GBO

IF YOU are a youngish man who sits on a European corporate board, you should worry: the chances are that your chairman wants to give your seat to a woman. In January the lower house of France’s parliament approved a new law which would force companies to lift the proportion of women on their boards to 40% by 2016. The law would oblige France’s 40 biggest listed firms to put women into 169 seats currently occupied by men. Spain has also introduced a quota at 40%, to be reached by 2015. Italy and the Netherlands are contemplating similar measures. This week Britain’s government threatened to make companies report formally on their recruitment of female directors.

Compared with America, where women held 15% of board seats at Fortune 500 companies in 2009 according to Catalyst, a lobbying organisation, European countries have relatively few female board members. Britain is not too far behind at 12%, according to a survey of Europe’s 300 biggest firms by the European Professional Women’s Network (EPWN). Spain, Italy, France and Germany, however, all lag behind the European average of 10%.

The exception is Scandinavia, and in particular, Norway, where quotas for women on boards originated. In 2005 the government gave listed firms two years to put women in 40% of board seats on pain of liquidation. Businessmen howled. Riulf Rustad, a professional investor with stakes in several Norwegian companies, said 70% of the new recruits would fail. In fact, there have been no obvious disasters. But a close look at Norway nonetheless suggests that imposing high gender quotas with tight deadlines can be bad for companies.

The Norwegian government was interested in social justice; it made no claims that putting women on boards would improve corporate performance or governance. Finding qualified women in a country where only 9% of board seats were held by women in 2003 and the vast majority of senior corporate jobs are filled by men proved challenging. According to a study by the University of Michigan, Norwegian firms have lost lots of boardroom experience: the new, younger women directors have spent less time running companies on average, are less likely to sit on other boards and are more likely to come from middle management.

DNO International, a Norwegian oil firm, appointed two new female directors in 2007. The three men on DNO’s board have a combined 66 years of experience in the oil business, but the new women directors have none; instead they have backgrounds in accounting and human resources. Schibsted, an international media group based in Oslo, selected all three of its new female directors from Sweden, one of its main markets. “If we hadn’t had the Swedish pool to draw from, the law would have been far more difficult for us,” says a senior executive at the firm.

The usual arguments for adding women directors are that diverse boards are more creative and innovative, less inclined to “groupthink” and likely to be more independent from senior management. Numerous studies show that high proportions of women directors coincide with superior corporate performance. But there is little academically accepted evidence of a causal relationship. It may be that thriving firms allow themselves the luxury of attending to social issues such as board diversity, whereas poorly performing ones batten down the hatches.

Women do seem to be particularly effective board members at companies where things are going wrong. A 2008 paper on the impact of female directors by Renée Adams and Daniel Ferreira of the University of Queensland and the London School of Economics found that bosses of American firms whose shares perform poorly are more likely to be fired if the firm has a relatively high number of women directors. On average, however, the paper concluded that firms perform worse as the proportion of women on the board increases. There is certainly no shortage of companies capable of producing stellar results with few or no women on the board. LVMH, a successful French luxury-goods group whose customers are mostly women, has had just one female director over the past ten years: Delphine Arnault, daughter of the firm’s chief executive and controlling shareholder.

Nor is there any doubt that in many cases low female representation also reflects a broader lack of meritocracy in corporate culture. In France, for instance, interlocking board memberships are common. Women, and many other deserving businesspeople, are excluded from the system. Emma Marcegaglia, head of Confindustria, Italy’s main business lobby, says the dearth of women on boards and in management mainly reflects a controlling male elite at the top of business, the members of which have hardly changed for the past 30 years. (Silvio Berlusconi, Italy’s prime minister and a prominent tycoon, last year referred to Ms Marcegaglia as a “velina” or showgirl.)

Core Mission

But what most prevents women from reaching the boardroom, say bosses and headhunters, is lack of hands-on experience of a firm’s core business. Too many women go into functional roles such as accounting, marketing or human resources early in their careers rather than staying in the mainstream, driving profits. Some do so by choice, but others fear they will not get ahead in more chauvinist parts of a business. Getting men to show up at every board meeting—another effect of having more women on boards—is all very well, but what firms really need is savvy business advice. Yet according to EPWN, the pipeline of female executives is “almost empty”: women occupy only 3% of executive roles on boards, compared with 12% of non-executive ones.

That suggests that the best way to increase the number of women on boards is to ensure that more women gain the right experience further down the corporate hierarchy. That may be a slower process than imposing a quota, but it is also likely to be a more meaningful and effective one.

www.economist.com  

Strengthening our economies for the future in key areas such as jobs, competition and taxation must now replace crisis management, says the OECD’s latest Going for Growth report. 

Governments have already started removing some of the emergency measures brought in to save the global economy from collapse. They must now ensure that the policies which remain – and new action in the months ahead - boost growth and living standards for the long-term. 

