Finland: Study probes background to gender inequality in the boardroom

Although Finland has the third-highest proportion of female board members in Europe, women executives are still overwhelmingly outnumbered. A new study suggests that Finnish companies are not actively promoting gender equality; the government has told the private sector that it must make sure at least 40% of its board members are women. 

According to the European Commission, in 2014, the average proportion of women on company boards was 29%. This compares with an average of 20% for female board members in major listed companies (companies whose shares are traded on an official stock exchange) in the EU28. However, the Finnish proportion of female executives and non-executive board members lies a little below the EU average. Since 2003, all Finnish governments have drawn up action plans for gender equality. A study commissioned by the Ministry of Social Affairs and Health throws light on recruitment practices, revealing how gender equality is taken into consideration when positions of upper management in listed and state-owned companies are filled.

Background

The qualitative research report Gender equality in recruitment of corporate top management (in Finnish) is related to one of several objectives in the government’s Action Plan for Gender Equality 2012–2015 – namely, to promote women’s career development and to increase the equal representation of women and men in decision-making in the public and private sector. The study was commissioned by the project 'Gender equality in top management – Changing practices in economic decision-making (TASURI)', partly financed by the EU Progress Programme and carried out by the Gender Equality Unit of the Ministry of Social Affairs and Health. The research report was managed by Tuija Koivunen at the University of Tampere.

A statistical report from the TASURI project, conducted by Statistics Finland and published together with the qualitative report, summarises statistics on the representation of women and men in top management (in Finnish). It shows that the proportion of women in corporate governance has risen in every type of company since 2007. Women made up 23% of the board positions in listed companies in 2013 and 17% of management groups. State-owned companies, however, lead, with the proportion of women board members at 39% and their share in management groups at 26%. This is partly because, since 2004, each government action plan has set a goal of at least 40% of board seats in State-owned companies to be held by women (and no more than 60% of seats to be held by either gender). This quota also applies at companies in which the government has a majority holding but which are not listed companies.

Persistent segregation

Eurostat data show that educational segregation, and segregation in the labour market, features strongly in Finland. In 2013, sectoral gender segregation stood at 8.5%, and occupational gender segregation at 6.1% (this figure being the weighted average difference of employment per sector and by occupation by gender). Both measures were greater than the EU27 average for that year (5.3% and 4.6% respectively). A coherence between the nature of the job and educational attainment is also strongly segregated according to gender: men are, from the very beginning of their careers, placed in more demanding tasks than their female peers with the same qualifications. Segregation in management is hence both horizontal and vertical: the proportion of women decreases as you go higher up in organisations. Moreover, women are more often managers in female-dominated sectors (in both the public sector and the service sector).

Main research questions and methodology

The study had four key aims:

  • to map practices related to recruitment for top positions in corporate management in listed and state-owned companies;
  • to map practices related to recruitment in the companies that are responsible for many of the recruitment practices in top management;
  • to investigate the ideas that are held regarding gender and gender equality, and how these influence recruitment practices;
  • to examine how different factors promote or prevent gender-equal career advancement.

The empirical data comprises 24 interviews, with chairs of boards, chief executive officers (CEOs), personnel managers of listed and state-owned companies, and executive search consultants. Different kinds of documents from the companies were also analysed, such as codes of conduct, reports on corporate social responsibility (CSR), annual reports and personnel policies.

Ambivalence regarding gender equality

The study reveals that most interviewees consider gender equality to be of secondary importance when recruiting, with competence pre-eminent. (However, how competence is measured and defined is not questioned.) Another commonly held view is that as more highly educated women take on different positions within companies, this will automatically lead to an increase of women in top management. This concept is based on the idea that the under-representation of women in top-management reflects not recruitment practices, but rather a shortage of qualified women. The study, however, indicates that there is no evidence to show that increased competence among women, or an increase in the number of competent women, automatically reduces or eliminates vertical segregation in top management. The parallel statistical report reveals that, if they are to attain top management positions alongside men, women generally need to have a higher level of educational attainment than their male peers.

Many interviewees explicitly expressed the importance of promoting gender equality, stressing the added value of women in top management. Having high-level women employees was also seen as important for a company's image. However, the study concludes that measures and practices aimed at promoting gender equality are seldom mentioned in company documents and hardly ever used in corporate branding.

Signs of a change?

The study concludes that, although Finnish companies aspire to diversity, profiling shows that promotion to top management requires a largely uniform educational background and competence. Finnish company directors are more likely than their international peers to have a technical education, and fewer Finnish women have this kind of education. The study also shows that certain positions and career phases, such as a CEO post, are often a prerequisite for a top management job and few women have this type of experience. However, study respondents told researchers that people with specific skills are increasingly being recruited as board members and this is likely to increase the proportion of women recruited.

Best practice and recommendations

The report recommends that companies and executive search firms actively take gender equality into consideration when recruiting for top management positions by doing the following:

  • aiming for an equal representation of women and men;
  • taking gender equality into account in internal training programmes;
  • making gender equality a much more visible part of the company’s public image, as a way to influence the attitudes and perceptions of management;
  • using external executive consultants;
  • requesting both female and male candidates on long-lists, as well as short-lists, of candidates;
  • monitoring the implementation of these objectives.

The report also suggests measures to improve the objectivity of the overall recruitment process, especially in defining the criteria for the role to be filled.

Commentary

The government’s Action Plan for Gender Equality 2012–2015 stated that the gender composition of the boards of listed companies should be monitored, and that if there was no significant improvement, recruitment of more women would be enforced by law. The government then evaluated the situation in June 2014, consulting the social partners. The Confederation of Finnish Industries opposed quotas set by law (in Finnish, 103 KB PDF), saying that self-regulation was sufficient. However, the trade union confederations SAK, STTK and Akava considered legislation to be necessary. In February 2015, the government set a goal of at least 40% of women on on the boards of companies by 1 January 2020 – both large and medium-sized listed companies. In addition, no more than 60% of seats were to be held by either gender. Before the end of June 2016, these companies are also expected to have set up and published company-specific targets for gender diversity. For the moment, gender quota legislation has been postponed until after a further evaluation, scheduled for 2018.

 

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