CA-EN Advisors
CA-EN Advisors

Gender diversity: Are German companies keeping up?

January 2020
January 2020


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  • Despite a 30% quota for Supervisory Board diversity, German corporations continue to lag peers on gender diversity at senior levels.
  • We engaged Germany’s largest listed companies on the lack of female representation at senior leadership levels, and their policies and measures to address this.
  • Our engagement revealed more awareness on the issues than had been apparent from their public disclosure – but practice varies widely.
  • Here we set out our best practice expectations on strategy and targets, flexible work arrangements, hiring procedures, gender pay gap assessments, employee surveys and education and training.

BMO Global Asset Management’s diversity engagement priorities

We believe that diversity in companies’ workforce and board supports long-term business performance, by bringing a range of perspectives to bear, helping to service a broader client base and providing effective challenge. This point of view is reinforced by academic and corporate data.

We have been in dialogue on board gender diversity with companies and voted against low-diversity boards for many years. In 2019 we have been expanding our focus to look at workforce diversity, including gender representation in senior leadership roles1, across the UK, Canada, the US, Japan and Germany.

While we are focusing on gender diversity as part of this engagement project, it is not the only diversity angle we are focused on. The measures and strategic adjustments we encourage companies to implement are meant to enhance overall diversity.

Our engagement calls on companies to:

  • Commit at leadership level to a diverse workforce, and link this to the company’s overall strategy;
  • Establish global flexible work arrangements. Options such as home office, telecommuting or part-time work allow employees to combine non-work-related interests, longer commutes or family tasks, and therefore are considered by us as a crucial driver to enhance and retain overall workforce diversity;
  • Develop policies and measures on hiring and promotion procedures;
  • Perform and disclose results of gender pay gap assessments across the company, and what actions will be taken as a result;
  • Conduct employee surveys and publish results. By performing regular surveys, a firm can understand its employees’ level of engagement and their satisfaction with diversity approaches. We also ask for disclosure of aggregated results to be able to judge the potential risk for disruption2;
  • Provide disclosure on goals and measures for increases in staff diversity, how measures have been implemented and the take up of these measures; and
  • Improve overall disclosure and respond to the annual survey of the Workforce Disclosure Initiative (WDI)3.

Here we set out our engagement progress with the DAX304, Germany’s 30 largest companies, several of which are globally significant multinational actors, with 18 in the list of the 500 biggest companies worldwide.

Diversity in Germany – Regulators press for action

Germany has seen significant legal developments regarding diversity (including beyond gender) in the last few years.

In 2016, the German Bundestag (Parliament) adopted a law that requires 30% of supervisory board members of companies headquartered in Germany to be comprised of ‘the respectively underrepresented gender’. If, for any newly created or up-for-election position, no female candidate can be found, the seat needs to remain empty. By the end of the 2019 German AGM season, all DAX30 companies had 30% or more female supervisory board members. The top three firms leading in female representation at this level are Munich RE (45%), Deutsche Boerse (42.9%) and Fresenius Medical Care (40%).

Since 2017, companies have been required to set and publish targets for supervisory boards, management boards and upper/senior management in their annual reports. At the time of our engagement, 7 of the 30 companies had 0% gender diversity in their management boards, but 5 of them did have targets aiming for a change before 2022. Two companies have a 0% target for women within the board of management, namely Heidelberg Cement and RWE. We communicated clearly that this is unacceptable, and that their targets need to be readjusted.

Employee flexibility, crucial for retaining diverse talent, includes parental and adoption leave options that extend beyond women. While German parental paid leave is relatively generous – up to 14 months if both parents combine their leave – only one company, Merck, was in the process of establishing global paid, gender-neutral parental leave policies.

German companies with more than 20 employees are required by law to fill at least 5% of their workforce with “seriously disabled persons”. However, many companies disregard the quota and can pay an equalization levy instead. Not all DAX30 companies report the share of disabled people among their workforce. Conversations revealed that the numbers assessed have shifted in the last few years to also include mental disability or mental health issues more broadly. We encouraged further disclosure.