Going for Growth finds that prudential banking regulation can be toughened without undermining competition. Strong supervision even appears to reduce the cost of credit for firms and households, as it helps to level the playing field. This is yet another reason why governments should resist allowing current financial sector reform proposals to be watered down. 

The report says unemployment will persist at higher levels than before the crisis while investments will be riskier as the cost of capital rises. The recession has eroded the potential output of OECD economies over the medium term. The report estimates a permanent GDP loss of 3 percent on average across these countries. 

“The global recession has left deep scars,” said OECD Secretary-General Angel Gurría. “The only way to begin healing them is by taking effective action now to help our economies recover their lost potential.”For each OECD country the report identifies five priority areas for reform in order to maintain decent standards of living and strengthen economic activity. Common to many is the need for urgent action on jobs, competition and taxes. In the current economic climate, the benefits could not only boost long-term living standards and speed up the jobs recovery but also help strengthen public finances. 

One of the biggest risks is that people with weaker ties to the labour market such as older workers, youths, those on low incomes or single mothers, will stop looking for jobs. Governments need to boost spending on training and job-search at this critical time. But they also need to provide the right incentives to the unemployed. This means resisting pressure to relax eligibility criteria for social transfers, the report says. 

Short-time work schemes avoided unnecessary layoffs during the recession in a number of European countries. However, if left in place too long, they tend to protect unviable jobs and discourage new, more productive jobs from being created. Credible time limits should be put on such schemes, the report suggests. 

Action to enhance competition should not wait for a stronger recovery. Reducing obstacles to entering new markets, for instance in retail trade and liberal professions, would stimulate the creation of new businesses and boost jobs.  This would also deliver incentives to improve efficiency, including through the weeding out of underperforming firms.

The report welcomes the phasing out of support to car manufacturers through “cash for clunkers” schemes across OECD countries. Some of the tax measures taken in response to the crisis could prove beneficial to long-term growth and should be left intact, says the report. For instance, tax credits and direct grants for R&D can help counter a slump in innovation and, if well focussed, can promote green initiatives. However, because the crisis has wreaked havoc with public finances, some taxes which were cut will need to be raised. The report recommends in general shifting the composition of taxes away from income and toward consumption and land. For instance, to strengthen growth, the US could introduce a form of value-added tax, potentially making up for the loss of tax revenue as a result of extending previous income tax cuts to the majority of taxpayers. 

Going for Growth also identifies for the first time priority reforms needed to sustain strong growth in Brazil, China, India, Indonesia and South Africa, the five countries with which the OECD has developed a policy of  “enhanced engagement”. Beyond strengthening social welfare and education systems, the report recommends relaxing highly stringent regulations in product markets, strengthening property rights and contract enforcement, deepening financial markets and reducing the size of informal sectors. 

source : www.oecd.org

10/02/2010 - It is easier to climb the social ladder and earn more than one’s parents in the Nordic countries, Australia and Canada than in France, Italy, Britain and the United States, according to a new OECD study. Intergenerational Social Mobility: a family affair? says weak social mobility can signal a lack of equal opportunities, constrain productivity and curb economic growth.

Climbing the social ladder depends on a range of factors such as individual ability,  family and social environments, networks and attitudes. But public action – particularly education and to some extent tax policies - can play an key role in helping people achieve a higher income and social status than their parents. 

Across all countries  family and socio-economic background is a major influence on a person’s level of education and earnings, but the impact of  parental education, or lack of it, on a child’s future prospects is particularly marked in southern European countries and the UK. 

The study finds that in these countries people whose fathers have a university degree earn on average at least 20% more than children of men whose education ended at upper- secondary level, and well over a third more than children of men who had not reached upper-secondary education.Well educated parents tend to have well educated children for whom it is easier to obtain well paid jobs. But the odds are stacked against children who do not benefit from this virtuous cycle. 

Encouraging greater social mix in the classroom is one of the ways government policy can help children from disadvantaged backgrounds improve their prospects, according to the study. Also important is  providing quality education to the very young which improves the chances of academic success as the child moves up through the school system. 

Segregating pupils too early on the basis of academic abilty is  found to undermine social mobility. By delaying selection until the age of 16 instead of 10 as is currently the case in some countries, the influence  of the school socio-economic environment on pupils’ academic performance could be reduced by as much as two-thirds. 

The study also finds that social mobility between generations tends to be lower in more unequal societies. It says redistributive tax and benefit policies aimed at providing income support or access to education for disadvantaged families may reduce the handicaps of a poorer or less well educated background. However, any growth-enhancing impact of redistributive policies via increased social mobility would need to be weighed against other, well-established negative effects on growth via reduced labour utilisation. 

source : www.oecd.org 

For a company developing its business in France, it is very important to well understand remunerations and social costs in France.. This understanding helps taking the right decisions in terms of cost for the company and salary level for the employees.

Each year, GBO Human Resources are publishing an exhaustive study on salaries in France. It contains complete data on remunerations level and structure, as well as analysis and forecasts regarding employement in France. An updated edition will be available beginning of 2010.