Hitting the glass ceiling on boards: Will new EU regulations break it?
Despite significant progress toward gender equality, women still hold a minority of management positions across many countries globally, and the boards of the largest companies continue to be male-dominated. That issue stems from both prejudice and structural constraints on the job market. In response to these challenges, the European Union has introduced measures to increase women’s representation on the boards of listed companies, promoting a more balanced and representative governance structure.
What is it all about?
In November 2022, the European Parliament and the Council (EU) adopted Directive 2022/2381. It aims to improve the gender balance on the boards of listed companies. The directive promotes better representation of women and men in management positions, introducing effective solutions to accelerate achieving this balance.
These regulations will not apply to non-public companies (e.g. limited liability companies) or publicly listed companies hiring fewer than 250 employees. Publicly listed companies were included in these regulations first because of their special role in the economy and their broader market impact.
Numbers
The directive obliges member states to require listed companies to achieve one of two goals:
- At least 40% of non-executive director positions should be held by women
- At least 33% of all director positions (both executive and non-executive) should be held by women
- EU member states have until July 2026 to put the directive into effect
What if a company ignores the provisions of the directive and does not implement it?
In such a case, the company will be obliged to take special measures regarding the recruitment process for management positions. This will specifically include launching a selection process in accordance with the principles set out in the directive.
Gender balance on the boards of Polish companies
The situation of women in management positions in Poland highlights how much work still needs to be done to achieve true gender equality in business. According to the 2023 “30% Club Poland” report, only 4.3% of CEOs of the largest companies listed on the Warsaw WIG140 index are women. On the management and supervisory boards of these companies, women constitute only 18%, which clearly underscores the men dominance.
Gender diversity across sectors
The greatest gender diversity is observed in the financial sector, where women hold 27.3% of management positions, giving hope for positive changes in the future. Unfortunately, not all industries show similar results. The agri-food sector fares the worst, with only 7.1% of women in management positions. Heavy industry (14.4%) and energy and raw materials (15.2%) also present low levels of female representation.
The above data indicate clear disparities across sectors. This may stem from historical prejudices and the various barriers women still encounter on their path to higher positions. While the financial sector leads in diversity, the overall picture in Poland shows that women still have limited access to key decision-making positions. This situation prevents realizing the full potential of diversity in business.
How are other European countries doing?
In December 2022, women accounted for only 32.2% of management positions in public companies in the European Union. There were significant differences between individual countries – France (45.2%) and Italy (42.6%) had the highest percentages of women in management positions. Poland, with 24.2%, ranked tenth from the bottom, being ahead of mainly the countries of Central and Eastern Europe. This data shows the uneven representation of women in management across Europe. Interestingly, the World Economic Forum’s “The Future of Jobs 2023” report indicates that more than half of Generation Z employees would turn down a job offer in a company without diverse leadership. This suggests that the pressure for change is likely to increase in the coming years.
Why are there still so few women in management positions and why is it worth changing?
The low percentage of women in management positions is a complex issue, primarily caused by persistent gender stereotypes in society. Women often face the false belief that they are less capable of being leaders than men, which limits their chances of getting promoted. This belief is rooted in traditional social roles that assign household tasks to women and leadership or business roles to men. As a result, women often face unequal treatment in both recruitment and career development.
However, there are many arguments for increasing the number of women on company boards. First of all, greater diversity helps better identify risks and address challenges. Research shows that companies with more gender-diverse boards are more profitable. A 2020 McKinsey report revealed that companies in the upper quartile for gender diversity on boards are 27% more likely to outperform financially than those in the lower quartile.
Moreover, the presence of women on boards positively impacts decision-making processes and management norms. They have a significant impact on corporate governance, board norms, and decision-making. Women in management positions are usually very well-prepared to achieve business goals and lead teams, and when they encounter gaps in knowledge, they are not afraid to admit it and ask insightful questions to gain a better understanding. This approach leads to more thoughtful and comprehensive decision-making by boards.
Promoting more women in management positions is not only a matter of fairness but also an opportunity for growth and improved business performance. Diverse perspectives enhance creativity, foster innovation, and enable companies to respond more effectively to changing market conditions. Ultimately, it benefits both companies and the whole economy.
What can companies do to hire more women?
To increase the representation of women in management positions, companies can take several actions, including:
- Make gender equality in decision-making roles a business priority by setting gender balance goals and emphasizing it as a key element of the company’s strategy
- Use transparent and professional recruitment processes – develop clear job profiles and skill sets, and ensure a transparent candidate selection process. Prioritize the underrepresented gender when qualifications are equal
- Establish specific, realistic, and timely goals to increase female representation on boards, allowing the progress to be monitored
- Collaborate with recruiting firms and oblige them to ensure relevant recruitment processes, presenting diverse candidate lists for every open board or management position
- Provide inclusion training – offer board members training and coaching to reinforce an inclusive approach to decision-making
- Build a network of contacts – actively seek out women for management roles using your network instead of relying solely on traditional recruitment methods
If you represent a company that needs support in the process of implementing gender equality in management boards, contact us for details of our offer. Just send a message to: Zadrozna.Anna@CareerAngels.eu
