The Swiss pragmatism, the key to success.

The economic prosperity and the social peace which prevail in Switzerland are strongly linked to the pragmatic character of its inhabitants. History shows us that the major stages of construction of this country gave rise to political and social formulas that allowed them to overcome antagonisms between the communities of a different language or religion, or between political families. And all this while focusing on social cohesion and integration of minorities rather than on the balance of power and ideological confrontation.

As an example, I will turn to the principle that governs the formation of the Federal Government. Without it being set forth by the constitution or the law, it is understood that its composition must reflect the political strength of the national parties and respect the national linguistic balance with five seats allocated to German-speaking communities, and two to the other communities.

This “magic formula” is one of the pillars of the Swiss consensual democracy that aims to integrate into the government all the major social and political forces and to promote consensus on conflicts. It is a pragmatic solution that ensures political stability, it is the key to the growth of Switzerland. And a fine example of positive discrimination, that, in addition to the personal skills of the members of the government, recognises the importance of diversity.

The limits of pragmatism

This is why it I was surprised at the very strong objections raised in this country on the issue of quotas for women on the boards of directors. The importance of the diversity of these governing bodies is yet internationally recognised as a determining factor of economic success. I would mention here the study led by Credit Suisse, The CS 3000 Gender: Women in Senior Management. Likewise, the European Commission summarises very clearly the economic arguments for greater diversity on the boards of directors, including the increase in the performance of the company, a greater understanding of the economic choices and behaviours of the consumers, a more efficient decision-making process, an improvement of the corporate governance and of the ethical decision-making process, and a better use of the qualified employees paid by the hour, of which 60% of graduates in Europe are women.

And, finally, what particularly surprises me in respect to the lack of pragmatism on this issue, it is the observation made by Credit Suisse in this study: “From the beginning of 2012 to June 2014, we have seen a 5% outperformance on a sector neutral basis by those companies with at least one woman on the board of directors, and whose market capitalisation has exceeded USD 10 billion. This then amounts to a compound excess return since 2005 of 3.3%, hence broadly maintaining the same momentum. By including companies whose market capitalisation is less than USD 10 billion, the annual outperformance is about 2.5%. The performance of the equity capital of the companies including women on their boards is higher.”

Despite these findings, Swiss companies do not seem to be aiming for clear diversity on their boards of directors and directorates-general. If the studies each have different results, it is not less true that, at an European level, we are at the bottom of the list.

Why is it that there is no traditional Swiss pragmatism here? Why is it that the issue of the quotas raises such a response from the companies? How can we explain this opposition to what clearly seems a profitable goal for the Swiss economy?

The latest example is the response given to the bill that the Federal Council introduced last December as part of the new law on public limited companies. This is to introduce into the law a “comply or explain” type-of-process with the ultimate goal of seeing that 30% of the board of directors’ members are women. Despite the non-binding nature of this provision, the bill raised strong criticism.

Political effects

This low diversity in the governance of Swiss companies also has an effect on the political system. Unlike many countries, men and women elected in Switzerland are not professional politicians. The principle of what we call the “lay Parliament” is that the majority of parliamentarians pursue an occupational activity in addition to their political mandate. This integration into the world of businesses and associations is highlighted and gives legitimacy to candidates. I will mention here the Chamber of Commerce, Industry and Services of Geneva, for whom this system “is a key to the success of Switzerland and promotes positive interactions between the political and the economic worlds”.

But women are rarely seen in the managerial positions and on the boards of directors of companies. And therefore, they have a legitimacy handicap in accessing political functions. In addition, the lay parliament system steers women towards juggling a political and professional career, all the while, in most instances, taking care of most of the family and household chores.

This interrelation between politics and economics has consequences and obviously explains, in part, the finding of the 1999 – 2014 assessment of Switzerland’s Plan of Action regarding equality between women and men. During this period, “the proportion of women in various parliaments stagnates or regresses”, despite the high number of campaigns and actions carried out by the Confederation, the cantons, and the cities. Consequently, during the 2011 national elections, the proportion of elected women did not increase but went down to 29% for the first time since the introduction of women’s suffrage. At the last municipal elections in Geneva, women represented less than 30% of the elected representatives, which is a 14% decrease compared to the previous elections.

A magic formula for diversity

So, has Switzerland reached the limits of its pragmatism when it comes to women? In any case, it is imperative that we act now if we do not want this country to miss out on the undeniable benefits that diversity has to offer in the economic and the political world.

In this respect, the publication by the World Economic Forum of the Global Gender Gap Report 2014 reminded us that there has not been enough progress in Switzerland when it comes to gender equality. Since 2010, our country has stagnated, or is even going backwards with regard to the Global Gender Gap Index. And yet, the Swiss society is no more discriminatory than others in respect to women.

Therefore, the Swiss political and economic leaders must now find a pragmatic “magic formula” for equality. As Mrs. Simonetta Sommaruga, President of the Swiss Confederation, said, 60% of the companies listed on the stock exchange do not have any women on their boards of directors. Self-regulation is clearly not working, and political pressure is needed for the companies to take action”.

This is not an attack on economic freedom. As pointed out by the Federal Commission for Women’s Issues: “Quotas in the field of economics meet a principle and a claim that goes back to the roots of liberalism: all persons must be employed and promoted on their own merits, regardless of their gender”.

Author: Anja Wyden Guelpa, Chancellor of State, Republic and Canton of Geneva

Saadia Zahidi, Senior Director, Gender Parity Programme and Human Capital, World Economic Forum, will present the Global Gender Gap Report 2014, in the presence of Anja Wyden Guelpa, State Chancellor of Geneva, on Tuesday 16 June 2015 at 06:00 pm at the Bellevue Palace in Bern.

Image: People enjoy the sunny spring weather as they sit on the banks of Lake Zurich in Zurich March 23, 2010. REUTERS/Arnd Wiegmann