The future of gender balance in decision-making

Gender representation in the workplace is a critical issue that has gained prominence in recent years. Despite significant progress in areas such as education and employment, women remain underrepresented in many industries, particularly in positions of leadership. This lack of representation can have serious consequences for both women and the organizations for which they work, such as lower productivity, missed opportunities, and higher turnover. The gender pay gap remains a significant issue in many countries with women earning less than men on average in almost every country worldwide.

According to McKinsey & Company’s 2020 report, women hold only 24% of senior leadership roles globally. This disparity is even more pronounced at the highest levels of business, where only 11% of C–suite positions are held by women. According to the same report, while many companies have set targets for increasing the representation of women in leadership positions, very few have actually met these targets. The gender pay gap persists with women earning less than men on average in almost every country worldwide.

Women are underrepresented in industries such as technology, manufacturing, and finance, all of which are frequently cited as key drivers of economic growth. Some companies and organizations are taking steps to promote gender balance by implementing policies and programs aimed at increasing the representation of women in leadership positions and addressing unconscious biases in the hiring and promotion process.

The EU has adopted the EU Gender Equality Strategy 2020–2025, which includes and analyzes policy objectives and actions to achieve significant progress toward a gender–equal Europe by 2025. The strategy’s main axis is the achievement of a Union in which men and women, girls and boys, in all their diversity, will be free to pursue their chosen path in life, will have equal opportunities to thrive, and will be able to equally participate in and lead our European society.

The most important aspect, however, is how the EU arrived at this conclusion.

The solution is decision-making.

According to studies, companies and organizations with more women in leadership positions perform better financially. A more balanced gender representation in decision-making can lead to better overall decision-making, as a diversity of perspectives and experiences is frequently beneficial in problem-solving and strategic planning. Setting targets and quotas for women in leadership positions, implementing mentorship and sponsorship programs for women and promoting a culture that values diversity and inclusivity are some ways to promote gender balance in decision-making.

The European Commission continues to encourage and support EU Member States and stakeholders in developing and implementing effective strategies to achieve balanced participation of men and women in decision-making, such as raising awareness, political dialogue, mutual learning, and the exchange of good practices, including through the Mutual Learning Programme in Gender Equality and the Platform of Diversity Charters, as well as funding projects to develop and support strategies and telecommunications.

In practice, the European Commission hopes to achieve a gender balance of 50% at all levels of management by the end of 2024. Quantitative targets for female appointments and leadership development programs will be among the supporting measures. The Commission will also increase efforts to increase the proportion of female managers in EU agencies, as well as ensure gender balance among speakers and panelists at conferences it organizes.

The European Commission proposed legislation in November 2012 to improve gender balance in corporate decision-making positions in the EU’s largest listed companies.

At the heart of the proposal is a transparent selection process for board members based on clear criteria and a comparison of the candidate’s qualifications – to be implemented by large listed companies that do not meet the target of 40% for non-executive directors (or 33% for all types of directors) must ensure fair and transparent selection procedures for board positions.

This approach prioritizes a candidate’s qualifications and merit as the deciding factors. The companies will determine the qualifications for board positions. The selection process will continue to prioritize suitability, competence, and professional performance over gender. Only when two candidates are equally qualified should the underrepresented sex be chosen.

The political agreement reached by the European Parliament and the Council is now subject to co–legislators’ formal approval.

The new Directive requires large-cap EU companies to accelerate progress toward gender balance on their boards, with a target of at least 40% among non–executive board members or 33% among all directors of the under-represented sex by 30 June 2026.

Companies with lower shares will also need to change their policies, according to EU Commission updates. Companies will be required, in particular, to make appointments based on a comparative analysis of candidates’ qualifications using clear gender-neutral, and unambiguous criteria, and to ensure that applicants are evaluated objectively based on their individual merits, regardless of gender.

This approach regards a candidate’s qualifications and merit as the deciding factors. The criteria for board positions will be established by the companies themselves. The key selection criteria will continue to be suitability, competence, and professional performance, rather than gender. Only when two candidates are equally qualified should the choice be made in favor of the underrepresented sex.

Some legislation will also be applied to companies with larger shares: individual commitments to achieve gender balance among their executive board members and companies that fail to meet the directive’s objective must report the reasons and the steps they are taking to address this shortcoming.

Penalties imposed by Member States on companies that fail to meet their selection and reporting obligations must be effective, proportionate, and dissuasive. Fines and the voiding or annulment of the contested director’s appointment could be among them. Member states will also publish information on companies that meet targets, which will act as peer pressure in addition to enforcement.

The adopted directive will improve gender balance on corporate boards of publicly traded companies across the EU while allowing flexibility for Member States that have implemented equally effective measures. It recognizes that some Member States have chosen other promising options for improving gender balance on corporate boards, and it allows those Member States to pursue their respective approaches instead of the directive’s procedural requirements, as long as they produce tangible results.

Gender representation in the workplace is an ongoing issue that necessitates continuing effort and commitment on the part of both government and private sector organizations. Despite recent progress, women continue to be underrepresented in many sectors, particularly in leadership positions. The EU member states must continue to promote policies and programs aimed at increasing female workplace representation and addressing unconscious biases in hiring and promotion. Setting targets and quotas for women in leadership positions, implementing mentorship and sponsorship programs for women, providing equal pay for equal work, increasing the availability of flexible working arrangements, and promoting a culture that values diversity and inclusivity are all ways to achieve this.

The future of gender representation in EU member states can be more balanced and equal with the right policies in place and a genuine commitment to change, leading to a more productive and prosperous society for all.

References

• EU action to promote gender balance in decision-making. commission.europa.eu. Available here 
• Ιστορικής σημασίας νομοθεσία για την εκπροσώπηση των φύλων στα διοικητικά συμβούλια. europarl.europa.eu. Available here  
• Gender Equality in Decision-making positions: The efficiency gains. intereconomics.eu. Available here