This year, the number of women directors in Finnish listed companies reached a record level, 32 % in large caps. However, the number of women executives has slightly decreased (now 20 %) because of the small number of women executives in newly listed companies and the negative development in small caps. In industrials, which is the largest business sector in Finland, a woman executive very seldom leads business operations. However, the future looks promising as the percentage of women executives is higher in younger age groups. Further results can be found in the recently published sixth Women Directors and Executives Report by the Finland Chamber of Commerce Women Directors on the Rise – Executive Positions Still Going to Men.
A record-high number of women directors sit on boards of Finnish listed companies this year: in large caps 32 % and in all Finnish listed companies 25 %. In recent years the share of women directors has increased circa one percentage point every year. In ten years the figure has increased three-fold. To put things in perspective, in 2003 only 7 % of the directors in listed companies were women.
“Self-regulation has proved an efficient tool to promote the representation of both genders on boards in Finland” concludes Ms Leena Linnainmaa, Deputy Chief Executive of the Finland Chamber of Commerce.
The size of the company matters when it comes to the number of women directors within the company. In large caps the number of women directors is 32 %, in mid caps 26 % and in small caps 20 %. In international comparison, the number of women directors in Finnish listed companies is among the top of all the EU countries and in fact the whole world. This has been achieved without quota legislation.
This year, a record number of women CEOs lead Finnish listed companies: 4 % (5 companies). In contrast, the number of women executives has decreased to 20 % after a steady growth in the past years (2015: 21.5 %).
This year’s negative development in the number of women executives can be explained by two factors: the executive teams of the newly listed companies only comprise 10 % women. Furthermore, the share of women executives in small caps has clearly decreased, four percentage points compared to last year. On a positive note, in large caps the number of women executives has increased.
“There is a lack of women in the Finnish start-up scene. The management of the newly listed companies is dominated by men. This also indicates that imposing mandatory quotas to promote gender balance could constitute a considerable obstacle for companies to get listed on stock exchange” comments Linnainmaa.
Few Women Executives in Business Operations
The number of women executives leading business operations has decreased – in 2016 just 10 % of the executives in business operations were women (2015: 11 %). The largest share of women leading business operations can be found in the healthcare, consumer goods and services as well as energy sectors.
The majority of Finnish listed companies (41 companies constituting 33 % of all the listed companies) belong to the industrial sector. Within the industrial sector, the number of women executives leading business operations is clearly smaller than in other sectors, under 3 per cent. To compare, in basic materials and in energy sectors, traditionally dominated by the men, women act far more often in business operational executive functions (13 % and 25 %). The fact that there are so few women in the industrial sector strongly diminishes the total share of executive women in business operations. Excluding the industrial sector, the percentage of women would be much higher, 14 %.
Women Executives Have Higher Educational Level than Their Male Counterparts
Some explanation for the small number of executive women can be found in the executives’ educational background. The report reveals that the most common background for executives in Finnish listed companies is a master’s degree in business or in engineering.
The Finnish economic structure is dominated by the industrial sector. It seems that there is a tradition to appoint engineers to executive positions. This tendency is rather strong in Finland compared to other countries. Of all the executives in Finnish listed companies, 38 per cent have a degree in engineering. What raises concern is that just a fifth of the engineering graduates are women. Of the executives in listed companies with engineering background only 10 % are women.
“What should also be noted is the number of male executives who have graduated with lower degree in engineering. Women appointed as executives seldom have lower degrees as their educational background. The difference between women and men in their educational level is most notable in engineering background” notes Mr Antti Turunen, Legal Counsel of the Finland Chamber of Commerce.
The executives of Finnish listed companies are between 29 to 74 years of age. In younger age groups the number of women executives is clearly higher than in older generations. In the age group of 40 years or younger, the number of women has increased already to 30 %. In 2013, the percentage of women in the same age group was just 21 %.
Younger women are more often appointed to line management. In the age group of the under 40 years old, more than half of the women executives lead business operations. If we look at older age groups, this figure is significantly lower.
“The positive trend among the younger women executives has continued for several years and gives a positive glimpse into the future. Yet, we lack a similar development in the older age groups. We should ask why there are so few women among executives who have turned 40 years of age” says Turunen.
Directors Have Seldom Background in HR or Marketing
The differing career paths between women and men are reflected in the gender distribution of boards. Almost half of the directors have CEO experience, most whom are men. In contrast, directors with professional background in HR or marketing are very rare. Still, women are better represented in these functions than in business operations. To establish a genuine balance between women and men in top positions, women should have more diverse career pipelines and leadership experience in business operations.