Since December 2018, Germany officially recognizes three genders: female, male, and “diverse”. The latter should cover intersex persons, as well as everyone who does not feel comfortable in one of the binary categories. Some employers have started issuing job adverts referring to “(w/m/d)” – weiblich, männlich, diverse (female, male, diverse)6.

Finally, in March 2019, the German Social Democratic Minister for Family, Youth, Women & the Elderly outlined plans for corporate fines if targets for women in senior management and executive boards are not established or met. The minister also highlighted her desire for executive board quotas.

Assessing best practice

Through analyzing company and third-party datawe developed a list of best practice measures and assessed each company against these. These included, for example, targets for female representation at senior levels, flexible working measures8, hiring procedures and gender pay disparity.

Each company was then assigned a two-part score, the first part based on targets and diversity awareness measures, and the second on flexible working performance9. We performed this ranking pre-dialogue and repeated it after our engagement, using the additional information we gathered. (see Fig. 1)

Over the course of six months, we reached out to all the DAX30 companies10, spoke to 22, sometimes several times, and had extensive email conversations with seven companies. In total, we had 89 interactions. Only one company, Covestro, did not respond to multiple requests for dialogue11.

Fig. 1 – Company rankings on awareness and flexibility

Company rankings on awareness and flexibility

Source: BMO Global Asset Management, as at Sept-2019

Based on our conversations, companies are doing more than their public reporting suggests. To better inform investment decisions, we continue to stress the relevance of enhanced disclosure.

The majority of the companies confirmed that it was their first conversation with investors on workforce diversity, although many had held discussions on supervisory board diversity before (see Fig. 2). This potentially explains the substantial changes in our disclosure ranking post-dialogues, as plenty of information was made available upon request.

Fig. 2 – Company responses to whether it was the first time they spoke with investors on workforce diversity. All companies confirmed that interest has increased during 2019.

Company responses to whether it was the first time they spoke with investors

Source: BMO Global Asset Management, as at Sept-2019

Diversity in practice within the DAX30 companies

Our in-depth engagement allowed us to identify a range of best practices across different areas of diversity strategy and policies.

Strategy and targets

The majority of the DAX30 companies rightfully highlighted the strategic relevance of diversity for their business, with some pointing out cases where previous neglect of diversity issues ignored large potential customer groups groups, e.g. physically disabled in the automobile sector. Still, not all the companies showed commensurate action. Where this became apparent, we highlighted the innovation potential a diverse set of perspectives might bring and urged the companies to be more ambitious.

While we focused on gender diversity, all companies made it clear that they implement diversity strategies of a broader scale. The most common issue raised was the lack of internationality and the need to add non-German senior managers to their leadership circles. Other strategically relevant diversity markers frequently named included age, experience and educational background.

Management board targets vary substantially between the DAX30 companies, from 0% to 40%. Since the 2016 legal requirement to set targets, a small number of companies have achieved theirs already and readjusted their ambition.

Good practices on strategy and targets include:

  • Including diversity in KPIs for management board and regular staff to measure qualitative and quantitative progress, and link to bonus payments;
  • Setting high targets for levels one and two below the management board, which ensure dedicated resources and a pipeline for management board positions;
  • Including diversity as a core pillar of doing business in the company’s Code of Conduct;
  • Tracking progress. For instance, DHL has developed a diversity dashboard, which monitors global diversity data; and
  • Disclosing targets and progress made for a balanced gender mix e.g. MunichRe12.
Flexible working arrangements

All companies we spoke with referenced availability of flexible working arrangements, though sometimes they were limited to HQ or office staff, as some laboratory or manufacturing environments do not allow for home office options. Most impressive was Lufthansa’s statement on offering around 100 different part-time models, which reflects the flexibility required by their business model.

Our expectation is that companies offer flexible work arrangements where possible and create a corporate culture that is supportive of take-up across gender or seniority levels. Ideally, we would want to see a full list of options publicly disclosed, with a breakdown of take up per region and seniority level.

