionnaire participants, a clear statement is problematic. For instance, the position of managers, executive managers, heads, boards members, executives, leaders, etc. mean different positions in individual companies and countries. Thus the application of the issue as well as the quota regulation proved to be challenging.
2.2. Research Design
The reasoning of the thesis will be based on inductive methodology. The paper will open with leadership theories related to the topic, followed by an analysis of available statistical data from Germany, trying to find a tailored answer and tools for Germany handling the women quota.
Therefore one can say that the overall research design will be analytic and a mixture of qualitative and quantitative data. The quantitative data will be primarily measure the performance of German businesses, draw conclusions and analyse the need for a women's quota. The qualitative data is an important tool to use, reflect and comprehend the desire and need for more women in management positions.
Qualitative facts are essential to give an idea about a very opinionated issue, which involves society, economy and politics and cannot be merely reflected by just presenting quantitative data. The mixed method of qualitative and quantitative approach has proved to be an excellent tool, reasoning the introduction of the women's quota and still include all parameters. The combination of figures and statements make the analysis within the thesis comprehensive and thorough.
The goal of the inductive approach will be to find specific answers for the underrepresented women situation in German companies.
2.3. Literature review
The literature sources regarding leadership theory are endless and publications on leadership can be found in versatile selections of professional and practitioner journals comprising several disciplines such as management, psychology, sociology, political science, public administration as well as educational administration.
This paper will include literature and views from all these discipline since the topic of the women quota in leadership positions touches all of these fields.
Nevertheless the author has decided to focus solely on transformational and transactional leadership theory with regards to characteristics of a female leadership style.
Articles by lain Hay as well as meta-analysis by the female social psychologists Alice Eagly and Blair Johnson on gender and leadership will base the theoretical discussion. Alice Eagly and Mary Johannesen-Schmidt also performed a study on the leadership styles of men and women, which will be discussed.
One advantage is that the findings from Hay and Eagly are reasonably new. Most leadership theories are more than 30 years old, when women did not play a great role in management positions as they do now. During the 1980's, research was done on charismatic, situational and transformational leadership. There is extensive literature, mostly by Eagly, on similarities of successful transformational leaders and female leadership styles.
Thus the theoretical literature concerning the topic can without difficulty relate to the pressing issue of leading women.
The literature regarding the current situation in Germany and the pressing question of the necessity to implement a quota will be mainly extracted from recent journal articles and daily reports.
Due to the rapid change of the German and world economy as well as political enforcement, the author needs to be up to date regarding the newest developments and opinions.
These precise circumstances have been shown to be more difficult, because the literature and news reports available are overwhelming but also redundant. Thus the author decided to rely mainly on one scientific source (DlW) and only little input through weekly online news magazines like Spiegel and Global Post. As the author knows that those sources are not comprehensive, the decision in favour was made due to the length of the thesis.
Employees rather like to be convinced by a woman, than yelled at by a man.
Annette Winkler, German Entrepreneur & Industrial Manager
3. THEORETICAL FRAMEWORK
This thesis will discuss the possibility of a women quota in leadership positions in Germany. Therefore the theoretical discussion will comprise the concept of leadership theories particularly related to female leaders. The key idea is to investigate the possibility of a typical female leadership style. Furthermore one would like to examine if there are similarities between a particularly successful leadership style and characteristics of female leadership.
The rough definition of leadership is organizing a group of individuals and its processes of social influence to attain a shared goal or mutual endeavour. Leadership is a collective process shared among members of the group in which the leader usually has a formal authority and more influence. (Bolder, Gosling, Marturano, & Dennison, 2003)
One can assume that leadership is as old as mankind and therefore the concept of leadership is discussed in a wide range of literature. Over time, different leadership concepts have been developed, named mostly after their male contrivances: Adair's Action-Centred Leadership Model, Tannenbaum & Schmidt's Leadership Continuum, Hersey & Blanchard's Model of Leadership, Great man theory, trait theory, behavioural theory, Fielder's contingency theory and attribution theory.
All these theories have been developed over the past 70 years based on different approaches like who exerts influence, the purpose of influence attempts, and the way influence is exerted. Then again, most leadership theories share principal components like vision, inspiration, role modelling, intellectual stimulation, meaning making, appeals to higher-order needs, empowerment, setting of high expectations and fostering collective identity. (Conger, 1999) Yukl hits the mark: "(...) there are almost as many definitions of leadership as there are persons who have attempted to define the concept.” (Yukl, 1989, p. 252)
But the core theoretical groundwork for this thesis will cover the concept of transactional leadership versus transformational leadership theory.
These opposing leadership styles are explained on the bases of the relationship between individuals and the level of exchange they have.
"This capacity to shape a vision of what can be achieved, and to share the vision with others so that it becomes their own, is one of the most important elements ofleadership."
Professor David Pennington, Vice Chancellor ofthe University of Melbourne
3.1. Transactional versus Transformational Leadership
Famous sociologists like Max Weber, Bernard Bass or McGregor Burns have done the most important research on transformation leadership. Burns advanced this theory mainly from descriptive research on political leaders and juxtaposes transformational leadership with transactional leadership. In Burns' opinion, leaders are not born nor made, but evolve from a structure of motivation, values and goals. In order to relate to the concept one must understand the essential differences between transactional and transformational leadership. The basis for leadership is the relationship between two people, which again is maintained by the level of exchange between both. The greater the exchange between two individuals, of any kind - materialistic or non-materialistic, the stronger the relationship. (Stewart, 2006)
The transactional relation is based on requirements, conditions and rewards for efforts. (Bass, 2006)
For instance, if employees deliver good work they get a generous bonus in return. Leaders leading in this manner are called transactional leaders.
Accordingly managers know about the connection between the effort shown and reward given as well as use the standard measures of incentive, reward, punishment and sanction in order to control subordinates. These managers promise rewards for good performance and look out for unconventionalities from rules and standards applying corrective actions when necessary. Moreover, this style is more oriented to the present, only dealing with current issues. (Bass, 2006) To put it in a nutshell, the transactional motivation is done by setting goals and promising rewards for the expected performance.
"Transactional leadership is a prescription for mediocrity (...) intervening with his or her group only when procedures and standards for accomplishing tasks are not being met - If it ain't broken, don't fix it.” (Bass, 2006, p. 20) A manager with this behaviour pattern uses disciplinary threats to get employees to perform, which is ineffective and in the long term counterproductive.
According to Eagly, men are more likely to be transactional leaders. Her findings suggest that male managers being transactional leaders paid attention to their follower's problems and mistakes, waited until problems became severe before attempting to solve them and were absent and uninvolved at critical time. (Eagly & Johannesen-Schmidt, 2001)
How these findings come along with transformational and female leaders will be discussed in the following passages.