Women on Boards: America Is Falling Behind
What will it take for men to get it? In the last five years, women and minorities actually lost ground in U.S. corporate boardroom representation, despite solid evidence that greater women's representation in corporate leadership correlates directly with improved business performance.
A 2010 McKinsey study finds that across all industry sectors, companies with the most women on their boards of directors significantly and consistently outperform those with no female representation: by 41 percent in terms of return on equity and by 56 percent in terms of operating results. Firms in France's CAC40 with a high ratio of women in top management, according to research from CERAM business school, showed better resistance to the 2008 financial crisis; BNP Paribas, for example, where 39 percent of managers are women, saw its stock fall by 20 percent in 2008, while the share price of Credit Agricole, where only 16 percent of the managers are female, plummeted 62.2 percent.
The point is not what special attributes women bring to the table to achieve such positive results; it's what their absence implies. Lack of gender diversity in a company's management team, a recent Financial Times editorial emphasized, "now sends negative signals of a conservative mind-set, an inability to look beyond a tried circle of directors and a proneness to damaging group-think."
European nations, so often criticized for stifling innovation in a tangle of tradition and regulation, have decisively leapfrogged the United States on this issue. The U.K. took a newly aggressive stance with the publication on February 24th of a Parliamentary report advocating that FTSE 100 boards should aim for a minimum of 25 percent female representation by 2015 and threatening more draconian action if no significant change is manifested within the next two years.
The British declaration closely follows other high-profile European nations: Norway and Spain have already set quotas for women's representation on boards of directors. France plans to impose a 20 percent quota by 2012 and double it to 40 percent by 2016 for the country's 2,500 largest companies. Germany's chancellor Angela Merkel recently said the country's male-dominated boardrooms were a "scandal" and that companies had "one last chance" to address the issue before facing enforced quotas. Italy, too, is considering a "quota rosa," as is the Netherlands, and in Brussels, the European Commission is drawing up plans for a voluntary code urging all public companies to have 40 percent of their boards made up of women — or face the imposition of mandatory quotas within the next five years.
On the other side of the Atlantic Ocean, however, across boardrooms and executive suites and along the corridors of political power, women's progress is stagnating. As of 2010, women held just 15.7 percent of Fortune 500 board seats, a minuscule increase over the previous two years. Women comprise 3 percent of Fortune 500 chief executives and 7.6 percent of Fortune 500 top earner positions. Another study, by Corporate Women Directors International, shows that the U.S. even lags behind countries such as Bulgaria, Latvia, and South Africa in board representation by women.
So why aren't they getting a seat at the table? Call it "gender fatigue," the growing invisibility of bias in the business world. According to The Center for Work-Life Policy's new study on women in leadership, The Sponsor Effect: Breaking through the Last Glass Ceiling, male managers simply don't see the lack of women around them, conditioned as they are by decades of initiatives dedicated to correcting gender inequities. More than half (56 percent) of men think that women have made considerable progress at their companies over the past ten years; only 39 percent of women agree. The majority of men (58 percent) say that the reason for the progress is that their company has been trying harder to promote women; the majority of women (57 percent) say it is because women have made great strides in terms of performance and educational credentials. Some 49 percent of women think gender bias is alive and kicking; only 28 percent of men do.
Help is coming from forward-thinking corporations. A sizable group of corporate heavy-hitters, including American Express, Cisco, Deloitte, Morgan Stanley, and Intel, are experimenting with initiatives that give high-performing women the skills and support to move into leadership positions. These corporations understand that cracking the last glass ceiling will give them a significant competitive advantage in talent markets the world over.
But should the U.S. rely on the marketplace to propel change? Or should the government step in to compel it? What are your thoughts?