Examples we heard included:

  • Flexible work time around core hours, avoiding a fixed starting time;
  • Job-sharing across genders, and for all levels of seniority;
  • Annual work time models, which would allow for ten months of work and two months off;
  • Sabbaticals for long-term staff, which enhances employee retention;
  • Paid parental leave, globally, for all genders;
  • Parent-child offices, if e.g. usual child care options fall through; and
  • Financial and administration support for child care or elderly care emergencies.
Hiring procedures

Internal hiring and promotions, as well as external recruitment, are key factors for enhancing corporate diversity and leadership representation.

Our expectations are that companies acknowledge hiring as a key moment for steering their diversity efforts and apply respective broad programs. We were mostly satisfied with the insights we received, and with the wealth of measures companies apply.

Measures that reportedly have shown best results include:

  • Mandatory unconscious bias training for recruiters and internal hiring managers;
  • Use a software for job ads to rephrase or substitute whole sections to make it more appealing for women. One company (Continental) reported a 100% increase in applications from women post-software run;
  • Structured interviews, tests, and simulations to enhance comparability of answers by candidates;
  • Diverse interview panels to lower bias and also to showcase the company’s diversity to candidates;
  • Diverse decisions panels that opine unanimously to avoid a biased one-person decision;
  • Mandatory diverse shortlists;
  • Advertise all positions to allow full talent pool to apply;
  • Leadership five-year rotation period, freeing up positions and educating staff further through varying roles;
  • One company introduced their early retirement policy for staff from 60 years of age as a diversity measure, opening leadership positions;
  • Quotas for key talent programs; and
  • Career support for partners of expats to facilitate international moves.
Gender pay gaps

Our expectation is that companies perform an annual global assessment about their pay structure, with gender and ethnic breakdowns, taking actions where necessary to address imbalances, and inform their employees accordingly.

We also expect companies to provide an external report or include a section in their annual report on their gender and ethnic pay gap assessments, broken down per roles, level of responsibility, and region.

A best practice was showcased by Daimler. The company has proactively decided to develop an app available to all their employees to compare pay levels and understand whether they get paid above or below the average for their type of role. The results can then be used to discuss adjustments with their managers. Requests for adjustments are reportedly minimal.

All companies confirmed that they have received only very limited requests based on Germany’s Salary Transparency Act, and that limited to no adjustments were made. Further work needs to be done to understand how well companies inform their employees about the law’s application and transparency around wage levels.

Companies reported the following as helpful to minimize gender pay gaps:

  • Not asking for previous compensation in the hiring process to eliminate gender-biased payments;
  • Assigning salary bands based on experience and level of responsibility for each role;
  • Compensation position surveys to understand the “market value” of specific positions and base compensation decisions on that; and
  • Assessment and aggregated disclosure of global pay levels along full and part-time, seniority level and region.
Employee Surveys

Employee surveys are an important tool for companies to understand the needs and expectations of their employees across different regions, business lines and responsibility levels, which are crucial factors for their business success.

Our expectation is that companies conduct an annual employee engagement survey that includes questions on the level of satisfaction of the company’s diversity efforts. We also expect companies to disclose externally the fact that they are performing these surveys, or otherwise, and provide aggregated results. This will help us to better understand the level of employee engagement and satisfaction, and whether any disruptions might be expected in the future.

All companies had performed one or several employee surveys in the past, but there was a varying degree of frequency, depth, engagement and disclosure.

Best practice included Volkswagen, which performs annual surveys, publishes the results internally on a departmental level and binds bonus payments to the results. Daimler, though not performing annual surveys, conducts them globally every 1.5 years, which results in senior management and board level discussions, completed with adjustment measures for areas of improvement. BMW discloses a summary of its biennial surveys, which allow for a quantitative comparison of the results.

Some companies highlighted shorter mid-year surveys (Telekom) or with focus groups (e.g. all senior managers, all team leaders). Another measure was to add 360-degree feedback sessions to provide insights into management and diversity performance (Deutsche Boerse).

