Eugenia Bieto: “Gender equality moves faster when the CEO is a woman”

Center for Corporate Governance

Within the framework of the 10th Anniversary of the Esade-PwC Program for Board Members, the director of Esade Madrid and the Center for Corporate Governance, Mario Lara, spoke to Eugenia Bieto about gender and diversity amongst boards of directors and senior management. Bieto is an independent director of Endesa, president of the Catalan Coordination of Foundations and treasurer of Círculo del Liceo. She was the general manager of the Esade Foundation from 2011 to 2018, and was also the founder of the Esade Entrepreneurship Center, where she was the director for 11 years. 

This article is a summary of the interview. Click here to listen to the full interview in Spanish.  

What conclusions do you draw from the latest Esade Gender Monitor report? 

This is the 8th edition of the Esade Gender Monitor, so we can see how the numbers of women not only joining boards of directors but also holding positions of responsibility has evolved. The first conclusion is that the evolution has been positive but there’s still a long way to go until women account for 40% of board members and senior management, mainly because of obstacles posed by corporate culture and unconscious bias, and difficulties in achieving a work-life balance. Another conclusion is that the shift towards equality is greater in companies with a female CEO. Equality is something that the company’s most senior executive must believe in. If this executive believes in it, it’s easier for equality policies to be embodied in specific actions. In companies run by women, such policies are implemented and become a reality.  

What about enshrining gender quotas in law? 

I think it’s very positive. Great progress has happened in the last eight years, mainly thanks to legislation. The transposition of the recent EU directive stipulating that 40% of board members and senior management must be women by 2026 will help. In addition, this legislative pressure is accompanied by social and economic pressure: society and big companies are moving in this direction. Stakeholders are starting to regard diversity as almost important as environmental criteria when championing the decisions taken by big companies. Quotas would be an issue if they existed merely for the sake of it, treating women like mandatory flower vases on display. But gender quota legislation concerns something demanded by society. So, I think it’s very positive and will be extremely fruitful. 

According to data, only 6% of CEOs and fewer than 20% of senior managers are women in Spain. Is this what we must focus on to close the gender gap?  

Undoubtedly, we must focus on senior management, and the advantages are many. Having more women in senior management makes it easier for women to join boards of directors because when choosing board members, corporate CEOs seek people with considerable management experience. Furthermore, when the CEO is a woman, there is a palpable shift in corporate culture and efforts are made to achieve a percentage much higher than 20%. But something worries me, something I’m not sure can be remedied by legislation: how is management defined? It’s easy to say that 30% of CEOs are women. Simply check out the data base and see how many female CEOs there are. But big companies have hundreds of directors. Where do you draw the line when defining management? The conclusion is that it must be more interwoven with diversity policies and programs, together with plenty of training to remedy unconscious bias and a great deal of guidance because women sometimes find it hard to apply for certain jobs. But this is difficult to achieve by legislation alone, particularly when measuring outcomes. 

How can boards help speed up this process? 

Firstly, by setting an example. If only 10% of its board members are women, equality is unlikely to be widespread in a company. It’s important to set an example and broadcast equality landmarks in order to let the entire firm know that equality matters to the CEO. Secondly, by supervising and encouraging the integration of gender issues into strategy by means of well-defined programs and road maps. Finally, KPIs or incentives must be tied to an increase in the numbers of women in management positions.  

Diversity means added value – but also greater complexity. What advice would you give the chairpersons of boards to help them stop the management of complexity becoming an obstacle? 

Complexity’s always a challenge for directors, but it’s entertaining and exciting too. In addition, the most diverse companies have better ESG and innovation performance. However, I think that a board should represent the same diversity found in society. Let’s not forget that the board will be testing product strategies and market strategies, deciding whether or not to go global, or to create a new business unit... Returning to gender though, let’s not forget that most purchase decisions are taken by women. As for complexity, I think that the chairperson of a very heterogeneous board should encourage everyone to take part, particularly those who don’t get involved much or whose opinions differ greatly from the rest. The chairperson should also hold discussions about trending topics such as AI, the environment, cyber security, etc. In other words, encourage discussions that prompt people with very different ideas and origins to take part. 

How do you think the onset of new facets of diversity might affect discussions about board membership? 

All progress regarding gender diversity has enabled the creation of a work methodology in companies for addressing diversity and inclusion issues. I expect that in a few years, the discussions happening today about gender diversity will be about old age. It would be extremely interesting for boards to encourage intergenerational dialogue. It’s unacceptable for all the members of a board to be over 60. 

What do you think about the contribution of appointment and remuneration committees (mandatory since 2014) to today’s governance format?  

In my experience, these committees are very dynamic and active, and take very important decisions. This committee drafts the entire proposal about the remuneration of board members and senior executives for the board’s approval. This package also includes variable remuneration and, along with it, indicators. This means that it plays an extremely important role in professionalizing the board of directors, ensuring that the appointment process is very professional, well-structured and well-designed, and offers several alternatives in order to choose the best candidate. The mandatory nature of such a committee is very welcome. 

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