The High Turnover Rate for Female Board Members in Germany

The High Turnover Rate for Female Board Members in Germany

Why you should care

Because Europe’s largest economy is striving to balance its testosterone-filled executive board rooms with a controversial law.

Wooed, hired, gone. That’s been the pattern since Germany’s government last year instructed the country’s biggest corporations to up the number of female executive on their boards. The quotas were controversial even when they were “recommendations.” And now, to much controversy, the government announced it plans to enforce them for large, listed companies starting in 2016. Should be good news for highly qualified women. Right?

Eh. Not so fast.

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Percentage of German female executives that don’t stick around

Women are getting their foot in the door, it seems, but then they’re swiftly resigning. Apparently no one told them about Sheryl Sandberg. The turnover rate of male board members across Germany’s major companies is 20 percent. In six of the 11 total companies tracked on Germany’s equivalent of Dow Jones, seven female board members resigned. That’s a turnover rate of 51 percent — more than twice the male rate. This is according to a study done by German consulting firm Kienbaum Consultants International.

Reasons? Thanks to a historically male-dominated culture, many complain that headhunters don’t give women an easy ride into the company and don’t help them climb to the top. Then there’s the lack of a female cohort: On 38 boards in 21 DAX-listed companies, 31 seats were taken by men. Seven were held by women. You’ve heard it before: It’s “a closed network of old boys,” says Julia Redenius-Hövermann, a professor of citizen and business law at Frankfurt School of Finance and Management. And a recent, completely unsurprising poll of Germany’s female board members found that zero had difficulty coordinating family life and work. Others think that all businesswomen are disadvantaged when they are seen as “a quota board member,” says Jürgen Weigand, a professor of economics at the WHU-Otto Beisheim School of Management.

It’s a big deal to call this out in Germany, the largest economy in Europe, and the nation leading the continent’s attempted charge out of recession. Germany sets a model for its neighbors, many would say. So all eyes on the continent are on Elke Strathmann, who left her high-profile position as personnel chief with the automotive supplier Continental in April 2013 due to conflict over “next steps” for HR (to be replaced by another woman, Ariane Reinhart, of Volkswagen).

There’s some good news: The German Institute for Economic Research calculates that in recent months the percentage of board women has climbed again from 5.5 percent to 7 percent. Already, one-third of DAX-listed companies meet the recommended quota for board membership. And for supervisory boards, a lower-tier board, women account for just under 25 percent. “We just need to wait until the next generation,” concludes Redenius-Hövermann. Slow and steady.

Nathan Siegel contributed reporting.

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