Education and training

We expect firms to support their employees towards a diversity-driven culture by providing training and education. The efforts taken differ substantially across the DAX30. Some younger, smaller firms do not offer any training, whereas some companies with long-running diversity and inclusion programs have holistic programs across all seniority levels, in various formats and across the globe.

Best practice examples include:

  • Mandatory in-person unconscious bias training for management board as well as levels one and two below the board (Telekom);
  • “Go ahead” program, which starts several times per year with a group of 6-12 women to prepare them for any kind of leadership position (Lufthansa);
  • Web-based tool available to all employees, called the “cultural navigator”, showing which bias you might have (BASF);
  • Web-based global mentoring platform that matches employees based on their interest in themes (to be mentored in), used by more than three thousand employees (Daimler);
  • Mandatory unconscious bias training for managers/leaders (Allianz, BASF); and
  • Development of a global toolkit (hiring, onboarding, development etc) for gender-intelligent operations (adidas).
Additional diversity initiatives

Though we did not aim at engaging on the below aspects, we see them as supporting overall corporate diversity and they should serve as inspiration for other firms:

  • Development of employee network groups (e.g. LGTBQ, women, working parents);
  • Establishment of guidelines to support trans-identifying colleagues within the company and educate relevant actors (e.g. HR, hiring managers);
  • Reverse mentoring programs in which younger employees provide feedback to older managers; and
  • Considering class as a category alongside classic diversity criteria (e.g. gender, ethnicity, religion, LGBTQ).

The way forward

Going forward, we will continue to engage German companies around the expectations outlined above with a focus on those that have either not responded to our engagement or remain laggards.


Beyond just diversity, we will encourage the DAX30 companies to respond to the Workforce. Disclosure Initiative’s (WDI) annual survey and work together with other investors to make the case for enhanced workforce disclosure.


Overall, our engagement with the DAX30 companies demonstrated better performance than initially assumed based on their disclosure. Nonetheless, it is a long way for the DAX30 companies to become the Diversity30.



  1. BMO Global Asset Management ESG Viewpoint, ‘A focus on gender diversity”, March 2019
  2. Low engagement levels and high levels of dissatisfaction may indicate increase in turnover rates, related costs and business continuity risks.
  3. Later this year an ESG Viewpoint about our WDI-related engagement will follow. The WDI is an initiative to improve workforce data of listed companies, supported by more than 130 investors, with a combined AuM of around USD 15trn.
  4. As of August 31st 2019 the DAX30 are: adidas, Allianz, BASF, Bayer, Beiersdorf, BMW, Continental, Covestro, Daimler, Deutsche Bank, Deutsche Boerse, Deutsche Lufthansa, Deutsche Post/DHL, Deutsche Telekom, E.on, Fresenius, Fresenius Medical Care, Heidelberg Cement, Henkel, Infineon Technologies, Linde, Merck, Munich Re, RWE, SAP, Siemens, ThyssenKrupp, Volkswagen, Vonovia, Wirecard.
  5. Between 125-320€ per unfilled position
  6. E.g. Projektmanager (w/m/d)
  7. MSCI ESG, ISS. Company data as at April 2019
  8. E.g. acknowledgement of diversity benefits & own challenges, targets for board, c-suite and senior management, diversity concept broader than gender, anti-bias trainings, board responsibility for topic, sponsorship and mentorship programs, hiring procedures
  9. E.g. flexible work arrangements, child care facilities, parent-kid offices, part-time for senior roles, job-sharing options, worldwide staff assignments
  10. On Sep 5th, 2019 Thyssenkrupp had to leave the DAX30, and was substituted by MTU. Our analysis does not include MTU.
  11. As of Sep 18th, 2019

Views and opinions have been arrived at by BMO Global Asset Management and should not be considered to be a recommendation or solicitation to buy or sell any companies that may be mentioned.

The information, opinions, estimates or forecasts contained in this document were obtained from sources reasonably believed to be reliable and are subject to change at any time.

reo® is a registered trademark of BMO Asset Management (Holdings) PLC.

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